E-Financial
What SMEs Must Do Before Applying For a Business Loan
By Adeniyi Ogunfowoke,
Finding the right business idea is the single most important thing in building a successful business; raising capital is the second most important if you must nurture the idea of growth. While the sources of capital still remain largely the same – as they were in the last 2 decades, certain factors must be considered by entrepreneurs looking to raise capital through loans. Jumia, Nigeria’s number one shopping destination shares a few of the important considerations.
Firm up your business plan
No doubt, as an entrepreneur, you have a business plan that serves as a compass for your business. Nonetheless, if you’re at the precipice of obtaining a business loan to advance the successful running of your business, it’s important that you firm up your business plan, as potential lenders will scrutinize every single element contained in the plan. You might likely jeopardize your only chance of raising capital if there are avoidable loopholes in the plan. A potential lender will be keenly interested in knowing that you are running a credible business and that you have the knowledge and skill-sets required to grow it into something great. Include absolutely everything that has to do with your business, such as goals, competitors, past and projected revenue and expenses, market analysis, and how you intend to grow your company. This will be the first thing they read, and it could be the last if they are not immediately interested.
Research your borrowing options
There are a whole lot of options for loans today. You have the banks, online loan lending platforms and companies offering loans to entrepreneurs. A good example of the latter is Jumia Lending where vendors selling on the platform are granted easy working capital with no collateral. The rules for getting a loan are simple: You must have been selling on Jumia for at least 6 months, your 6-month average sales revenue on Jumia must be greater than N100,000 and your 6-month average items sold on Jumia must be more than 25 items.
Prepare financial statements
You will want to include any past financial statement you can provide for the lenders and future projections. Come up with a plan that you will follow, and show projected numbers so that your lenders can see your goals clearly and know that you will be able to make enough money to pay them back. Include your cash flow statements, income statements, and balance statements for the past three to five years, and show your estimates for these statements for the next few years, taking into account all seasonal changes in your business and how you will use the money you are borrowing.
Know your capacity for collateral
Certain types of loans will require you to put down some form of collateral. If this is the type of loan you choose, you will need to have a good idea of how much your form of collateral is worth. Lenders will want to know this number and you will want to know that you have something of tangible value to secure the loan. Just make sure that you’re not going to default on the loan and lose whatever property you use.
Understand what the loan will cost you in the end
You will want to know exactly how long it will take you to pay off your loan. Find out what kinds of offers various lenders will be able to give you, and use those interest rates and fees to estimate your payments. All of this information should be included in your financial statements, but you should also add up all of your payments to see how much the loan will cost you. Know all of the terms and conditions attached to each loan offer before you decide which one will be best for you, and be able to show the lenders that you are a good investment.
Titan Trust Bank has selected Oracle FSS for its core and digital banking technology, it is understood.
The start-up bank recently obtained its license by the Central Bank of Nigeria (CBN).
It’s understood that Temenos and Infosys also competed for the deal.
The shortlist came down to the two most widely installed international core systems in Nigeria, Infosys’ Finacle and Oracle FSS’s Flexcube.
The Nigerian banking sector has seen a great deal of upheaval over the years, with many mergers, start-ups and closures. Flexcube is a well respected name since the late 1990s (the pioneer was Access Bank, now one of the country’s top five banks) and has been a commonly selected platform since then.
The new bank is believed to be one of five to have gained regulatory approval of late (Globus Bank is another).
Local media sources say the new licences stem from the Central Bank’s desire to attract new investments into the sector and better serve the country’s 50 million+ unbanked and under-banked citizens.
Titan Bank is said to be headed by a former executive director of Heritage Bank (which is a Finacle user).
Oracle FSS did not respond to request for comment.
International Monetary Fund (IMF), has appointed Tony Elumelu, Nigerian billionaire and group chairman of Heirs Holdings, owners of United Bank of Africa, to its advisory council on entrepreneurship and growth, convened by Kristalina Georgieva, the fund managing director.
The announcement was disclosed in a statement on Friday.
According to the statement, the IMF advisory council comprises global business leaders, policymakers, and academics dedicated to identifying and addressing regulatory barriers to entrepreneurship.
The IMF said Elumelu will be instrumental in ensuring that Africa’s entrepreneurship is central in policy making.
“Elumelu, Africa’s leading advocate of entrepreneurship and whose Foundation has funded, mentored, and trained over 25,000 African entrepreneurs since 2015, champions entrepreneurship as the engine for the economic transformation of Africa,” the statement reads.
“A self-made entrepreneur, Elumelu’s embracing of entrepreneurship is fundamental to his concept of Africapitalism, his belief that Africa’s private sector can and must play a leading role in the continent’s development, making long-term investments that deliver social and economic value.
“Elumelu will be instrumental in ensuring that Africa’s entrepreneurial potential is central to global economic policy making.”
Speaking at the inaugural meeting of the advisory council on March 26, Georgieva said the appointees would share their experiences on how macroeconomic and financial policies “can provide a supportive environment for innovation, entrepreneurship, and productivity — key ingredients for a thriving private sector and strong economic growth”.
Africa’s Micro, Small, and Medium Enterprises, fintech industry, scaling remittances, and cross-border payments will be the driving forces behind the continent’s digital ballooning payments system, which is estimated to reach $1.5 trillion by 2030.
This is according to a MasterCard-commissioned study by Genesis Analytics, which states that the digital payments economy is growing faster on the continent.
This comes as the World Bank says Sub-Saharan Africa has shown significant growth in financial inclusion over the past decade, much of it driven by mobile money account adoption.
Dimitrios Dosis, president, Eastern Europe, Middle East and Africa at MasterCard, comments: “Africa is filled with immense possibilities, and its people have the potential to shape the global economy in the decades ahead.
“MasterCard remains deeply committed to driving digital transformation across the continent, working closely with entrepreneurs, merchants, banks, start-ups, telcos, and governments. By increasing our investments, expanding innovation, and fostering inclusion, we are helping build a more connected and accessible digital future.”
The payment technology company went on to say as a longstanding technology partner to Africa, its continues to strengthen its commitment to the continent’s digital growth through strategic investments, public-private partnerships, and innovation initiatives that drive financial health and economic growth.
In addition, it says trends in Africa signal a strong shift towards digital transactions, with businesses and consumers increasingly embracing contactless solutions, further accelerating economic participation and financial accessibility across the region.
“For over five decades, MasterCard has worked alongside African governments, businesses, and communities to advance financial inclusion and economic development.
“With Africa projected to host nine of the world’s 20 fastest-growing economies, we are focused on leveraging our expertise and a technology to support the continent’s continued digital transformation.
“Our investments today will help build a more resilient economy for the future,” says Mark Elliott, division president, Africa, MasterCard
By fostering collaboration with key stakeholders, MasterCard says it aims to enhance digital connectivity, expand economic opportunities, and enable millions of people and businesses to thrive in the digital economy.
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