I cannot use bank loan to fund my business — Deborah Oyedepo
By Adaeze Okechukwu
JUDGING from my last experience obtaining a loan, I would say the process was fairly easy and straight forward. I was formerly banking with a particular bank and I had to transfer my funds to the new bank I wanted to obtain the loan from. The bank was able to process the loan within a month. It was not cumbersome at all. The repayment time and schedule were very convenient for me.
The only challenge I had was with the high interest rate. The interest rate was just too outrageous, I must say. I was really in dire need of the money at that time, so I had to collect the loan regardless of the high interest rate.
Currently, I am more than comfortable borrowing from the coperative society I belong to. Its interest rate is even as low as eight per cent per annum even when juxtaposed with the 18 to 25 per cent charged by banks.
In terms of the loan packages, I think banks generally have a lot of loan facilities to suit various needs of customers. However, I am skeptical about the extent to which people patronise commercial banks for loans.
I maintain that the interest rates should be reduced so that start-ups can affordably access loans as capital for their businesses. I was asked by someone who wanted to start a business to sign a guarantor’s form for her to acquire a loan from a micro-finance bank. I carefully evaluated the interest rate the microfinance bank was asking her to pay, alongside the turnover the business had the potential of generating within the stipulated loan tenure. I had to discourage her from acquiring that loan; as the interest on the loan will be very back-breaking to pay off eventually. We had to creatively devise alternative means of funding the business.
Frankly speaking, I cannot obtain a loan for my business from banks. Recently, I have had to sign as a guarantor for someone acquiring a loan with an interest rate as high as 5 per cent monthly. That’s outrageously high. A business that can afford such loan must be doing really well.
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