We will try to answer a question, than the concepts "small business" and "medium business" differ, and also we will consider the main requirements and approaches of banks to crediting of the subjects belonging to both groups.
In the economy theory these concepts are shared on the basis of the legislation.
In laws some criteria according to which the enterprises carry to one of groups are used:
1) Number of employees: 16-100 people and 101-250 for small and medium-sized enterprise respectively. To 15 people inclusive admit the microenterprises and treat small business.
2) Sales proceeds and/or cost of assets. Is defined by the Tax Code and the law on accounting. Values time in 5 years establishes the government of the Russian Federation.
3) The share of state ownership or foreign investors should be no more than 25 %
Division of these concepts of the legislation obliges banks to realize various programs of crediting of subjects of small and medium business. However banks define a difference proceeding from own established norms which are calculated on the basis of intra bank techniques of the analysis of the enterprises.
Criteria here are used various depending on concrete bank. It can be both an official turn and number of employees, etc. The border usually fluctuates within 80-100 million dollars - on an official turn and 50-100 people - by number of employees. However clear split here isn't present. It happens so that in one bank the enterprise will appear in small business, and in other already on the average. For example, the intermediary or consulting companies, which annual turnover exceeds 100 million dollars, and the number of employees less than 100 people or the companies at which one of parameters is in a border area.
For the similar organization with transitional parameters which besides addressed for the first time for the credit, there is a question on what of programs to begin cooperation with bank? So we will answer it...
The main difference of programs of financing of small and medium business is the line of the credit products provided by this program. In small business there are some quite concrete products with clear split on the sum, terms and the crediting purpose, and also with the specific name. For example «credit for business development» or credit "Bizes Rost". It is characteristic feature of retail sector when potentially big client base needs creation of standard products.
On the average business for the lack of big client base more favourably use of an individual approach. Each address of the client is considered from the point of view of specific goals, possibilities and indicators of this organization. In an individual order credit conditions are considered also.
The individual approach is often used and in small business, especially on credit conditions (an individual rate, credit term, mortgaging providing).
Conclusion: from this position the program of financing of medium business since the individual approach is always more favorable to the organization, than a standard product with a strict framework is more interesting.
The following essential distinction is an approach to the financial analysis.
In the analysis according to the program of small business the real picture of business is made. It is analyzed both official, and the administrative "black" reporting. From this position all business processes, such as cash flow or goods/production movement are considered also. In the analysis of group of companies really related companies, including the fictitious, technical companies are considered. The bank assumes that the enterprises of small business can have essential distinctions between the official and administrative reporting. Often the organizations declare losses when the profit is really got; don't put on balance the available equipment etc. In this regard, if the bank is guided only by official data, crediting in principle isn't possible – the organization unprofitable, it is not enough assets etc. therefore administrative data are requested and the real situation is analyzed.
On the average business only the official reporting, i.e. the tax reporting and внутрення the primary reporting on the basis of which the tax is formed is considered. Are accepted to consideration and audit reports of foreign auditors. Banks here assume that the company at which official (declared) turn of 80-100 million roubles and more should be rather open for tax inspection and according to transparent from the point of view of the official reporting. It characterizes its position, prestige and gravity of intentions, and to bank helps to compensate the separate risks connected with complexity of the analysis.
Conclusion: to the organizations which work generally informally, the program of small business is necessary, and completely official companies with transparent accounts department can use the program of financing of medium business if certainly the company corresponds to necessary criteria about which it is told above.
There are some more differences. Interest rates on the average business as a rule below, and potential terms of crediting it is more. Process of consideration of a question of crediting in small business takes 1-3 weeks, at most a month, on the average business one transaction can be considered 3 months and more.
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