Some businesses that had applied for the Economic Recovery Fund (ERF) are in for a rude shock as banks find them ineligible.
According to lenders, the businesses face problems that predate the Covid-19 pandemic disruptions while others are already in non performing loans (NPL) books.
The government established the Rwf186 billion fund to rescue businesses that had been hard hit by Covid-19 pandemic.
“Covid19 made some of the already struggling businesses even worse, some were already in the NPL books, and in certain cases we have seen that it’s not finances that they need”
“There businesses that had problems before Covid19 and we have seen that these problems are beyond finances, we shall work with them in other ways” said Maurice Toroitich, the chief executive of BPR Atlas Mara.
He noted that some SME’s that have applied for the fund have come only with a short term view, having no understanding of how their businesses will survive long term, or any grasp of the demand, which he says is “ a fundamental issue we are all grappling with.”
However some other affected businesses that have applied for the fund in form of loans restructuring by their banks say it was relatively easier to fulfill the requirements, and that the process is under way.
“The application process is elaborate enough, no short cuts, our bank gave us a checklist of the requirements and we haven’t met any challenge so far,” said Sarah Kirenga, general manager of Land Mark Suites in Kagugu.
She said they are also evaluating to see if it’s prudent to also apply for the Rwf75million, the other portion of the ERF meant to finance the fixed and operational costs, which “also has its own terms and conditions, which actually seem to be the toughest.”