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THE PRACTICE OF SMALL BUSINESS FINANCING IN UZBEKISTAN
Z.Z. Khudayberganova, lecturer Tashkent institute of finance (Uzbekistan, Tashkent)
DOI: 10.24411/2411-0450-2018-10340
Abstract. The way of investigation makes analyses over small business enterprises and companies that are engaged in various fields of economy as whole. Moreover, the paper scrutinizes both practical and theoretical issues of business while showing the ways of development for the future studies. The paper offers scientific recommendations that advance the crediting activities of small businesses through commercial banks.
Keywords: small businesses, small business financing, bank, bank loans, credit, entrepreneurs.
Loans provided to small businesses for various purposes by a lender. These loans may have less restrictive requirements, enabling the small business to secure the funds. A small business loan may provide other incentives for the borrower, which could minimize expenses for the business [1].
Small business financing refers to the means by which an aspiring or current business owner obtains money to start a new small business, purchase an existing small business or bring money into an existing small business to finance current or future business activity. There are many ways to finance a new or existing business, each of which features its own benefits and limitations. In the wake of the financial crisis of 2007-08, the availability of traditional types of small business financing dramatically decreased [2].
According to the conclusion of M.V. Mamut, in order to develop the practice of microlending small businesses, it is necessary to withdraw microcredit operations of banks and non-banking institutions from the control of the Central Bank [3].
The issuance of microcredits and work in small communities requires large expenditures, and the control of microcredit operations in such conditions from the side of the Central Bank does not cause the interests of commercial banks in issuing microcredits.
The founder of the bank Grameen, the Nobel Prize winner, the well-known
economist, scientist M. Yunus made revolutionary changes for the sphere of lending to small businesses. In particular, on his initiative and proposal, the Grameen Bank introduced a form of lending with the group responsibility of small business entities, lending without a guarantor.
According to the conclusion of French economists, the establishment of mutually beneficial partnerships of small and medium-sized enterprises with large enterprises increases the possibility of them obtaining loans from commercial banks. Since before cooperating with small and medium-sized enterprises, large enterprises analyze their compliance with market requirements. Also, a large enterprise constantly monitors the status of its partner, a small and medium-sized enterprise [4].
This statement of J. Chanel-Raynaud and E. Bloy is based on an analysis of the experience of developed countries and is thus considered convincing. Their research is based on an analysis of specific information and serves as evidence that big business plays an important role in the development of small and medium-sized businesses.
As you know, the main source of financing small businesses in the Republic of Uzbekistan are loans from commercial banks.
Also, an important source of financing investment expenditures of small businesses are long-term loans from foreign banks and international financial institutions.
The size and level of loans issued by commercial banks of the Republic of Uzbekistan [5]
Indicators 01.01.2015 01.01.2016 01.01.2017
Credits of commercial banks issued to small businesses, billion soums 9158 12112 15870
The share of loans of commercial banks granted to small businesses in the total volume of credit investments of banks,% 26,3 28,4 29,7
As can be seen from the data in the table, there is an increase in the size of loans and a share in the gross volume of loans issued by commercial banks of the Republic of Uzbekistan to small businesses. This indicates that lending to small businesses has become one of the priority areas of credit activity of banks and the process of lending is financed by the state.
In accordance with Article 356 of the Tax Code of the Republic of Uzbekistan, when micro-firms and small enterprises introduce into production new equipment and technologies small businesses, the tax base is reduced by 25% of their value. At the same time, the reduction of the taxable base is carried out during the 5 year tax period from the moment of the start of use of the process equipment.
These funds by commercial banks with interest in the amount not exceeding 50% of the refinancing rate of the Central Bank are fully directed to the financing of investment projects. What created great opportunities for entrepreneurs to start and develop their activities.
