Firstbank warns SMEs against sourcing finance from “loan sharks

Date:

December 7, 2023.

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Azonuchechi Chukwu.

Firstbank of Nigeria Ltd. has cautioned Small and Medium-sized Enterprises (SMEs) against seeking financing from unlicensed money lenders generally referred to as loan sharks.

Dr Abiodun Famuyiwa, Head, SMEs Banking and Money Transfer of the bank, gave the warning at First Bank SMEConnect Webinar on Wednesday.

The webinar had the theme: “Pioneering SME Success: Growing Profit and Sustainability Goals’’.

The webinar, organised in collaboration with the MESH Consult Ltd., was aimed at providing SMEs with a comprehensive understanding of the strategies and approaches necessary to achieve sustainable growth and profitability.

According to Famuyiwa, in sourcing for finance, it is advisable for SMEs to avoid unnecessary financial pressure by engaging “loan sharks”.

“A number of times when they are trying to raise capital, we discovered that what most SMEs do, desperately, when they cannot get family members to give them money, is to go to “loan sharks”.

“The damage that has been caused by these “loan sharks” are many, because they give you at an interest rate that is off the roof; by the time you are struggling to pay the interest, the capital is still waiting for you.

“Most times, the profit from these businesses is so marginal that you will not be able to cope with the high cost.

“So, please avoid expensive sources of funds like these loan sharks, they can be very damaging to the business. Records show that we have lost some great SMEs because some of them, out of pressure, commit suicide,’’ he said.

He urged them to always seek financing from reputable and regulated financial institutions.

Famuyiwa, while providing growth levers, advised SMEs to ensure that their businesses are registered, either as a sole proprietor, private company or a limited liability, before approaching banks.

He urged SMEs to have proper financial records, adequate sales turnover, strong cash flow from business, tax identification number and ensure they also filed their annual returns.

He advised them to ensure they had a valid bank verification number, saying it is important for their businesses.

He also advised them to take advantage of technology to improve their business, especially to boost their relationship with their customers.

He said that Know-Your-Customer documents and clean credit bureau report was also important when approaching the bank for finance.

He introduced some of the products that Firstbank has for SMEs that would aid their business and they would not need them to pay an Annual Maintenance Charge (AMC).

“In Firstbank, we have a FirstSME current account that you can just open without paying any AMC and be running your business either as a nano, micro or small and medium-sized enterprises.

“The account comes in three variants with exciting features – FirstSME Basic, FirstSME Classic and FirstSME Deluxe; with these, you can pay money into that account without any AMC charges.

“This is one of the strong value propositions that First Bank has put forward to support every business; whether that business is registered or not, you can run the business,’’ he said.

He added that the bank also had other bouquets of products that would support any type of business and meet their requirements.

The highlight of the programme was a free offer of the Firstbank Point of Sale (PoS) machines to over 300 SME operators who joined the meeting.(www.naija247news.com).

Azonuchechi Chukwu
Azonuchechi Chukwuhttps://gravatar.com/azonuchechivchukwu
Azonuchechi Chukwu - Business Journalist at Naija247news.com Azonuchechi Chukwu is a seasoned business journalist contributing to the insightful coverage of economic and financial news at Naija247news.com. With a passion for unraveling the complexities of the business world, Azonuchechi brings a wealth of expertise and dedication to his role. As a Business Journalist, Azonuchechi specializes in providing comprehensive analyses of market trends, corporate developments, and economic indicators. His in-depth reports offer Naija247news.com readers a nuanced understanding of the forces shaping the Nigerian and global business landscapes. Azonuchechi Chukwu's commitment to journalistic excellence is evident in his ability to translate complex financial information into accessible and engaging narratives. Whether exploring stock market fluctuations, corporate strategies, or economic policies, he strives to deliver content that empowers readers with valuable insights. With an educational background in business and a keen interest in the intersection of finance and technology, Azonuchechi stays at the forefront of industry dynamics. His coverage extends beyond traditional financial reporting, encompassing the dynamic realms of fintech, entrepreneurship, and sustainable business practices. Azonuchechi Chukwu's work goes beyond the surface, aiming to foster financial literacy and awareness among Naija247news.com's audience. By demystifying economic complexities and shedding light on emerging opportunities, he plays a pivotal role in keeping readers well-informed in the fast-paced world of business. As Naija247news.com's Business Journalist, Azonuchechi Chukwu continues to make meaningful contributions to the platform's mission of delivering timely, accurate, and relevant business news to its diverse audience. His dedication to journalistic integrity and his ability to navigate the intricacies of the business realm make him an invaluable asset to the Naija247news.com team.

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