'Partner in financing' gives SMEs one-stop financing services

Dutch SMEs have access to a wide selection of financing options ranging from bank financing to private investors and regional development companies. They prefer to arrange their financing all at one stop. Rabobank is going to fulfil this role for SME entrepreneurs so they can ‘put all their energy into enterprise.’

One stop for SME financing

'Entrepreneurs need financing so they can realise their plans. And they want to know as quickly as possible from the bank: Is this a good plan and is it financeable? Only after that question has been answered do they start thinking about the composition of the financing', says Marcel Gerritsen, who is responsible for business financing at Rabobank in the Netherlands.

Providing clients with solutions and taking worries off their minds. This is the main objective behind Rabobank’s drive to increasingly fulfil the role of ‘partner in financing' for SMEs from autumn 2015 onwards. Gerritsen explains what he means: 'It means we are going to join forces with entrepreneurs to see whether they have a good plan for realising their ideas. We will then look at which form of financing is most appropriate based in part on the company’s balance sheet. This might be exclusively bank financing that will be placed on Rabobank's balance sheet, but it could also be a combination of financing provided by partners or investors from our networks, such as an investment fund or a regional development company. We'll also take responsibility for putting together the total package of financing. And once the financing has been put in place, clients can use the Rabobank systems to keep track of the total package of financing they have arranged through Rabobank.'

Focus is currently on bank financing

This constitutes a far-reaching change because when entrepreneurs currently speak with Rabobank advisers the focus is primarily on bank financing. Gerritsen: 'We can already offer a great deal of risk-bearing capital both from within our own bank and through government schemes. By offering this more often and acting as a financial conductor, we can help entrepreneurs get ahead. And our clients also ask us to perform this role.'

140 billion euros in bank financing for SMEs

Gerritsen is convinced that this new Rabobank approach is vital: 'Over the past few years we’ve seen a gap emerge between what clients want and what we can offer in terms of bank financing.' Entrepreneurs in the Netherlands have traditionally turned to banks for their financing needs. Dutch banks have 140 billion euros in outstanding loans to SMEs, with Rabobank being the country’s largest credit provider.

Businesses are facing more tumultuous markets. As a result they run greater risks, which means they must have more risk-bearing capital. And more stringent regulations introduced by regulators mean banks must hold bigger buffers, which in turn limited their scope for lending.

New sources of financing

Numerous new financial possibilities for entrepreneurs have arisen in recent years. Entrepreneurs have greater choice today than ever before. Examples include credit unions, crowdfunding, private ‘informal’ investors, bonds for SMEs and the local, national and even European government’s new incentive schemes. So they have an impressive list from which to choose. While these forms of financing cannot rival bank financing in terms of size, they can nevertheless be attractive alternatives for individual entrepreneurs.

'Entrepreneurs in the SME sector are looking for one stop and one point of contact they can turn to for access to the full range of financing possibilities.'

Marcel Gerritsen, business banking at Rabobank in the Netherlands

One point of contact

Rabobank is now going to perform an active role in this respect. 'SMEs can get lost in the jungle of capital solutions', says Gerritsen. 'While large companies have specialised employees on staff for this, entrepreneurs in the SME sector often have to do it on their own. They consequently want to be relieved of the worry and are looking for one stop and one point of contact they can turn to for access to the full range of financing possibilities. We're now going to increasingly offer just that at Rabobank.'

Expanding services step by step

Rabobank will not become the 'partner in financing' overnight. Gerritsen explains that a series of initiatives are being carried out that will make it possible for the bank to take on this role and expand its services step by step. The initiatives cover a broad spectrum from training advisers and account managers to making changes to the automation systems and entering into legally sound agreements with reliable partners.

Providing access to networks

Even though there is a lot of work to be done before Rabobank can become the ‘partner in financing' in every respect, Gerritsen is convinced that Rabobank can successfully fulfil this role for SMEs. 'Risk management is our specialised field, we also provide part of the financing, we already share a great deal of financial information with our clients and have an excellent network. We know the investors at the regional level, ranging from investment funds to other entrepreneurs and high net worth individuals. We're going to provide entrepreneurs with access to these contacts and networks so that they can put all their energy into enterprise and realise their ambitions.'

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