{"id":39566,"date":"2019-06-28T19:10:06","date_gmt":"2019-06-28T19:10:06","guid":{"rendered":"http:\/\/localhost:8888\/cregital\/disha\/2019\/06\/28\/scaling-your-business-with-bank-loan-what-you-need-to-know\/"},"modified":"2022-02-07T09:35:02","modified_gmt":"2022-02-07T09:35:02","slug":"scaling-your-business-with-bank-loan-what-you-need-to-know","status":"publish","type":"post","link":"https:\/\/msmehub.org\/staging\/6671\/scaling-your-business-with-bank-loan-what-you-need-to-know\/","title":{"rendered":"Scaling your business with bank loan? What you need to know."},"content":{"rendered":"

It is the dream of every entrepreneur to birth and nurture a business that can be either sold at a premium or handed down to future generations. However, experts put the failure rate of Small and Medium Enterprises (SMEs) and startups within the first five years of their existence at 50% or more. One of the top reasons for such business failure is lack of adequate capital or poor management of available ones. As I stated in\u00a0\u00a0Effective Cash Flow Management: The lifeblood of any business<\/a>,\u00a0<\/strong>if your business does not have sufficient cash to meet its obligations as they fall due, the business is heading for collapse. Considering the fact that most entrepreneurs in Nigeria go into business with capital drawn from personal savings or assistance from family and friends, which is often not enough, I have decided to put together this piece as a guide to entrepreneur seeking to scale up their businesses with bank loans.<\/p>\n

Though business owners can grow their businesses organically from retained earnings or further injection of equity, this route is usually unnecessarily slow, making it difficult for such businesses to keep pace with industry trends. This is of course with exception to big corporations that are capable of making and retaining so much profits that can be ploughed back into the business or easily go to the capital market to raise funds. Ordinarily, for Micro, Small and Medium Enterprises (MSMEs) and startups, the banks should be the bridge between the entrepreneur’s ideas and business reality. However, in Nigeria, there has been accusations and counter-accusations by both parties. Entrepreneurs usually would say Nigerian banks do not support ideas and small businesses. The banks on the other hand always put up a defence that most MSMEs and startups do not meet their minimum risk acceptance criteria, and a large percentage of those they took chances on almost certainly default in repayment in the long run.<\/p>\n

Nevertheless, I can boldly tell you that Nigeria banks still fund small businesses. For instance,\u00a0Guaranty Trust Bank<\/strong>\u00a0alone has rolled out a number of MSME specific loans in the last few months. These include:\u00a0Fashion Credit<\/strong>\u00a0(for operators in the fashion industry),\u00a0Food and Drinks Credits\u00a0<\/strong>(for entrepreneurs\u00a0in the food industry),\u00a0Cash Flow Credit\u00a0<\/strong>(for businesses in the\u00a0education and healthcare sectors<\/strong>, for now), among others. Interestingly, the aforementioned loans are without collateral as you know it. That is, you are not required to pledge a landed property with a Certificate of Occupancy (C of O) as one of the conditions for accessing the loan. Loan extension to MSMEs in Nigeria may not have gotten to the desired level but it is getting better, thanks to several CBN intervention funds and adoption of the Bank Verification Number (BVN).<\/p>\n

In order to access MSME loans without hassles, below are some of the things you need to know:<\/p>\n