Designing Working Capital Financing Product for SME Bank Limited

Abstract

This project was conducted for the purpose of designing a new term loan product for working capital which will facilitate the Small and Medium Enterprises (SMEs) sector because SMEs are considered as the backbone for third world economies. SMEs are heavily dependant on financial institutions for financing their working capital requirements. The product was designed under the umbrella of prudential regulations of State Bank of Pakistan, market analysis of similar banking products and internal policies of the SME bank Limited. The product is a new term loan facility for working capital which is unique in the market. This product has more than 1 year repayment tenure which is also distinctive, although 1 year Running finance facilities are available in the market. The markup and principal will be paid in monthly installments which will facilitate SME’s customers by easily repaying loan with small payment of money. Recommendations for this study basically for SME bank to improve its market position in SME financing market.