FNB receives funding capacity to extend more loans to South Africa’s SMEs

24-04-25 / Shelly Nxumalo

FNB receives funding capacity to extend more loans to South Africa’s SMEs

Johannesburg - FNB is pleased to announce it has created significant funding capacity to provide even more lending support to South African SMEs through two innovative and complimentary initiatives. Already the largest lender to SMEs in the country, FNB has signed a R1.8 billion credit risk-sharing facility with the International Finance Corporation (IFC) and raised a further R2.5 billion of funding from a social bond issued by FirstRand Bank.

The credit risk-sharing facility is part of the IFC's Small Loan Guarantee Program, supported by a financial guarantee from the European Commission's European Fund for Sustainable Development. The Small Loan Guarantee Program pools together IFC risk-sharing facilities with IFC's partner financial institutions to help de-risk and scale up financing for SMEs. This provides FNB's SME portfolio with an extra R1.8 billion of risk capacity, as the IFC will cover 50% of all credit losses associated with the loans originated under this facility.

The objective of the facility is to enable FNB to scale its lending to SME customers, particularly women-owned businesses and businesses involved in agricultural and rural sectors, climate resilience and healthcare.

The proceeds of the social bond, which was strongly supported by the market being nearly three times oversubscribed, is specifically earmarked for lending to women-led businesses, which has been a long-term focus area for FNB, with a book of over R50 billion already originated in this segment of the market.

Commenting on this additional funding capacity, FNB CEO, Harry Kellan, commented that the bank is constantly looking for opportunities to increase its capacity to support SMEs.

"FNB is passionate about supporting our business customers' ambitions and SMEs remain significant contributors to economic development, growth in productive assets, job creation and community upliftment. We are particularly pleased to be able to partner with the IFC to find innovative ways to appropriately manage risk whilst transforming the agricultural sector which in turn supports rural community development."