Within the events accompanying the Small and Medium Enterprises Forum
Specialists review the mechanism of obtaining financing for entrepreneurial projects from commercial banks
Within the events accompanying the Small and Medium Enterprises Forum organized by the Asharqia Chamber in partnership with the Public Authority for Small and Medium Enterprises "Monshaat" yesterday, Sunday, November 28, 2022, two workshops specialized in entrepreneurial projects were held, the first was entitled: Testing Ideas in Entrepreneurship, presented by a faculty member Prince Mohammed bin Salman College of Management and Entrepreneurship, Dr. Abdul Rahman Hariri.
During the workshop, Hariri stressed the importance of testing ideas before entering into force, because the idea - according to him - may succeed or fail, and in the event of success, it means continuing and continuing, but in the event of failure (in the test before practical implementation) So the entrepreneur must change the idea or re-test it, or move to a new idea that guarantees him success in his next project. So the entrepreneur must change the idea or re-test it, or move to a new idea that guarantees him success in his next project.
Based on that - according to Dr. Hariri - it is necessary to know the methods of testing ideas, in order to be sure of success (which means continuation and implementation), or failure (which means stopping and looking for another idea), and one of the methods used to test ideas is measuring the first interest through advertisements Through this, it is possible to know the extent of people’s interest in the idea and their interest in it, so that the next step in this regard comes, which is to know the ways to reach customer segments, and through that it is possible to judge the idea.
In this regard, Hariri stresses that the entrepreneur must remember that he is in the stage of testing (or choosing) the idea. The goal - now - is not to increase sales, but rather to test the idea and get to know the work and its specifications in order to benefit from all of that to build the product.
In this regard, he sees the need for proper planning to build the initial experience, and this requires reading the experiences of others and the means of testing ideas, and choosing a preferred method that can be followed after that. It is necessary to plan the experiment itself, and to know the best method that can be followed in this regard, so that it is less costly, effort and time.
Dr. Hariri concluded that the entrepreneur should not drown too much in his dreams, and he should take initiative and speed, because the idea that is not valid is abandoned and another idea is searched for.
In the second workshop, entitled: Qualification for obtaining financing from commercial banks, the leader of the Emerging Business Banking Team at Riyad Bank, Tariq Al-Qahtani, confirmed that the Saudi banking sector has initiatives aimed at financing small and medium enterprises, confirming the fact of the trend to support this sector, with its conviction that there are challenges it faces. Pre-financing and some financing.
He stated that banking initiatives to finance small and medium enterprises were represented by many local banks in establishing specialized departments and centers in the facilities sector with specialized relationship managers, and holding meetings and introductory and educational courses in cooperation with the General Authority for Small and Medium Enterprises, chambers of commerce, Saudi universities, as well as Saudi banks. Itself, and cooperation with local specialized agencies such as the sponsorship program, and international ones such as the International Finance Corporation, and participation in various activities related to the activities of small and medium enterprises in cooperation with governmental and semi-governmental agencies and the private sector, as well as presenting the emerging business portfolio (SME TOOLKIT, G20 Sponsorship),
He added that among the initiatives in this regard is the provision of exclusive financing and non-financial products to serve the small and medium enterprises sector, most notably cash facilities, which include financing tawarruq / or profit, which may be short-term (financing the working capital cycle), or medium-term (financing fixed assets). or long-term (financing capital expansions), including programs for financing contracting contracts, supply contracts and service works, financing salaries, professional licenses products, and commercial real estate financing products, in addition to non-cash facilities such as financial guarantees provided to companies for the purpose of financing purchases on credit, Consulting and more.
He explained that qualifying for financing from commercial banks requires the preparation of a credit file that includes a feasibility study, audited or internally prepared financial statements, or the movement of a commercial account, with documentation of all details (completion certificates, invoices, sales, social insurance...), and everything that reflects reputation. Business, personal, credit history, management performance level, operating system, and so on.
Nevertheless, he believes that the banking sector faces a number of challenges in this regard before financing, including: limited invested capital, inability to prepare a credit file, and manifestations of this include weak documentation (commercial accounts, certificates of good execution, sales movement), and lack of competencies Manpower or specialized expertise, lack of administrative and financial skills, weak sources of payment.
As for the challenges facing the banking sector after financing, such as the ill-conceived expansion of activities, the pressure on the level of liquidity in activity, and the different strengths and success criteria.
(cadres, mechanisms, technical knowledge, cost management...etc), loss of specialization, differing financing and technical needs for the activity, loss of competitive factors, which leads to a high degree of risk and thus threatens the continuity of the credit relationship.
