Access Bank has been talking about business finance opportunities it creates for micro, small and medium enterprises, MSMEs, its radio program in the Inspiration 92.3FM.
In a recent episode monitored by our reporter, David Ita, Team Lead, non-Financial Services at Access Bank gave insight on how to build a bankable business.
What is a bankable business
A bankable business is one that is intentionally positioned to enjoy banking services with no inhibition to accessing funding. These are businesses with strategies, clear focus, vision, mission, a clear business plan, registered and most importantly, structure.
How do entrepreneurs build bankable businesses
First of all, at the start of the business, the good entrepreneur would have a business plan that lays out what he intend to achieve and how he intends to achieve it. This includes proving that there is a market for the kind of business he is going into in the market analysis. It also means he proves that the market is sizeable enough to guaranty strong revenue stream and profit and also for sustainable growth. In the business plan he also shows revenue model.
Another thing that is imperative for building a bankable and successful business is a clear financial record. Your financial record is the report card of what your business has been doing, is doing and an insight into what it may do in the near future. Lack of proper financial record is the reason why most businesses cannot access funds from banks.
Explain more on this record keeping for the micro, small and medium enterprises, MSMEs
There is no doubt that a lot of MSMEs have records of their daily business transactions in their personal accounting books. But the truth still remains that, that personal accounting book can be doctored. Having a personal accounting book is definitely the first step, but for a clearer record, it is imperative that your transactions are captured and routed through a terminal such as PoS or bank statements.
This allows the bank to size up your business even without talking to you. A lot of our customers at Access Bank can tell you that we’ve called them up to ask if they have any need for growth support. This is possible because we are tracking their progress through a captured route of transaction. We have made transaction easy for our customers.
A lot of MSMEs say they have met most of the requirements for credit facilities but they still get turned down by banks, why?
Banks are primarily in business to make money, and one of the major vehicles through which that is achieved is through lending money to its customers, to the entrepreneurs. It is also good to know that the money the banks lend out is depositors’ money that has been entrusted to the banks. So before the bank will lend a penny out to any business, the bank must do its due diligence to ensure they don’t lose depositors’ money.
That is why the bank has risk assessment, list of criteria to check who qualifies for loan. An essential part of that list is our 5Cs of lending, which are Character, Capacity, Collateral, Condition, and Capital. For instance, let’s take a look at capacity. Assuming you are looking for a loan of N1 million and your business capacity is a hundred thousand, you can’t qualify for that loan. Loan are given based on the capacity of the business seen in the volume of business it handles currently.
What are the loan options for MSMEs in Access Bank?
We have loans like Access School Advantage loan which is tailored for private schools and you can access up to N10million and pay termly as you collect school fees. The loan is available for school renovations, purchase of school bus, generator, stocking up school library and laboratory, purchase of school uniforms, payment of staff salaries etc.
There is Access Medi-loan which is for SMEs in the health sector. It is offered in partnership with the Medical Credit Fund (MCF), and it comes with an added benefit of technical advisory support from MCF for healthcare businesses.
Our customers can enjoy up to N3million without collateral to meet their working capital needs and up to N350 million for equipment financing and business expansion.
Also, there is the Creative Industry Loan, through the CBN on-lending initiative targeted at the Creative sector. Access Bank supports businesses in the fashion industry, IT, Movie and Music production. You can enjoy up to N500million at a discounted interest rate of 9% for a repayment duration of up to 10 years.
If your business does not fit into any of the categories stated above, there is no worry, we have diverse offerings to cater to every business within the MSME segment. Even better, you do not have to run your account for any length of time to qualify. You are eligible to be considered for loans up to N5 million as soon as you open a Diamond Business Advantage account. All you need to do is head to the nearest Access Bank branch to open a Diamond Business Advantage account.