Small and medium business (SMB) is a sector, which is considered one of the most perspective in the world. The share of this business is quite high in the US and the EU, however, SMEs accounted for no more that 20% of total turnover.
One of the problems the small and medium businesses face is the availability of cash resources. Mikhail Chelidze, President of GSMEA (Georgian Small & Medium Enterprises Association), says that entrepreneurs practically do not have access to finance, because the banks are not lending them. “Banks do not give loans without collateral, while small and medium enterprises can’t offer it ,” – Chelidze points out. According to him, another problem is the lack of knowledge.
Chelidze says that in most cases when taking out loans, entrepreneurs do not calculate risks, do not have a business plan which also prevents access to finances.
Nodar Chichinadze, President of the Association of Young Financiers and Businessmen (AYFB) and the “2030” member, also speaks about the need for access to financial resources. According to him, at this stage large business has more access to financial resources, because the government offers more benefits to major projects.
President of the Association of Banks of Georgia Zurab Gvasalia talks about the educational deficit. He says in many cases t entrepreneurs do not understand why they are taking a loan and what risks may exist. Gvasalia explains entrepreneurs often cannot understand why the bank refuses to give a loan and they go to private lenders. In his words, due to the lack of education, the Association had a project which covered Georgia’s several regions in the frames of which the potential borrowers received training. Gvasalia believes various agencies and organizations should continue working in this direction.