Starting from the statements of Radu Gheţea, the president of CEC Bank, that only 21% of the small and medium enterprises (SMEs) in Romania resort to bank loans, whereas the others use their own or third party resources, in this article I want to speak about the chances of SMEs of making a decent profit in Romania, if not even to represent the engine of the economy, like they are in developed countries.
As we all know, entrepreneurs prefer to act instead of look for solutions for a long time, therefore they can't wait for the banks to decide whether they want to lend them money or not. Here is where the banks and the guarantee and counterguarantee funds step in, when it comes to encouraging the small entrepreneurs to resort to bank loans, instead of choosing other solutions to finance their investments and their day-to-day operations. In order to be eligible for loans, it is necessary for the entrepreneurs to understand that the balance sheet must contain relevant and real data concerning the activity of the company, even though most of the time they prefer to present an empty balance sheet to the bank, mostly due to the extremely heavy taxation in Romania. This results in a vicious circle, where the banks accuse the SMEs of being "unbankable", i.e. that they lack solid financial data, stable market position and legal status, whereas the managers of the small companies complain about the lack of openness by the banks when it comes to their needs.
Furthermore, the provisions of the Basel agreements (either in their existing form, Basel II, or in their future form, called Basel III) generally classifies loans granted to SMEs as being similar retail loans. Thus, the lending products are standardized, unlike the loans granted to the major corporations. Because of that, the entrepreneurs can't "adapt' the financing method to their real needs, and the terms fo
