First Bank Nigeria hosted a webinar on “The ABCs of Accessing Finance for your Business,” designed to expose SMEs to the various finance opportunities that they can access and utilize to keep their businesses on the growth trajectory.
The webinar was anchored by Damilola Salawu who heads Technology, Innovation and Fintech Practice at Olaniwun Ajayi LP. According to him, the lifecycle of SMEs include the early stage, growth stage and maturity stage.
Early-stage SMEs are businesses under the first stage of the growth cycle. During this stage, the main priority is to find and obtain customers, develop a product or service and build a brand identity. Funding, hiring staff and managing cash reserves were highlighted as the key challenges faced by businesses at the early stage.
The financing options for early-stage SMEs include:
- Personal investments/ bootstrapping,
- Funding from friends and family,
- Early-stage venture capital fund,
- Government Grants,
- Funding from incubators and accelerators,
- SME loans,
- The credit union, cooperative, and thrift societies
SMEs that make it past the early stage, move into the growth stage. Growth stage SMEs are already generating revenues and growing their client base. The funds received by growth stage SMEs are mainly used to attract new customers and retain existing ones, develop new products and services, and develop methods of increasing profits and revenue.
Financing options for growth-stage SMEs include;
- Private equity investment
- Venture capital funding
- Equity financing
- Debt financing
- Bank Loans
- Receivable based financing
- Crowdfunding
SMEs in the maturity stage are companies that have been around for many years and sell products and services that customers and businesses use on a regular basis.
Financing options for maturity stage SMEs include;
- Mezzanine financing
- Debt financing
- Equity financing
Other panelists also contributed on how SMEs can access finance for their businesses.
Patrick Ehidiame Akhidenor who heads the Credit Analysis & Processing at First Bank of Nigeria Limited shared how SMEs can position their businesses to access bank finances. According to him, banks are generally playing the role of the intermediators (the surplus and deficit side of financing) and SMEs must have a clear structure and be completely honest with the information they provide to the bank before accessing finance.
SMEs must have a good credit history as those with a bad credit history or outstanding loans from utility bills or any lender will be unable to access finance from banks.