Lenders resort to training SMEs in crafting business plans for easy access to credit

Monday February 17 2020

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A BPR Main Branch banking Hall in Kigali. PHOTO | CYRIL NDEGEYA 

ARAFAT MUGABO
By ARAFAT MUGABO
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Local commercial banks plan to train small and medium businesses on crafting better business plans as they seek to grow their loan book.

Currently, small and medium businesses continue to struggle to access credit due to lack of bankable projects.

However, some small businesses have resorted to hiring professionals to write their business plans.

However, this is costly and not sustainable. For instance, Musa Mahoro a garment wholesale trader in Kigali said he approached about three commercial banks and two microfinance lenders for a loan to invest in his business but failed due to poor bankable project.

 “It is very disturbing to approach an expert for assistance to draft professional bankable projects and the cost is almost half the loan applied for,” said Mr Mahoro, adding that it requires between Rwf400,000 and Rwf1 million to hire an expert to draft the business plan that can be accepted by banks.

Banks insist on entrepreneurs submitting a business plan and collateral to access funding.

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According to Lydie Nyombayire Murorunkwere, head of institutional banking at Banque Populaire du Rwanda (BPR) Atlas Mara, utilisation of Export Growth Fund for local SMEs and other interested investors has been low, citing limited awareness and lack of technical capacity among people requesting the loan.

“We are working hard in partnership with the Development Bank of Rwanda to help our customers to have detailed and professional business plans for easy access to loans. Usually, without a detailed business plan, collateral security means zero loans from banks,” she said.

“Businesses access funding because they have the requirements, without support to be able to draft good business projects to convince the lender to offer the loan, means zero loans,” said Ms Murorunkwere.

“As banks, we aim at investing in businesses that will yield profits enabling the investor to pay back the loan, considering the collateral security and business plan is a priority,” she said.

“We have money to offer especially to people venturing in made in Rwanda products but due to lack of technical skills and expertise amongst business people denies them opportunities to access the finance,” she added.

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