• Saturday, May 25, 2024
businessday logo


Expert at export clinic in PH reveals what banks want from loan-seeking SMEs

Nigerian Export Promotion Council (NEPC)

Small business operators in the South-South learning how to join the export league have been told to first understand how to be export-ready and what banks want before granting loans to entrepreneurs.

The revelations emerged at the one-day export clinic at Aldgate Hotels on Abacha Road in Port Harcourt organized by the Nigerian Export Promotion Council (NEPC), south-south zone where Executive Secretary/CEO of the Institute of Export Operations & Management (IEOM), Ofon Udofia, opened the eyes of the trainees on export financing and sourcing market for export products.

The CEO who was represented by director of training, Olalekan Paul Akande, mentioned credit record as the most important indicator the banks look out for. He said the banks monitor the credit behaviour of the SMEs to see how they handled loans in previous situations. “The bank verification number (BVN) they ask for is used to monitor all your bank accounts to know how you have behaved”.

Udofia also said experience counts a lot because the lenders want to know whether the entrepreneur has full grasp of the business he is into especially in an era when Nigerians are feared at home and abroad. “The firm must show consistency, character and business experience along the line”.

The lenders also want to know if the proposed business would likely generate good cash flow, whether it is viable. Sector risk is said to be another watching point that banks look out for. He said agric had high risk rating in the past, making banks to steer clear of the sector, but insurance and government guarantees have come to de-risk the sector, he noted.

The last major item the banks wants to be sure of, he hinted, is the quality of collateral deposited by the would-be borrower. He answered many question on that item and why some banks demand for i50 per cent value of collateral to cover a loan.

The entrepreneurs were also made to understand that sourcing for market could be the biggest and most challenging part of the export trade because once a buyer is found, other factors seem to fall into step easily.

Akande speaking also for Udofia urged the budding exporters to endeavour to know everything about the product they want to go into, the major players in it, the sources, the use, and who buys. To get buyers, the upcoming exporter would need to build a relationship circle and expand their network for a start. They were advised to use technology (whatsapp, instagram, etc) to reach markets around the world.

He urged them to imbibe the culture of perfect planning and organization to become problem-solvers. Many participants who spoke said their eyes have just been opened to new possibilities, saying they now know where to start and who to meet in times of challenge.

Declaring open the clinic on behalf of the Executive Director/CEO, Olusegun Awolowo, the south-south zonal coordinator, Joe Itah, said the council discovered that most entrepreneurs in the zone that were eager to go into export business did not know where to start.

He said some who started derailed along the line, thus the NEPC resolved to start afresh and groom the budding and idle exporters. He assured that the complaint of mentorship pointed out by most participants is not an issue because the council is ready even on weekends to put any exporter through.

He also said all the agencies and other organizations that have anything to do with export business have been brought together to explain details to the SME operators while financing has since been treated by bring banks and lending agencies to make presentations.

The zonal coordinator explained that agencies at the ports have been made to work together to reduce hassles for exporters while the SMEs are encouraged to operate as cooperatives to make things easier.