Funding of SMEs and mid-market companies by Securitisation

We provide links to some important reading material on SME funding by way of securitization. There are also news items on our site off and on for which use the search button.

Securitisation is quite often associated with repackaging of loans by banks and financial intermediaries - its use for corporate finance has still been greatly limited. The most obvious obstacle is the size - since securiitsation is a capital market initiative, most corporates lack the size of "saleable assets" to constitute an economically cost-effective securitisation transactions.

When it comes to size, the size of funding requirements for small and medium enterprises is much smaller.

To obviate the difficulty of limited size, initiatives of pooled securitisation of receivables/lending to SMEs have been launched by several countries. KfW in Germany has been running SME loans securitisation program PROMISE for several years. Lately, several other governments - Luxembourg, Spain, Singapore, etc have launched similar initiatives. Some of them take the cash structure; some take the synthetic route.

Truly, securiitsation of SME loans is the most apt developmental use of securitisation.

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