FirstBank Warns SMEs Against Loan Sharks

First Bank of Nigeria has urged small and micro business holders against sourcing funding from loan sharks and overstretching themselves financially to avoid stress and financial instability.

This was stated by the group head, Retail Business, Community Banking and Money Transfer at First Bank, Dr Abiodun Famuyiwa during the December FirstBank SMEConnect Webinar on “Pioneering SME Success: Growth Profit and Sustainability Goals”.

Famuyiwa noted that many small and micro business had been thrown into turmoil due to the pressures and crude ways of loan sharks. Urging them to approach their banks for loans targeted at helping micro and small business thrive, he said: “in sourcing for finance, try to avoid putting yourself into unnecessary financial pressure.

“A lot of times whilst trying to raise capital to solve the problem of finance, what most SMEs do is that they get desperate when they cannot raise funds, or they cannot get family members to give them, the next thing they do is to go to these loan sharks. A lot of damage has been caused by these loan sharks because they give people interest rate that is off the roof

“By the time you are struggling to pay the interest, the capital is still waiting for you. And most businesses, the profit is so marginal that they will not be able to cope. Please avoid expensive source of funds like these loan sharks as they can be very damaging to businesses.

“Records show that we have lost some great SMEs because they had to pack up due to too much pressure and some committed suicide. You want to go to bank to get single digit loans but you have to run the business the right way.

“Ensure your business is registered, have financial record, adequate sales to turn over.

SMEs should be discipled enough to ensure that all the money that is made is through the bank so that the bank can see turnover and cash flow. Ensure you have Tax identification Number because if you don’t have it, it would be very difficult for you do business with banks.”

Stating that FirstBank is committed to helping small and micro business to thrive, he said “in FirstBank, we are very passionate about our customer, particularly the SME and that’s why the bank has set up an SME unit that is focused on SMEs alone.

“In FirstBank, we have products that you can just open an account and without paying any AMC you can be running your business, whether it is a nano micro, small, medium enterprise. Our products for small businesses include the First SME basic, First SME classic where you can pay money to that account and the bank will not charge you any AMC, this is one of the strong value proposition that FirstBank has put forward to support every business.