Clear business model or concept to be captured in the business plan, clear marketing and sales strategy, competent and experienced management, clear competitive advantage and strong financials have been identified as key remedies to the challenge of access to finance faced by SMEs.
Executive Director, South, Fidelity Bank Plc. Aku Odinkemelu, made the assertion in Enugu at the Bank’s maiden edition of the regional conference for the South-East region, themed ‘Positioning SMEs for Growth in the South-East Region’ recently.
Odinkemelu, who was the lead discussant on the panel discussion session on ‘Overcoming Barriers to Funding’, said that SMEs in Nigeria are confronted with key challenges of low-levels of business management and finance.
She identified the key challenges to include poor managerial/entrepreneurial skills and inadequate business processes; inadequate research/market information to determine business viability; poor access to market; limited access to the export markets; inadequate record keeping.
Others are absence of proper business planning; lack of long term strategy and poor business model; low technology leverage; key man risk, etc, as well as finance, which has to do with limited options; high cost; amount and tenor.
Odinkemelu tasked SMEs to possess what she called the 5Cs of Credit- conditions, character, capacity, capital and collateral- for banks to enable them become more attractive and eligible for funding.
She said banks want to know the purpose of the loan, local economic climate and conditions within the industry and other related industries that could affect the business.
“Banks also want to see a measure of integrity and trustworthiness. Your credentials and references, credit reports, references from customers, suppliers, staff and other third parties, etc., technical competence, managerial competence, financials, market size/profile, service offerings/income lines, pricing strategy, etc, money promoter must have invested in the business evidencing his commitment, and secondary repayment source,” she said.
Earlier in his remark, the MD & CEO, Fidelity Bank Plc., Nnamdi Okonkwo, said the theme of the conference was at the heart of the bank’s passion and commitment to building entrepreneurs in the South-East region of Nigeria.
“Whilst we have always supported small businesses, our renewed focus on the SME segment is driven by the increasing role of SMEs as critical agents of economic development and transformation in Nigeria,” he said.
“In line with this, we created a dedicated SME Banking Division (Fidelity Managed SMEs) which focuses on providing solutions to the challenges faced by SMEs through a multifaceted approach, one of which is our flagship SME-focused radio programme (the Fidelity SME Forum), a major component of the business advisory and business management capacity building end of our business.
“These advisory and capacity building components are very much complemented by a host of other essential services and resources. Therefore, the Fidelity Regional SME conference series is intended to further democratize the knowledge sharing process that our national SME conference series, our SME-focused radio programme and our other business management capacity building platforms already present to aspiring and existing entrepreneurs and is expected to go a long way in cementing our position as the leading SME bank in Nigeria.”