Financial Statements and SMEs' loan granting

Sammanfattning: Abstract Date: 2007-05-16 Authors: Lyna Alami Barumwete Michel Karimunda Course: Bachelor thesis in business administration,10 Swedish Credits (15 ECTS) Tutor: Margareta Paulsson Title: Financial statements and SMEs’ loan granting. Problem: How do banks use financial reports and accounts during SMEs’ loan granting? Purpose: The main goal of the thesis is to analyse how banks use financial reports and accounts during SMEs’ loan granting. Additionally, we will analyse what kind of information in the financial statements lenders prioritise when deciding to grant a loan to SMEs. Methodology: We used a qualitative and deductive scientific method. The empirical material and data has been collected through four face-to-face interviews with three major banks operating in Umeå. Conclusions: We found that financial and accounting information is significant during credit assessment for SMEs, especially when it comes to evaluate their repayment ability and control of their financial stability. Still, there are other factors that play a major roll and have therefore to be taken into consideration such as acquaintance and what the loan is going to be used for. Key words: Financial information, auditing information, accounting information, bank lending, credit assessment, credit-risk, loan and credit granting, SME. Number of pages: 55 Number of references/sources: 24