Law Firm Advises Startups, SMEs On Debt Market Financing

The New Practice (TNP), a commercially oriented law firm with a vibrant team of business-savvy lawyers and a global outlook of tax experts, has urged Nigerian startups and SMEs to rethink their business models and embrace debt market financing as a practical pathway to scaling sustainably.

TNP made this case at a roundtable and media parley held at its Lagos headquarters, themed ‘Scaling Smarter: Debt Markets as a Growth Catalyst for Startups.’ The event brought together regulators from the capital market ecosystem, credit rating experts, risk managers, tax experts, investors, and other stakeholders, and was led by partners from the firm.

Presenting its position, the firm explained why debt market financing is becoming an increasingly stronger alternative to equity for Nigerian startups, arguing that debt naturally encourages founders to stay alert, disciplined, and financially responsible. This guidance comes amid new revelations that many startup founders lack adequate knowledge of what is required to raise debt from the capital markets.

The discussion featured a strong lineup of speakers, including the Group CEO of NGX Group, Temi Popoola; Sector Head for Non-Bank Financial Institutions at GCR Nigeria, Timchang Gwatau; Founder and CEO of Payaza Africa, Seyi Ebenezer; and Lead, Structured Products at Norrenberger, Adedayo Aderoju.

Speaking at the session, NGX Group CEO,Temi Popoola, stressed that capital market regulators must adopt a more pro-market stance to improve reforms and market accessibility. He emphasised that the barriers to entering the debt market have dropped significantly over the years.

“What was once a tool used almost exclusively by Nigeria’s largest corporates is now accessible to smaller companies,” Popoola said, noting that over N1 trillion worth of commercial papers have been issued in 2025 alone, evidence of how critical the instrument has become for short-term financing.

He credited much of this progress to the Securities and Exchange Commission (SEC), saying today’s regulators are more market-supportive than ever.

Also speaking, GCR Nigeria’s Sector head for Non-Bank Financial Institutions, Timchang Gwatau, advised SMEs to strengthen their corporate governance as they consider approaching the debt markets. Good governance, he said, is key to accessing structured finance.

He explained that before entering the debt market, whether through bonds or commercial papers, companies must typically secure a credit rating. The process, he said, rests on four pillars, and these pillars cut across the operating environment, which represents Nigeria’s wealth levels, purchasing power, and macroeconomic conditions, shaping the baseline risk for any entity.

Secondly, some sectors are inherently more resilient. Banking and telecoms, he noted, currently stand out as credit-resilient industries.

Lastly is the financial profile, which Timchang in his statement said, adding that, “Beyond past numbers, analysts consider the company’s future outlook. Early-stage companies can compensate for financial weaknesses with strong governance and structural discipline.”

He added that, consistent, long-term banking relationships also help strengthen a company’s qualitative assessment, while sudden shifts in financiers can raise red flags.

For his part, Payaza Africa CEO, Seyi Ebenezer, shared the story of how his company leveraged the debt market to scale.

“When we were starting Payaza, VCs and PEs were offering us money. But we looked at the prospects and decided this business can work on a debt level, ” he added.

Payaza, a payments solutions provider, has raised about N40.37 billion across Series 1 to 4 of its N50 billion commercial paper issuance. Moderator and TNP Partner, Bukola Bankole described the company as a “powerful example of what discipline and smart debt utilisation can achieve.”

Ebenezer used the platform to underline his philosophy of leadership and growth. Business success, he argued, relies more on discipline than on sheer intellect.

“Disciplined people supervise smart people,” he said, adding that founders do not need exceptional academic credentials to build strong companies, what they need is discipline that guides decision-making and steadies the business.

He linked this directly to the nature of debt. Debt, he said, enforces structure. “When people are in debt, they become disciplined,” he noted. With interest running daily, including weekends, founders are forced to remain alert. “You have no reason not to pay,” he said.

The constant pressure, he argued, builds a culture of accountability, payments must be met, timelines respected, and financial planning enforced. For this reason, Ebenezer concluded that entrepreneurs seeking sustainable growth may find that operating within a disciplined, debt-driven structure provides the clarity and financial responsibility their businesses need.