‘Many SMEs do not have structure in place to access finance’

Funke Susan Medun, director at Leapworld Limited, a firm helping micro, small and medium enterprises (MSMEs) access funding and write good bankable business plans, says many small businesses do not have proper structure in place to access funds.

“From the internal processes, a lot of small businesses do not have the system and structure in place to access needed finance to grow their businesses, and this is a huge barrier,” she said.

According to her, financial institutions want a guarantee that small businesses have the capacity to repay back loans, stressing that small business owners need to keep good books.

“You can’t provide what you don’t have. MSMEs need to start keeping proper records and there is a need to also separate the expenses of the owners from the business so that the business can have a life of its own,” she said.

She added that information is not available to a lot of MSMEs.

“Lagos state is doing great with the Lagos State Employment Trust Fund (LSETF), and I think other states should emulate them. You would be shocked to know that a lot of businesses that operate in Lagos do not know about LSETF. Some are aware but do not know the criteria needed to access it. Some believe the fund is only meant for businesses whose operators are indigenes of Lagos State.

“Some also believe that it is a national cake so they do not have to meet the criteria to access the fund. There are lots of low-interest funds for MSMEs, even grants, but all these barriers have prevented small and medium enterprises from accessing available funds. MSMEs should constantly seek strategic information to leverage for growth.”

She pointed out that most start-ups fail to build capacity in the industry in which they operate, which has increased their failure rates.

“You need the right skills to scale up your business and if it is lacking, the growth of the business would be limited. Applying the method you used for your survival stage at your growth stage will not grow the business sustainably,” she counselled.

ODINAKA ANUDU