‘Lengthy process’ killing SMEs loan from BoI – NASME

Cooperative societies gets N2bn loan from BoI
Bank of Industry (BoI)

‘Lengthy process’ killing SMEs loan from BoI – Many Small and Medium Enterprises (SMEs) cannot get Bank of Industry (BoI) facilities because of the lengthy process, the Nigerian Association of Small and Medium Enterprises (NASME) has said.

Its Senior Special Technical Adviser, Mr. Chris John Mamuda, said in Lagos that most SMEs did not understand the processes.

“Everybody just believes because that the government says there is money for loan, you just go and collect without any proper documentation and planning.

“For instance, if BoI wants to give loans, there are certain processes involved – ranging from the purpose of the loan and the collateral involved to other demands which you must meet. However, most enterprises don’t want to go through this process; that is the lack of understanding,” he said.

He said BoI’s interest rate is at nine per cent while commercial banks are at 22 per cent, and with commitment fee from BoI, it may be 10 per cent.

“However, with moratorium from them, they can say you have  six months’ grace before you start repaying, but the problem is, most of these business operators still do not understand and that is why we have huge unpaid loans even from BoI. Sometimes the loans favour foreign SMEs more than the local ones,” Mamuda said.

He said over the years, SMEs have contributed to the gross domestic product (GDP) of the country and added value to products.

He added that SMEs have created jobs and promoted economic diversification scheme of the Federal Government.

He, however, said all these do not come without challenges, adding that these challenges are still inhibiting the sector’s capacity to contribute to the economy.

He said: “The challenges are many, but I categorise them into two: internal and external. The internal challenges range from poor organisational skills, inadequate record keeping and data to know new business trends and how to catch up with international standards. There is also poor development and product packaging skills. We all know very well that you can’t grow a business when you’re not abreast with global trends and also when you don’t have adequate data to know what is in demand.

“The external challenge is  where regulation, multiple-taxation, absence of business advisory support and access to loans come to play. Taxes being charged on SMEs are not encouraging, and also advisory support from the agencies is not available. Access to start-up loans is a huge challenge as there is lack of understanding of the procedures of securing such loans by the SMEs.”

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