By Peter Egwuatu
Despite the credit crunch in the banking industry , Diamond Bank Plc has called on its customers and other entrepreneurs to take advantage of its Small and Medium Scale Enterprises (SMEs) loan package to boost their businesses.
The Bank revealed this weekend when it held its BusinessXpress Enterprise Series at the garden city , PortHarcourt in River State.
Speaking at a well attended forum for the Bankâ€™s customers, Chidimma Lawanson, Head, Diamond Bankâ€™s SMEs desk also revealed to customers the impending N500 billion expected from the Central Bank of Nigeria (CBN) to boost lending to the productive sector on long-term basis.
She, however disclosed that Diamond Bank offers a specially structured loan to cater for the medical sector of the economy. She said at the moment, banks found it difficult to process demands for large loans to pharmacists and medical doctors because drugs do not qualify as guaranteed stocks which can serve as collateral as in the case of goods like spare parts and some other imports.
Meanwhile, Chidinma advised that when the CBN N500 billion package comes on stream that the SMEs should take advantage of it to further boost their businesses.
According to her, â€œ CBN had realized that real businesses required long-term loans to grow the economy but what was available was short-term fund. Banks were not just being cruel not to lend on long-term basis but that the CBN would not allow banks to lend with shareholders funds but only with deposits by customers, which were short-term funds.â€
Continuing she said, â€œHelp is on the way to boost long-term loans in Nigeria. The CBN is giving us N500 billion n through the Bank of Industry (BOI) to begin this new move. It is one of the interventions from the CBN to help boost production and assist the economy on a productive basis. Modalities are being worked to float the fund. Entrepreneurs should hold till this is outâ€.
For other SMEs like restaurant operators, hair-dressing operators, tailors, parts dealers, etc, she said the SME loan package was structured to fit into their income pattern without recourse to traditional forms of collateral requirements. â€œIf it is for purchase of plants, the plant would serve as collateral because we can impound it if the loan is not performing.â€
She also said stocks can serve as collateral because it can be impounded upon default. And still be resold, unlike drugs that can easily expire and become worthless stock in the hands of any bank that impounded it.
Diamond Bank further urged businesses to embrace the SME accounts that have a maximum turnover limit of N40million per month with not more than N6,000 charge per month instead of N20,000 charge for the same amount in other packages.
The bank also advised businesses to move away from cash transactions, bring all cash transactions into the banks, and embrace e-transfers to enhance the safety of their businesses and attract loans through impressive bank statements.
Some of the business operators who took the Diamond Bank to task on long-term loans include Marcus Oriji of Moo-Hi-Tech Nig Limited (equipment fabricators), Charles Okeke of Tshabron Limited (Cement dealers) and Chinyere Uwaga of Condios Nig Limited (pharmaceuticals).
Oriji particularly poured lamentations on behalf of machine and equipment fabrications, saying the three months often given to them to repay loans did not give room for serious businesses.
He said before one designed and made machines and displayed them for patronage, the banks would come knocking. Other business owners echoed Orijiâ€™sÂ worries, prompting Lawanson to appeal to SME executives to wait for the expected CBN package.
Another participant, Onu Kalagbo from Limelight Resources Limited, an equipment leasing outfit who described the seminar as the first of its kind in the oil city stressed the Port Harcourt entrepreneurs needed more of such confidence building programmes.
Thanking Diamond Bank for the initiative, Kalagbo stated that â€œwith the experience and insight gathered from the seminar, any businessman who has discipline will continue to succeed and grow his business.â€