By Femi Adeoya

For most people to make it big as entrepreneurs and for most small and medium scale businesses (SMEs), even starting a business and ultimately expanding the business either in Nigeria or elsewhere, there is usually a need to get funding loans from banks.

In the past commercial banks in Nigeria has been quite supportive to business funding. With your basic business plan, collateral security, bank statements to support your turnover requirement for the loan, cash flow statement to determine liquidity and feasibility studies to determine viability of the business, it’s almost certain you would get your loan request approved ceteris paribus conditions.

As an accountant myself, I have seen several loan requests through in my 18 years of professional practice. Once you have an averagely good relationship manager to ‘defend’ your request and you satisfy what’s usually called the 3 Cs of credit: Credit, Collateral and Character, you are likely to get your loan request executed.

Banks often evaluate risk, collateral, and reputation of the borrower, past payment history, availability of capital, and the amount of time required to complete and manage the transaction. Modern lenders simply sum these up as the 3 Cs of credit: Credit, Collateral and Character.

I know of several business investors and entrepreneurs who have being able to expand their business scope and reach for the singular reason they were able to access loans from commercial banks. However obtaining loans in the last four years from any Nigerian bank especially by (SMEs) has become very difficult if not impossible. Many people with viable ideas to start a business have been unable to do so due to lack of capital. And many businesses have been unable to expand for lack of support from banks.

READ MORE: https://skytrendnews.com/2019/05/17/renmoney-24-hour-no-collateral-loan-scam-or-balm/

Some of the reasons adduced to this are due to high default rates, liquidity squeeze of banks by the Central bank of Nigeria, poor credit ratings. It has also been discovered that most banks in Nigeria now find government bonds more attractive and risk free and opt for it rather than taking the ‘risk’ of loaning to SMEs. It should be noted that over 90% jobs from Nigeria come from SMEs accruing almost 50% of our GDP, so abandoning this sector will limit the nation’s growth but that is a topic for another day.

Renmoney rate is a killer. Better you approach Bank of Industry or Islamic bank in Nigeria or even a cooperative is better.

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