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Small and medium-sized enterprises (SMEs) are important engines of growth, jobs and social cohesion. However, the creation, survival and growth of SMEs is often hampered by access to finance. Thus, access to SME finance has become a key priority in developing and transition countries. Since the early nineties, Frankfurt School of Finance & Management is combining advisory work, training, and policy advice with applied research. Our goal is to support financial institutions in developing and transition countries establish good practices in Micro and SME finance.

This online course, which is based on Frankfurt School’s broad experience in practical project work and theoretical business school education programs, is tailored to the needs of mid-level managers and loan officers active or interested in SME Finance.

What Do We Offer?

  • Seven units including video lectures, a PDF script laying the theoretical foundation, examples, practical exercises, online tests and case studies.
  • A discussion forum for course related issues as well as for exchange of opinions and experiences with peers, tutors and the FSDF e-Campus team.
  • Personalized support from your FSDF e-Campus.
  • The option to obtain a Frankfurt School Certificate after passing the final exam or a confirmation of course completion after completing the course.
  • An international network of institutions hosting our final exam all over the world.

Tuition fees

Registration Date Fee
Before Jan. 15, 2017 EUR 1,100
After Jan. 15, 2017 EUR 1,300

Final exam fee: 50 EUR (to be paid directly to the final exam host).

Discounts:

  • 10% group discount (for 5 or more participants working for the same instutiton)
  • 10% for FS Alumni
Payment Options
  • Bank Transfer (bank fees to be coverend by the participants)
  • Credit Card
  • PayPal

Payment in instalments is unfortunately not possible.

Travel related costs for taking the final exam have to be covered by the participants individually.

Target Audience

  • Mid-management of financial institutions working with SME Finance
  • Operational staff within financial institutions working with SME Finance
  • Top management of financial institutions wanting to enter SME Finance
  • Staff of regulators, policy makers, donors and other SME Finance related institutions
  • Staff of SME associations
  • Consultants, students and other individuals interested in SME Finance

Workload

The course takes approx. 6 months assuming 5-7 hours of self-study per week. It consists of 7 units which build upon each other. You will take the units in sequence and will  need to pass an online multiple choice test before accessing the next unit.

Unit 3, 4 and 5 include an assignment which you will need to submit at a fixed deadline.

Course Details

The introduction to the course starts with positioning SME Finance compared to other client segments, e.g. corporate clients or retail clients. The learning goal of the course is to explain the main SME Finance principles, mainly focusing on credit risk analysis, the lending decision process and appropriate risk-taking intermediation as well as customer relationship management. SME businesses face a number of specific risks in their business but SME lending is a profitable business for many MFIs and banks that use the right methodology –cash flow based lending- and appropriate decision making tools.

Understanding the challenges that small and medium business owners are facing is fundamental to the provision of excellent service and achieving good credit decisions.

The course follows the below listed basic logics and assumptions on SME Finance:
  1. SMEs require specific financial services and products according to their comparably small size and often limited scope.
  2. SMEs sometimes operate in informal or semi-formal environments; access to reliable (or even audited) financial data is therefore often limited.
  3. Since audited financial statements and sound business planning may not be available, the financial institution has to analyze the situation of the client carefully and verify verbal or internal statements.
  4. Once data is gathered and verified, lending decisions can be taken based on financial considerations and depending on risk appetite.

Course Objectives

On successful completion of this module, students will have a thoroughout comprehension of principal concepts and theories in SME finance, i.e. they will be able to:

  • recall differences between SME finance compared to other client segments, e.g. corporate clients and retail clients
  • explain the specifics of SMEs in a geographically limited area
  • identify products and services required by SMEs in transition and developing countries

Suggestions & Recommendations

This course gives you the flexibility to decide on the timing and pace of your learning experience. However we will provide you with recommendations for you to take as much as possible from this course.

Your schedule: We will provide you a course schedule including voluntary and mandatory deadlines. The course schedule serves as a guideline for your personal learning schedule and will help you complete the programme within the given time frame.

