sijuola olanubi
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Commercial banks still represent a major source of funding for businesses today. While bank lending, particularly to SMEs has been low in this part of the world, entrepreneurs with viable businesses who meet a bank’s lending requirements continue to access funding for their enterprise.
First Bank, an active participant in SME loans financing in Nigeria, offers the following unique products for SMEs seeking to access funding for their business ventures.
1. Local Purchase Order (LPO) Finance
This is a loan facility targeted at small scale businesses involved in the supply of consumer goods. It is designed to provide a short-term loan to business owners in this line of business seeking capital to either ensure a constant supply pipeline or for the expansion of their businesses.
Features: A special feature of this short-term loan is that you can request for up to 70% of the total cost of your orders. The loan facility is for a 120 days duration after which a 60-day extension can be applied for.
Requirements: To be eligible for the loan, your business must make an annual turnover of up to N500 million and your clients must be on the bank’s “list of principals”. That is, you can only use the loan to transact business with companies approved by the bank. In addition, the collateral for the loan is an agreement to carry out the banking of all your business proceeds with First Bank.
2. Secured Term Loans & Overdrafts
This loan facility is meant to provide retail business owners’ access to overdrafts needed to meet the cash flow requirements of their businesses.
Features: Access to a loan of up to N20 million with repayment spread over 12 months. However, you can only access an amount equivalent to 30 percent of your turnover in the past 6 months.
Requirements: Collateral for the loan includes “legal mortgage over property” in the bank’s approved locations and treasury bills.
3. Commercial Mortgage
This loan facility is meant for businesses seeking capital to acquire landed properties.
Requirements: To be eligible for the loan, you must have been running your business for the past 5 years. You must also have been operating an account with the bank for the past 6 months. In addition, your repayment plan must be based on the revenue from your business and not on gains from the property to be funded. Furthermore, you must carry out all necessary insurance coverage on the property such as “mortgage protection assurance” and fire insurance.
4. Operational Vehicle Loan
This loan facility is designed to provide a substantial part of the capital business owners require for purchasing vehicles to be used to facilitate the daily operations of their businesses and not for commercial purposes.
Features: Amount accessible under this plan ranges from N100 000.00 to N10 million with repayment spread over a space of 3 years.
Requirements: The bank will only provide up to 60 percent of the total loan while the applicant is required to present 40 percent of this amount before the loan can be granted. Furthermore, vehicles can only be purchased from companies approved by the bank and an insurance coverage must be provided for the vehicles after the loan has been accessed.
For more information, you can go to www.sme.firstbanknigeria.com
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