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Chuks Udo Okonta
Stanbic IBTC Holdings PLC, a member of Standard Bank Group, is now offering pragmatic loan solutions to Small and Medium Enterprises (SMEs) in Nigeria.
The introduction of this loan offer essentially complements the bouquet of product offerings by Stanbic IBTC, as it aims to be the leading end-to-end financial solutions provider in Nigeria.
The creation of this credit solution is geared towards encouraging SME growth in an ever-evolving economy. SMEs are the backbone of most economies, particularly in developing countries. These enterprises account for many businesses in nations as they are significant contributors to job creation and economic development.
In Nigeria, SMEs contribute over 48 per cent to the national gross domestic product (GDP) and account for about 96 per cent of businesses, which in turn creates about 84 per cent of employment in the 36 states and the Federal Capital Territory (FCT).
Despite the substantial contribution of SMEs to the Nigerian economy, challenges still abound that hinder the growth and development of the sector. These challenges include limited access to capital and financing, inadequate public infrastructure, and recently, the COVID -19 pandemic. The pandemic caused several distortions to the economic framework of the country, causing several startup businesses and SMEs to fold up.
Furthermore, the Nigerian business terrain is very challenging. According to a World Bank report, Nigeria ranked 131 out of 189 countries in the 2020 Ease of Doing Business index. In addition, access to finance is a key constraint to SME growth.
These challenges have driven Stanbic IBTC to introduce the SME short term loan facility. The SME loan is aimed at augmenting working capital to finance various business projects and bridge urgent cash flow needs.
This initiative enables SMEs to take loans with ease and convenience. It also offers benefits which include repayment flexibility and limited documentation with no collateral. The ease of accessibility to funds is worthy of mention, as this solves one of the key issues facing small and medium scale businesses in Nigeria which is access to adequate funding. The temporary overdraft provides financial credits to both new and existing customers within 24 hours, with a maximum loan repayment duration of 90 days.
The loan solution offers speedy, robust funds to prospective customers, including entrepreneurs, who are seeking urgent funds or temporary overdrafts to cater to their commercial needs.
Stanbic IBTC is positioning itself to support SMEs to enable aspiring and emerging entrepreneurs in Nigeria sustain their businesses while also facilitating the development of an enabling business environment and thriving ecosystem. The organisation has continued to encourage economic integration by providing incentives for SMEs, which will hopefully foster a better business environment in Nigeria.
Speaking on the essence of the product to SMEs, Ayodele Ojosipe, Head, Enterprise Banking, Stanbic IBTC Bank PLC stated that the product was created for SMEs that require financial assistance for commercial transactions as well as their day-to-day business transactions. He said, “One major issue for SMEs is access to funds that aid the growth of their business and because at Stanbic IBTC, we understand how important funds are to the success of any business, we came up with this offering to ease the aftermath of the pandemic”.
With the SME temporary overdraft, SMEs will not be pressured to remit the loan immediately, as the repayment plan is flexible and is based on the cash flow of the enterprise. This creates some form of stability for the enterprises, which will, in time, bolster the financial sector and improve the Nigerian economy in general.
Another remarkable feature of the SME short term loan is its convenience. Regular loans usually require cumbersome documentation, including loan purpose papers and collateral. However, obtaining this loan requires minimal documentation; making it easy for SMEs to access funds for necessary costs and other business activities.
The SME loan solution further reaffirms Stanbic IBTC’s desire to harness the strong entrepreneurial culture of Nigerians by providing quality financial services to its customers.
This approach by Stanbic IBTC is a breath of fresh air for small and medium scale enterprises, whose business dynamics are an important driver of productivity and growth in any economic system.