In order to increase finance access for small and medium-scale enterprises (SMEs) and reduce high rejection of loan applications resulting from poorly packaged and non-bankable business plans, the Bank of Industry (BoI) has appointed 122 business development service providers (BDSPs) to assist small businesses access its credit facilities.
Speaking at the signing of the agreement between the bank and the BDSPs in Lagos last weekend, Rasheed Olaoluwa, managing director, BoI, explained that the move became necessary in order to ensure that viable SMEs access long-term finance that would aid their contribution to job creation and the country’s Gross Domestic Product (GDP).
According to Olaoluwa, the 122 BDSPs, who were selected from 311 applications received nationwide, have a mandate to collaborate with BoI to identify credible SMEs that require finance, while assisting them to develop bankable business plans and proposals to facilitate their access to finance.
“The BDSPs who have been distributed nationwide will be guided by BoI’s Risk Acceptance Criteria (RAC), and will also ensure that a sound business model is developed and presented. They will be
collaborating with BoI to conduct periodic post-finance monitoring of the SMEs as well as providing post-finance services such as mentorship, handholding, financial advice and inculcation of best
practices.
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“They will be supporting the SMEs to develop synergies and sustainable relationships with large enterprises, industrial buyers, and suppliers along the value chain,” he said.
Olaoluwa however added that the bank has identified specific performance benchmarks to ensure that the BDSPs meet their obligations.
“They must make full disclosures to BoI in respect of the SME and any BDSP that misrepresents facts in the course of processing any loan application shall be blacklisted. Business plans and loan applications submitted shall be in accordance with BoI’s Risk Acceptance Criteria (RAC) and other applicable criteria which shall be communicated to the BDSPs by BoI,” he said.
“Each BDSP is expected to achieve a minimum of 10 successful applications annually. This is a worst-case scenario. Any BDSP that fails to achieve a success rate at least 40 percent in terms of successful
loan applications may be disqualified from the renewal of this agreement,” he said.
Olaoluwa, however, stated that customers could equally apply for loans directly to the bank rather than going through the appointed firms.
Reacting to this great opportunity given them to drive SMEs, Macauley Atasie, managing consultant, Nextzon Resort Consult Limited, said: “The biggest challenge facing small businesses is lack of access to credit to start up businesses.
“A lot of initiatives of the Federal Government to support SMEs have failed over the years. We must find a way to model our businesses to thrive. We will get the best out of small businesses to create value at the bottom end of the value chain.”
Also, according to Folasade Odunaiya, executive director, IBFC Alliance, the initiative is aimed at creating an innovative approach towards SME development.
“This initiative serves as a catalyst for economic development. It provides a way for small businesses to actualise their dreams at low costs. We are willing to contribute our own quota to see that this
initiative succeeds. We call for some smoothening along the line because the budget is tight and also commend the close user group developed by the BoI as it would provide an interface for BDSPs to
interact on the way forward,” she said.
ODINAKA ANUDU
