The two most popular funding options for franchises in Nigeria are commonly equity and debt, and a combination of the two is usually utilised.
Franchises are rapidly increasing and the option to finance the business through acquiring a debt has become more popular since a franchise as a business model alleviates most of the risk that is associated with new businesses.
Entrepreneurs seeking to set up franchises have several debt options to finance their businesses. Future finance owners could consider and explore asset loans, trade finance, project finance, MSME fund and guarantee schemes.
“The various financing options address various business needs, for instance the MSME fund is a dedicated development fund available to SMEs at a single digit interest rate and it is only available to businesses in produce on/manufacturing and agri-value chain and can be utilised to fund asset acquisition, expansion or trade finance,” says George Ogbonnaya, Group Head: SME Banking, First City Monument Bank.
Ogbonnaya will speak at the SME and Franchising Nigeria Exhibition and Congress, organised by Informa Life Sciences Exhibitions. The event will take place for the first time on December 2-3, 2015 at the Eko International Convention & Exhibition Centre, Lagos, Nigeria. The asset loan is collateralised by equipment. If a significant amount of capital equipment is needed, the purchase of the asset could be financed through a bank loan.
Register your attendance for free at www.smeandfranchisingnigeria.com/BusinessDay.
