Small scale enterprise credit schemes : administrative costs and the role of inventory norms

This report suggests that by developing inventory norms for small businesses, lenders" administrative costs could be reduced. The report examines the actual costs of existing small business lending schemes and delineates several characteristics of schemes which are low in cost; many of these characteristics are found to be akin to those possessed by informal credit institutions, intimate knowledge of potential clients being a common thread. Since little information exists on small business inventory, primary data from Sierra Leone, Honduras, and Jamaica are used to construct inventory norms, in the form of sales-inventory ratios, for the clothing, furniture, metal products, and bread industries in these countries.