As the Central Bank new initiatives such as the credit card
facilities to boost the creative industry, is well thought but should be followed
through as loans are issues of concern as many have experienced.
We applied for credit after doing what I thought was a very
thorough feasibility report and confident we had a very good business. Even at that, I knew one of the ‘Big Men’ at
the top of the bank whom I could reach should the need arise. The financing proposition was for the bank to
finance part of the equipment purchase, whilst we provide part financing, and
as well bear all installation costs and purchase additional equipment locally. The bank would in effect also make the fund
transfer and so they were involved in the transaction.
In all, it would be a
50/50 funding. We already had the
business going and the additional contribution from the bank would be far less
than the current value of the business.
Once we got confirmation from the bank that the credit would be
approved, we effected payment of initial 10% deposit amounting to Euro
20,000. It was our first request for
bank financing so we made everything pretty clear and based on what we really
After the initial deposit payment, I was to run after the
bank severally. I followed up, begged
and pushed and was really shocked at the attitude. With delays setting in, the supplier promptly
wrote to informed us that we would be surcharged for the delayed payments
otherwise they’d cancel the transaction and we forfeit the deposit. We further begged and pushed and eventually,
the bank ‘graciously’ obliged us the credit, they gave us 65% of what we
requested. I felt this didn’t connect so
I asked what happened and was told that, that was all the bank could
afford. Caught between losing our
deposit and having faith that some miracle could happen we trudged on.
When the equipment arrived, we started installation and
commissioning then I started seeing signs of trouble. I alerted the bank; they said I should be
grateful I got given in the first place.
We channelled all funds we had into the commissioning, essentially using
operational funds for capital expenditure.
It wasn’t long before we got stranded.
Repayment time was up and the bank promptly demanded that we start
paying. I took every necessary document
to show to them, tried to talk with that we were actually stranded and couldn’t
All the talks seemed to count for nothing. I called the ‘big man’ yet again, who
wondered why we were given less than we requested stating that the practice is
that a customer got what is applied for, otherwise they reviewed and agree with
the customer to reduce if there were concerns that the request was frivolous or
Subsequently, my banker again, ‘graciously’ announced that
the total facility was granted at the first instance and they had deliberately
disbursed the fund short to see if we could survive. I raised the fact that we had been stranded
for about four months. That we had had
several meetings with the bank on the situation, and that they mentioned that
we were being surcharged 40% default charges and asked if that meant anything
to him. He just shrugged off.
The nightmare didn’t end there. They eventually released the outstanding
funds to us. Then a new twist, we would
now have to repay in 10 months. We now
had two concurrent loans running together with repayments falling due first, in
the first week of the month and next by midmonth. It isn’t allthat, the loan
amount had now increased significantly as previous unpaid amounts which earlier
fell due were now charged at 40% interest for default.
I just stared at them.
I tried having a meeting with them they bluffed me. The bank resorted to threats and
intimidation. I felt we borrowed the
money and we must pay back and I was reluctant to make any case or be seen to
be irresponsible, besides we were debtors and some sense of shame, if you know
what I mean! Also, I felt I needed to show gratefulness for this bank’s
At last, I talked with a Lawyer who was appalled at all
these and suggested that I have to make the officials understand that it mattered that they
appreciate their culpability and that they couldn’t ride rough-shod over us,
and that we would escalate and seek re-dress if need be. I told him we owed and needed to pay, he
said, yes, but responsibly so.
Then I had one more meeting with the bank executives and
very calmly took them through the credit journey showing them e-mails
evidences, reminded them of the original request and letting them know that we
were committed to paying back but it will have to be within responsible
limit. Expectedly, they backed down.
See my story. The
question is how do you grow an economy without the SMEs? And how do SMEs grow
and survive without credit? How do small and medium scale enterprises access
credit fairly and easily? How do we get credit within reasonable interest
rates? How can we simplify credit application system and process? What thoughts
do you have for financial security system that makes borrowers pay?
What changes do we need to make to our legal and judicial
system to ensure accelerated judicial and legal process so that the wheel of
justice will move in good time and in good speed? Are there venture capitalists
out there? How do business people access you? Do banks have dedicated SME
funds? What form of social engagement and responsibility can the banks can
engage in to prime business knowledge and awareness to help viable and genuine
business entrepreneurs build knowledge and capacity to help them better able to
access credit? Do you have a successful credit application story? \
Please tell it. Is it true that Bank Managers actually own
the loan shack businesses giving credit at up to 25% per month? That they get the monies to their cronies and
then direct bank customers to them? I heard so but I don’t know. Folks, how do
genuine business people get credit besides getting from some relative or friend
or well-wisher? By the way, my MBA
thesis is going to be on a comparative analysis of family and friend’s credit
provisions for SME survival against the bank’s effort in this same direction,
looking at the Nigerian example and using a special case study.
And you know, interestingly, it comes back to us all, the
banks, the SMEs and the economy. It
works well, and we all benefit; a vibrant economy, more jobs, people off the
street and yes, a safer world.