In the event that the entrepreneur does not have any property contributed as collateral, the provision of guarantees of the mahalla committee (local self-government body) at the place of residence of the entrepreneur as collateral has been put into practice. Also, the possibility of accepting equipment and property purchased at the expense of this loan as collateral for 80% of their value for this loan has been determined.
The practical significance of this innovation lies in the fact that a significant part of small business entities lack highly liquid collateral objects and this circumstance prevents an increase in the use of bank loans.
In countries with a low degree of financial security of the economy, collateral for loans is considered to be the most important way to
prevent an increase in credit risk.
In addition, the terms of consideration by commercial banks of businessmen's applications for the allocation of loans, according to the statements of private entrepreneurs - 5 working days, according to the statements of small businesses with the status of a legal entity - 10 business days. This makes it possible to speed up the lending process and save the time of entrepreneurs.
It is necessary to emphasize that in Uzbekistan, in accordance with the Decree of the President of the Republic of Uzbekistan No. PP-2768 dated February 10, 2017 "On the establishment of the Guarantee Fund for Small Business Development", the Guarantee Fund was established, which provides small businesses with the necessary collateral for commercial banks loans, issued for the purchase of new modern technological equipment and other purposes, in part not covered by the pledge. At the same time, the provision of the Guarantee Fund for loans from commercial banks may not exceed 50 percent of the total loan amount and the amount equivalent to 100,000 (one hundred thousand) US dollars [6].
In conclusion, commercial banks should arrange at the expense of urgent and overdraft loans the payment of import payments on documentary letters of credit of small businesses, small enterprises on public procurement, micro firms with a high degree of solvency.
As a result of the practical application of this scientific proposal, first, to expand the possibilities of financing the import of small businesses; secondly, the volume of interest income of commercial banks received from loans will increase; thirdly, to reduce the degree of credit risk of the activities of banks, since the small business entity has a high degree of solvency to pay the loan; fourthly, the
withdrawal from their economic circulation of foreign currency of small businesses will be prevented.
The main condition should be the following: the issuance of an overdraft loan for a period of one month and the obligatory presence of a credit balance on the client's foreign currency account on the last day of the month. Not to allow repayment at the expense of
of the client, the loan issued in foreign currency.
To increase the possibility of repayment of loans issued in foreign currency to small businesses, it is necessary to ensure the stability of their export earnings. For this, in our opinion, it is necessary to coordinate the rates of customs duties with the countries in which the bulk of exports of small businesses fall.
soum funds available on the current account
References
1. Small business loan definition. http://www.businessdictionary.com/
2. Small business financing. https://en.wikipedia.org/
3.MamutM.V. Microfinance: New Opportunities of the Financial and Credit System // Banking. - Moscow, 2009. - № 4. - P. 96-99.
4. Chanel-Reynaud G., Bloy E. La Banque et le risqué PME. - Presses Universitaires de Lyon, 2001. - P. 39-40.
5. Monetary policy of the Republic of Uzbekistan. http://www.cbu.uz/
6. Decree of the President of the Republic of Uzbekistan No. PP-2768 dated February 10, 2017 "On the establishment of the Guarantee Fund for the Development of Small Business" // Collected legislation of the Republic of Uzbekistan. - Tashkent, 2017. - №7. - P. 141-142.
ПРАКТИКА ФИНАНСИРОВАНИЯ МАЛОГО БИЗНЕСА В УЗБЕКИСТАНЕ
З.З. Худайберганова, преподаватель Ташкентский финансовый институт (Узбекистан, г. Ташкент)
Аннотация. Метод исследования позволяет анализировать предприятия малого бизнеса и компании, которые занимаются различными отраслями экономики в целом. Кроме того, в статье рассматриваются как практические, так и теоретические вопросы бизнеса, а также показаны пути развития для будущих исследований. Автором предлагаются научные рекомендации, которые способствуют кредитованию малого бизнеса через коммерческие банки.
Ключевые слова: малый бизнес, финансирование малого бизнеса, банк, банковские кредиты, кредит, предприниматели.
