‘SMEs Should Embrace Productive Borrowing For Growth’

Nigeria’s widening financing gap, rising inflation and high operating costs are forcing renewed conversations around how small and medium enterprises (SMEs) access and utilise credit, director of Enterprise Sales at FairMoney Business, Gloria Onosode, has said.

Speaking at a forum in Lagos, yesterday, she urged businesses to view borrowing as a strategic tool for growth rather than a last resort during financial distress.

According to her, SMEs should integrate borrowing into their long-term business plans, arguing that credit used for expansion, asset acquisition and capacity building is more likely to drive growth than loans taken for consumption. She said, “To build a sustainable financial future, we must change our relationship with credit. Borrowing shouldn’t be a cycle of survival; it should form part of a broader financial plan designed to support sustainable growth.”

She said the impact of borrowing depends largely on how the funds are deployed, noting that productive investments generate future income and strengthen businesses. “Good debt acts as an investment in your future self or your company. When you borrow to buy a delivery truck, stock inventory ahead of a peak retail season or fund specialised training, you aren’t spending money; you are investing in assets that may contribute to increased productivity and income generation,” she said.

Onosode noted that inadequate working capital prevents many SMEs from capitalising on business opportunities. “Cash-flow timing mismatches are the silent killers of momentum. You might get a massive corporate purchase order but lack the immediate working capital to fulfil it. Waiting weeks to organically pool cash from existing revenue means losing the contract,” she said.

She added that borrowing for productive investments could also help businesses cushion the effects of inflation by enabling them to acquire equipment before prices increase further.

“In inflation-heavy environments, waiting to save up the full purchase price for vital business assets can backfire because equipment costs often outpace savings rates,” she said.

However, she cautioned businesses against indiscriminate borrowing, stressing that every loan decision should be supported by realistic cash-flow projections and repayment capacity.