Standard Bank Develops Targeted Loans for Small Businesses

Africa’s largest bank has taken strides over the past decade to improve its capacity to serve the small-and-medium businesses that have been driving economic growth across the African continent. Institutions like Standard Bank are particularly vulnerable to competitive pressure from more flexible institutions, including nontraditional competitors like mobile money operators. In response, Standard Bank has been enhancing its services to capture small business customers, with lending as a natural focus. In 2010, the bank launched the “SME Quick Loan” product in 10 countries; Quick Loans offer credit of between $300 and $30,000 designed for microbusinesses and SMEs that do not have bank accounts, and lack traditional collateral that would enable them to access traditional bank credit. The loan application process for Quick Loans was simplified down from a 19-page application to a 2-page application, and loan approval times reduced from several weeks to a few days. Standard Bank had issued close to 15,000 Quick Loans by June 2012. Though results differ by country, 75% of Quick Loan borrowers in Kenya repaid their loans ahead of the 12-month deadline, and 66% then took new loans. Standard Bank is also complementing its revised lending capacity with new, smaller branches in busy business centers that are more convenient to the small business customer base.