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Access to finance and funds

Based on comparative analysis of financial resources for financing the development of SMEs in the Republic of Srpska, it is clear that internal sources are the cheapest form of financing. However, most of the company’s growth and development must be financed from external sources.

From the analysis of external sources, it has been seen that the resources of the Investment Development Bank of the Republic of Srska are most convenient source, with the lowest interest rate.

From other sources, the most accessible and acceptable loans are from commercial banks and microcredit organizations. It is necessary to mention specific sources of financing, such as leasing.

On the other hand, there is a significant range of alternative sources of financing for development, which were confirmed in the mature market economy and which are not sufficiently used by national companies (the potential of capital markets, funds of the European Union and many others). The selection of sources for financing, enterprises should choose depending on the stage of development. In the initial stage of development, it is recommended to use its own funds, funds from family, friends, etc. Banking sector assets and the assets of other financial institutions are recommended in the later stages of development. For large enterprises it is usual to turn to the capital market and raise funds in this way (the initial offering of shares, corporate bonds, etc.).

Bosnia and Herzegovina (and Republic of Srpska) has just started the process of creating a system of financial support to SMEs. Market sources of financing for SMEs in Republic of Srpska is centered in banks, and the banking sector is characterized by the dominance of foreign private ownership.

It follows that the banking sector in Republic of Srpska, which is the most important for financing growth and development of SMEs, dependens on the steps and moves of foreign investors. In the conditions of world economic crisis, most of the world’s capital flows of the money goes to support the maintenance of macroeconomic stability. In such a situation all categories of customers suffer, especially those are risky, including SMEs and entrepreneurs. Looking at the volume of traffic and the impossibility of securing collateral, entrepreneurs are often seen as unprofitable and risky category of clients.

On the other hand, banks are trying to attract customers who have good financial results by providing lower interest rates, while at the same time seek to reduce the risk of seeking high-quality collateral. In such a situation, in the worst position are entrepreneurs, because they belong to the riskier group and do not have high-quality collateral.

In order to create favorable conditions for SMEs business, it is essential to create an environment that supports business, improve the competitiveness of SMEs, promotes partnership and networking among the various formal and informal business groups and groups from the public sector. It is also necessary to pay special attention to the most vulnerable target groups, eg. craft and micro enterprises (including self-employed), women entrepreneurs and young entrepreneurs.

It can be concluded that there are different ways of financing SMEs in the countries with developed economy, which could make its implementation in the future in the Western Balkans, and thus in the Republic of Srpska.

A wide range of different modalities of financing the development of enterprises in the counties with developed economies, contributes to the development of SMEs and entrepreneurship, because they are naturally oriented to their needs and abilities.

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