2 Reasons Your Request For Bank of Industry Loan Is Proving Difficult
Have you ever tried but failed to secure a loan for your business from the Bank of Industry, BoI? Several reasons could have accounted for this.
Your business may have been outside of the sectors that the bank provides financing for, or your loan demand may have been below the threshold of what the bank directly provides. There are also a host of other issues which we shall deal with subsequently on how to access a BoI loan.
In the meantime, Mr Femi Edun who is a Special Adviser to the Minister of Industry, Trade and Investment, provides a clue as to why BoI could reject your loan request.
1. Unbankable Projects: The number one issue for the bank is whether your business or project for which you are seeking a loan is bankable.
“One of the issues is for project owners and businesses to make their projects bankable and make them legible for credit,” said Mr Edun who also sits on the board of BoI.
According to him, the BoI has more funds available than there are bankable applications seeking funding from the development lender.
“The truth of the matter is that there are funds available to lend in excess of bankable applications at the moment. And that has always been the case,” he told a breakfast forum organized by Nigeria-South Africa Chamber of Commerce in Lagos last week.
2. High Cost of Financing: Depending on your size of business, cost of financing becomes a major hurdle that you may have to deal with when seeking BoI loan.
Small businesses are most affected because their businesses just does not worth much. To make matters worse, most of them have no collateral to guarantee access to credit.
“Cost of financing is a legitimate issue in Nigeria. We have high nominal interest rate. So, that is a macro-economic problem that is going to take some time to deal with them,” Edun said.
He said that a lot of work is needed to help the SMEs improve their access to debts because “one of the issues is having the equity that makes them eligible for debts or having what I would call a substitute for collateral that helps them to borrow.”
But for large businesses, Edun said, “the truth of the matter is that many of them need to work on their bankability. They need to ensure that they are producing proper oriented accounts to make sure that they file their returns on time”.
Also Watch: Bounce Masterclass: How To Write A Winning CV