Exercises: Even though the exercises in the script are not mandatory we strongly advise that you use them as an opportunity to check your knowledge and to prepare for the final exam.

Networking Opportunities: Use the forum to introduce yourself to your peer participants and to start interesting discussions.

Unit 1: Introduction to SME Finance

Most SMEs work in specific environments with particular characteristics. These change from country to country, region to region and even in between cities in same provinces. A framework to characterize and categorize the specifics of SMEs in a geographically limited area will be explained and judged against international best practice approaches. Typical products and services required by SMEs in transition and developing countries will be presented and best practices on how to approach the segment explained.

Unit structure:

o Definition of SMEs
o SMEs as customers of financial institutions
o International Trends in SME finance
o The role of regulation and supervision and national and regional policies
o Tax evasion as fact: challenges and barriers
o Organizational set-up of a SME unit/department
o Lending processes with international best practice approaches
- Individual cash flow based lending
- Relationship banking
- Group lending
- Credit scoring (statistical, judgemental, expert modus)
o Products and banking services to SMEs
o Marketing for SMEs

Unit 3: SME Credit Analysis - Verifying Information

This course builds on the information provided in Unit 2. Verifying that the information provided by the business owner is correct is fundamental to achieving good risk decisions. This unit will introduce the cross checking of financial information and develop the 8 SME risk categories in more detail.

Unit structure:

o Understanding clients’ financing needs, assessment based on:
- business nature and situation,
- investment project financing structure and
- (verified) cash flow forecast
o Verification of financial statements
- The need for cross checking refresher - Misleading financial statements
- Link between financial and non-financial information
- Cross checking of financial information (level 2 - balance sheet, income statement and cash flow items)

Unit 5: SME Credit Analysis - Cash Flow Analysis

Understanding the importance of cash flow for SME business is a key skill. This unit introduces the key features of cash flow analysis and financial forecasting. There will be a strong focus on preparing and analysing SME cash flow statements and financial forecasts to enhance with financial analysis.

Unit structure:

o Preparing Cash flow statements
- Operating Cash flow
- Investing Cash flow
- Financing Cash flow
o Preparing financial forecasts
- Balance sheet forecast
- Profit forecast
- Cash flow forecast
o Assessing financial forecasts
- Cross checking
- Sensitivity analysis

Unit 2: SME Credit Analysis - Collecting and Understanding Information

“Know your client” is an important principle to understand your customer in terms of business needs as well as for sound loan decisions. Many SMEs work in informal or semi-formal environments. Often no reliable financial data is provided or sometimes not existing. Non-financial information can be cross checked against financial information in order to get a realistic picture of the business’ economic situation. Furthermore the importance of understanding the purpose of a loan (“investment project”) will be stressed.

Unit structure:

o Introduction to SME services and clients’ needs assessment
- Lending products
- Deposit products
- Banking services and others
o Customer relationship management
- Know your client principle- Service quality
o Introduction to SME Lending
- Basic SME lending criteria
o - Specifics of SMEs
- Non-financial vs. financial information
- Repayment willingness and capacity
o Understand main SME Business Risks
- Character/Integrity
- Management risk
- Governance risk
- Market risk
- Financial risk
- Legal risk/Compliance
- Environmental (reputational) risks
- Collateral risk
o Verification of clients’ information
- How to verify reliability of information provided
- Cross checking of non-financial information
- Cross checking of financial information (level 1)
o Investment project evaluation

Unit 4: SME Credit Analysis - Financial Analysis

Understanding financial statements for SME business is an important element of good risk decisions and a low NPL profile. This course will introduce participants to understanding and interpreting key characteristics of SME financial statements. There will be a strong focus on analysing SME financial statements to assist with sound credit risk appraisal.

