How does your proposed innovation leverage public intervention in catalyzing private SME finance?
By showing the validity and sustainability of the model, we will look to develop a network of private (and still public if need be) institutions that would take part in such a program.
There are definite advantages for financing institutions to be part of the network. First, though they are financing a company which is locally based (relative to them), they are (1) diversifying their risk as they are financing one part of the whole organization and (2) benefiting from an added value operation as it is part of a value chain that feeds into each of its part.
Furthermore, the financing of the SMEs could have different sources: The BICP could act as a referral for SMEs to take part in the program or the BICP would take part into the financing through funds attributed to it. In all the scenarios, the BICP can give a seal of approval for the SMEs applying and eligible to the program. Thanks to its experience in launching the first Business Angel Network (LBA) in Lebanon and providing free support services (mentorships, workshops, clinics, etc.) to entrepreneurs in Lebanon, Bader has acquired an invaluable experience in identifying and supporting potentially successful SMEs. Bader will use its experience to give a "quality seal" to companies applying to the BICP so that network members (the financial institutions) will know that these SMEs have been vetted. This will allow an easier approval process from the network members to accept financing for the SMEs
What barriers does your proposed solution address?
Asymmetry of information, Lack of collateral, Lack of SME access to skills / knowledge / markets, Unavailability of financial products tailored to SME needs.
If you checked any of these barriers, describe how your solution addresses them
Asymmetry of Information: Entrepreneurs in their own country may be aware of financing institutions. However, in foreign countries they may not be aware of the financing opportunities. The BICP will allow SMEs to easily identify financing sources as they are part of the network
Lack of collateral: Very often SMEs lack collateral to get access to financing (especially with banks). Some of the program members can provide such facilities without collateral (for instance Kafalat in Lebanon, OSEO in France)
Lack of financial capacity: Financing for growth is important for any SMEs. When SMEs become international in their operations, financing becomes even more important. The BICP will increase this financing capacity.
Lack of SME access to skills / knowledge / markets: Indirectly, as SMEs will be part of this program, they will benefit from Bader's expertise, know-how, services and networks. Bader offers mentorships, workshops, SME clinics programs as well as access to local and international networks with the Diaspora and international organization.
Unavailability of financial products tailored to SME needs: As mentioned previously, there is no cross-country financing programs that would cater to the needs of SMEs working and operating in several countries