This is the second part of my Microfinance Bankable or Not
series. I hope you read the first part else, click here. Today, the theme is CONFIDENCE in the sector. Is it real or
myth? What you need to know and how you can best be on the advantage side.
Misinformation is the second biggest
problem facing the microfinance sector.
Many cry 'foul' when a mfb is
suggested for business...
May I ask you this? "What are
you going to the mfb for?"
Many, today, know mfbs for credit
lending MEANING you go there to get loan then repay over a period of time
(usually 6 months to 12 months). To this end, who should be wary of the other?
The essence of mfbs, among others,
is to create easy avenue through which funds can be made available to small and
medium scale business owners like you. Some hindrances to loans such as
collateral etc, were reviewed and to a large extent, removed thus presenting
microfinance bank as a business friendly bank.
WHY YOU SHOULD BE CONCERNED
Propagators of 'Microfinance
banks are not reliable' may be ill-informed individuals, illiterates or
non-active poor. While their attempt at accessing loans have been thwart again
and again due to one reason or the other, they carry such grudge to a new level
with image denting.
In truth, many still wonder why
start-up businesses, or roadside beggar, unemployed individuals are not given
financial capacity and room to perform... When such questions are not channel
to the right quarters for answers, rumour and unfounded information about the
sector soon get solid and overtime hurt consumers' confidence.
The two areas mentioned above are
'not good' areas for any microfinance organisation, the former is untested
water while the later is an abyss.
WHAT YOU CAN DO
* START YOUR BUSINESS ON YOUR
OWN
The risk involved in starting
business with loan is much more than going physical with a lion in Serengeti
plain. With what you have, start your business, run it for at least six months,
build your business reputation, know your business strength and weaknesses
before you approach a mfb for financial assistance.
Better still, bank with such
institution for some time.
* SUPPLY YOUR BANK WITH YOUR
YEARLY REPORTS:
There is a saying in banking,
"KYC is never enough" but if you can bring your financial institution
up to date with happenings in your business, you will be given priority in loans
and customer care.
* PAY ABOVE
YOUR REQUIRED REPAYMENTS
Many customers repay their loans
according to the laid down rule. When it's time for a new loan comes, don't be
surprise that a new KYC will be carried out, new guarantors will be required,
IPO etc which might delay the day your loan will come out.
What you can do is to let your
action speaks louder - HOW? Pay above required repayment amount. If your
monthly repayment is 50,000 naira but your business can, conveniently, repay
70,000, do it. By doing this, you are telling the bank's credit approving
committee that you are above what you got as loan. You are not only building a
bridge of trust, you are increasing the bank's confidence level in you.
* IF YOU
CAN, CLOSE YOUR LOANS BEFORE DUE DATE
Loans have period within which such
loan must be fully repaid. If the total months given is what you use in
repaying your loan, you might experience questioning, request for one approval
or statement of another before your loan is approved.
What can ease these bottlenecks is
if you are known to utilize your loan within 3-4months rather than the 9months.
* REQUEST
FOR ANNUAL FINANCIAL STATEMENT OR DOWNLOAD ONE FROM YOUR MFB’s WEBSITE
It is now a tradition for financial
institutions to publish their annual financial statement. This summarizes their
operation/performances for the previous year. The financial statement published
is the same submitted to the regulatory agency thus dem no born them well make dem alter am. You can request for one to
see their performance, they will be glad to give it to you.
P.S. Today, some microfinance institutions are giving out these
loans without interest, some purchase your machine directly for you (to reduce
fund diversion) while others simply do into the business with you (in other to
share the risk)... Get on the advantage side today.
Don Abiodun is business consultant,
a radio host, cinematographer and a blogger.
Follow him on
twitter @donabiodun
***Continue tomorrow 05/11/2014
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