Unit structure:

o The Balance Sheet
- Assets and Liabilities
- Shareholders’ equity
- The importance of valuations
o Income statements
- Trading statement
- Operating statement
- The difference between Cash and Profit
o Analysis of Financial Statements
- Performance
- Profit
- Efficiency
- Liquidity
- Return
- Solvency
o Working Capital
- Accounts receivable analysis
- Accounts payable analysis
- Inventory analysis
- Cash flow implications of changes in working capital
o Investment project
- Break-even calculation and analysis
- Internal rate of return

Unit 6: Loan Portfolio Management and Monitoring

Proper monitoring systems as well as efficient loan work-out schemes are an important element of effective SME Finance for financial institutions. Key approaches will be laid out and effective instruments (e.g. loan restructuring) will be presented.

Unit structure:

o Introduction to basics of loan monitoring and portfolio management
- Onsite visits
- Offsite investigation
- Portfolio indicators
- Monitoring processes
- Loan workout
- Portfolio handover procedures
o Monitoring
- Reporting and MIS
- IT requirements
- Early warning systems
- From warning to action
o Loan workout
- Instruments of loan work-out
- Restructuring
- Watchlisting
- Intensified Servicing
- Legal action
- Sequencing of instruments
o Portfolio handover
- Preparation and framework
- Basic portfolio handover process

Unit 7: Suppporting Activities and Strategy

Based on the understanding of general SME Finance management, several key topics will be reviewed and efficient as well as effective solutions presented.

Unit Structure:

o HR management and organization
- Job description and recruitment profiles/exams/interviews
- Bonus and incentive systems
o Process management
- Importance of process management
- Visualization of processes and development of manuals and procedure
- Lean banking principles
- Implementation of SixSigma
o MIS and ICT
- Reporting and monitoring
- Modern ICT and process efficiency (e.g. use of tablet PCs in onsite visits)
o Interdepartmental competition and interaction

Course Lecturers

Lecturer: Mike Hill

Mike is an SME specialist with over 40 years experience. He has been delivering SME training courses for over 35 years. He worked for Barclays Bank PLC from 1971 to 2004, in a number of Area Director roles. He won national awards for sales and service. He became a consultant in 2004. He is a Senior bank advisor specialising in SME finance and sales.

He is a Fellow of the Chartered Institute of bankers in England. He was an examiner for the Institutes lending qualification. He has a Bachelors degree in business management. He has two separate coaching diplomas.

Mehr Weniger

He has handled diverse loans credit portfolios, and managed teams of lending officers. He has carried out formal training and direct coaching for senior banking executives, bank managers, loan officers and bank staff. His technical skills are complemented by proven excellent management skills, with the ability to rapidly assess needs, mentor teams, and achieve results. He acted as a senior auditor for several years specialising in the assessment of SME credit risk portfolios.

As an experienced credit manager and trainer, he has written and developed specialised in training of SME risk analysis and business development on assignments with partner banks since 1992. He has acted as consultant in several SME downscaling projects. He has been engages on many SME assignments in Russia, Kuwait, Syria, Egypt Croatia, Malaysia, Iceland, Sweden, Czech Republic, Kenya, Tanzania, Uganda, Zambia, Mongolia, Albania, China, Ethiopia, Bulgaria, Germany, Armenia and Turkey. Mike is very approachable and he is committed to ensuring that all students achieve their full potential in the Certified Expert in SME finance course.

Co-Lecturer: Kairat Shalabay

Kairat is a Frankfurt School’s international advisor in SME banking and microfinance since 2010. He serves as one of the leading consultants and trainers at the Frankfurt School Competence Center in SME Finance and is regularly engaged in implementation of assignments in Eastern Europe and Asia.

Mehr Weniger

Kairat has variety of projects in his portfolio of advisory mandates including: German-Ukrainian Fund – Ukraine, KICB Bank – Kyrgyzstan, InecoBank – Armenia, BystroBank – Russia, Savings and Credit Associations - Moldova, Rabitabank - Azerbaijan and many others. Kairat has hands-on experience in commercial banking and a solid knowledge of SME and Micro Finance. In particular he is experienced in strategic planning, designing operational procedures, product development, development of lending methodologies and processes, credit risk management and trainings.

Kairat studied Economics in Turkey and holds a master of science degree in Finance from Exeter University, UK and is also a FS Certified Expert in Risk Management. Kairat is fluent in English, Turkish and Russian.