By Nkiruka Nnorom

The Director of Enterprise Development Centre, Pan Atlantic University, Lagos, Mr. Peter Bankole, has urged financial institutions, especially deposit money banks to take steps to de-risk the Small and Medium Enterprises, SMEs, in order to make them more attractive for bank funding.

Bankole, who spoke at the maiden edition of Fidelity Bank Annual SME Conference in Lagos, said that banks are averse to extending credit facilities to start-ups due to fear of possible collapse.

This, he said, is very challenging to small business owners and hampers the growth needed in the sector.

“Most banks are willing to lend to people who have collaterals, but for the small businesses, which will one day, if well developed, become one of the big ones, they don’t like to fund them, they want already made and this is a big challenge to SME sector.

“What we are saying is that the banks must be willing to fund that process of de-risking the SMEs and most of them are unwilling to. There are few that are funding that today, I can tell you the likes of Fidelity Bank is one of them, few of them are doing that, but majority are not doing today,” he said.

He noted that one of the ways to de-risk the sector is to build capacity of the business owners to make them understand their businesses better. However, on the part of the business owners, he said they should prepare themselves well enough to attract the necessary funding by keeping good records and helping people who are not part of the business understand how the business can make money.

He said, “Most small businesses don’t look good; they don’t look good because the person that wants to fund you don’t know how they operate. Don’t forget the money that the bank wants to give you is not their money; it is the money they collected from shareholders and depositors.

The banks owe the shareholders and the depositors. So, they also need to be careful to ensure that whatever money they give out, they will also get it back and also with interest.”

Others that spoke at the event emphasized that trust, integrity and creditability as essential in building sustainable business and attracting bank loans.

“If you have credibility and trust without collateral, you will make it. A lot of people I know have told me that without trust, it would have been impossible for them to grow to the level they are today”, he said.

Earlier, the Managing Director of Fidelity Bank, Mr. Nnamdi Okonkwo, explained that the conference was planned to provide insightful access to range of key factors affecting the development of SMEs in Nigeria from a wide array of SME development stakeholders; deeper understanding of Fidelity’s innovative range of SME-tailored products and services; access to robust advisory/ networking platform that could open new doors and opportunities..