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Great news for SMEs across the planet.  We can fill the world with SME Finance experts, quickly and cheaply!

At least that is the news from the Frankfurt School of Finance and Management who can make you a ‘Certified Expert in SME Finance’ upon completing a single course containing 7 modules.  In Australia that equates to a Certificate IV level of study, oh but wait perhaps I am being a little cynical because that is the education requirement to become a mortgage broker in Australia.

Having said that though in Australia the largest mortgage broking industry association, MFAA, has said that Cert IV, while legally meeting the minimum requirement, is not enough and their membership has had to lift their education standards to at least a diploma, effectively doubling the minimum education needed so as to advise on and facilitate mortgage and consumer lending advice.

So where is the problem with a Cert IV for SME finance, the transactions are simpler, the borrower structures are much less complex than individuals buying a house and because SME finance is less risky than consumer lending (what with payslips instead of earnings projections) the appropriate finance product and the application itself are all far simpler.  Cert IV will suffice!

Well that must be the logic.

Actually I should give the Europeans credit for having such a high standard of education in SME Finance because in Australia, where consumer lending is regulated and therefore imposes the minimum education standards discussed above, SME finance is largely unregulated and therefore no minimum education standard exists.  Anyone that can establish a relationship with a commercial lender can facilitate SME finance in this country.

So that must(!) confirm just how simple SME finance is compared to consumer lending, mustn’t it?

I think not.

Having surveyed accountants with regard to their SME clients’ funding needs (a formal survey available at Adviser Survey) almost all surveyed had made referrals of SME clients to a mortgage broker in the past but over 90% stopped doing so because “brokers just don’t understand the structures and strategies”, even of small businesses.

Now consider, as I find most lenders and service providers don’t, that the ‘M’ in SME covers businesses with annual revenue of $50m – $250m.  Are the complexities of transactions likely to increase?  Are the skills needed for small business finance going to be the same all the way to $250m turnover medium business finance?  Apparently so.

As an aside, I feel rather foolish now because of all the years of study it took to get a Commerce degree, MBA, Masters of Financial Planning, PhD studies and a Diploma of Finance Broking, but still don’t consider myself an expert of SME Finance because every client is different.

I should have knocked it over in 4 weeks for less than $1,000 and then added to my business cards Darren Lelliott – Certified Expert in SME Finance, instead of being your humbled, still learning SME Funding Adviser.  Surely it’s not too late?

Darren Lelliott

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