Press releases

ITC – Enabling Small Businesses Access Finance for Trade

29 November 2010
ITC News

With growth in trade essential for developing countries to emerge from the global economic and financial crisis, the International Trade Centre (ITC) has published two comprehensive business guides for small and medium-sized enterprises (SMEs), How to Access Trade Finance and Islamic Banking. The guides provide advice and best practices to help governments and trade support institutions facilitate access to finance for small exporting firms.

One of the guides, How to Access Trade Finance: A Guide for Exporting SMEs looks at trade finance in general, providing an overview of financing issues from the perspective of small exporters. The second, Islamic Banking:A Guide for Small and Medium-sized Enterprises, looks at the special case of Islamic banking, which has experienced unprecedented growth in recent years and offers attractive financing alternatives for small businesses.

“If developing countries are to emerge from the recession, then their SMEs need to be given the tools to boost export business and jump-start stalled economies,” said Patricia R. Francis, ITC’s Executive Director. “These two guides, which are available free online, form part of a package of short-term responses we have prepared to support SMEs in these times of crisis.”

Developed in cooperation with banks, development funds, chambers of commerce, trade promotion organizations and financial associations, the general guide to accessing trade finance is also designed to foster a new partnership between the banking sector and governments to boost SME exports.

The guide is a practical, accessible tool for SMEs and their partners. It provides an overview of financing issues from the perspective of small exporters, offers understanding of which financial instruments are most suitable, which service providers are most relevant, and how to approach them. It also provides examples of shipping documents, letters of credit and loan documentation, and a sample business plan.

The guide to Islamic banking examines the implications of the provisions of Islamic law, under which a key tenet is the prohibition of interest. Islamic banks do not make loans; rather they use other models such as sale, lease and partnership-based instruments to make a profit. For some, Islamic banking is attractive because it complies with Islamic law, but there are other aspects that can make it attractive to a wider group, including micro, small and medium-sized companies.

A number of well-known Western banks have opened dedicated Islamic banking operations primarily serving customers from the Middle East, the Gulf region and South Asia, but also clients in Europe, Canada and the United States.

See www.intracen.org/publications for ITC’s new business guides in PDF format. Print copies are for sale and can be ordered at www.intracen.org/eshop

Click here to download the PDF version