ByRonald Olusegun Olaiya
Managing Consultant/CEOBestride Consulting Limited
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
Development Funds
Through many initiatives of the government, various funds were established for SMEs. The lending rates under the funds are lower than market rates (3.75%-5% p.a.).
These funds are channeled through the following financial institutions (FIs):
- Commercial banks, finance companies, Islamic banks, development financial institutions, etc
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
Objectives
To ensure that the specific economic sectors get access to financing at reasonable cost; and
To increase the productive capacity of the specific economic sectors
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
Loan Processing
• Financing is granted in the form of loan, not grant.
• FIs bear the credit risk. • Normal credit assessment of the FIs is based on
applicant’s risk profile.• Main criterion is viability of business / project. • Other factors. (not exhaustive)
- Character of the applicant, Ability to pay back the loan, capital commitment, business condition, etc.
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
SME Special Funds
Fund Objective
1. Funds for Small & Medium Industries
To promote SME activities in both the export and domestic sectors
2. Funds for Food
To increase food production
3. New Entrepreneurs Funds
To help stimulate the growth of small and medium-sized enterprises.
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
SME Special Funds Cont’dFund Objective
4. Rehabilitation Funds for Small Businesses
To provide assistance to viable SMEs that are constrained financially to revive their facilities, plants, machines, equipments ,etc
5. Entrepreneur Project Funds (EPF)
To provide financing to entrepreneurs who have been awarded contracts/ projects by the Governments or Government related agencies, statutory bodies and reputable private/ public companies.
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
Credit Enhancement
Credit Guarantee by government or its relevant agency provides guarantee for SMEs with little or no collateral.
Borrowers are subjected to loan agreement
With the scheduled repayment by borrowers, it will enable the Government to assist other eligible borrowers
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
Client Charter of FIsFIs are required to display their client charters on the SME loans. The client charters include:
Documents and information required from SMEs;
Eligibility criteria; and
Loan processing time. Normally, the processing time for loan application is 30 days from the date of complete submission.
FIs are also required to inform the applicants on reasons for rejection of loan applications.
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
Complaint Units at FIs
All FIs have established complaint units as an avenue for customers to lodge complaints:
FIs have to settle the complaints within reasonable period of time.
Customers of FIs could also forward their complaints to:
SME Special Unit of the relevant supervisory agency
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
Eligibility Criteria
Ranking of Criteria used in assessing SME borrowers are as follows:
• Intended purpose of loan
• Repayment of previous loan
• Repayment schedule
• Type of business activity
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
Eligibility Criteria Cont’d
• Size of loan relative to size of business
• Availability of collateral • Liquidity ratio
• Net profit to sales
• Existing profitability
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
Eligibility Criteria Cont’d
Projected income
Loan activity at other banks
Equity stake in business
Trading experience
Trade debtors
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
Eligibility Criteria Cont’dTrade creditors
Length of time doing business with bank
Charges on assets
Gearing
Government guarantee of loan
Cvs of clients
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
Supporting Documents
• Company information
• Management information
• Financial information
• Security information
• Business operation information
• Other information04/07/23 14
Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
SME Units at FIs
• All FIs have established dedicated SME Units.
• The roles and functions include:
Identifying SME financing needs;
Organizing training, courses and seminars;
Providing cash management services; and
Advisory services i.e. financial management.
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
SME Special Units at FIsThey are established to assist viable SMEs by:
• Providing information on the various sources of financing available to the SMEs;
• Facilitating SMEs in their loan application process;
• Addressing the difficulties faced by viable SMEs in securing financing; and
• Providing advisory services on other SMEs’ financial requirements.
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
The Inescapable Reality
Reality - No matter what, it’s not everybody that can afford to access development funds/loans despite their inherent benefits. Reasons? Answer – Stringent conditions
Way out – All those who cannot access development loans are advised to opt for network marketing or MLM that is usually cheaper, at least to start with
Those who have successfully accessed them are also advised to take advantage of network marketing or MLM to add to their streams of income
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
Alternative Lines of Business
Listed below are links for alternative businesses that can be pursued by interested persons:
http://www.sfi4.com/12058229/FREE
http://www.tripleclicks.com/12058229/wave
http://www.profitclicking.com/?r=56cKwzXTq0&p=opp
https://www.profitablesunrise.com/?upline=olusegunolaiya1
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
ConclusionThe Government has introduced various initiatives and promotedvarious financing schemes to assist the SMEs. However, to ensure success SMEs should also:
Enhance competitive edge, business viability and quality of product or services offered.
Implement effective strategies to enhance accessibility to technologies, innovation, technical expertise including finance and skills in business management.
All entrepreneurs are also advised to explore the opportunities being offered through network marketing or multi-level marketing
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
About the Author
Ronald Olusegun Olaiya is a Management Consultant, Online Marketer & Entrepreneur. For enquiries on this write up and other business interests, please contact him via [email protected]; [email protected] or Mobile Phone +2348184559437
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
Thank You
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Bestride Consulting Limited:Criteria For Accessing Development Fund Through Financial Institutions
TagsDevelopment Fund, Criteria for Accessing Development Fund, SMEs, Network Marketing, MLM, Multi-Level Marketing, SFIMG, Triple Clicks, Profit Clicking, Profitable Sunrise
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