Stanbic IBTC Holdings Plc, a member of the Standard Bank Group, has created a short-term credit facility aimed at supplementing working capital to finance various business projects and bridging immediate cash flow needs of small and medium companies (SMEs).
According to a lender statement, this practical lending solution allows SMEs to obtain loans with ease and convenience. It also has advantages such as repayment flexibility and simple documentation with no collateral.
The ease of access to cash is noteworthy since it addresses one of the most pressing concerns confronting small and medium-sized enterprises in Nigeria: access to adequate finance. The temporary overdraft provides new and existing customers with financial credits within 24 hours, with a maximum loan repayment period of 90 days.
Stanbic IBTC Holdings Plc stated that it developed this package to promote SME growth in an ever-changing economy, as the sector remains the backbone of most economies, particularly in emerging countries.
These businesses account for a large portion of all businesses in a country, and they are important contributors to employment creation and economic development.
In Nigeria, SMEs provide more than 48% of the national GDP and account for around 96% of enterprises, which in turn generate over 84% of employment in the 36 states and the Federal Capital Territory (FCT).
Despite the significant contribution of SMEs to the Nigerian economy, obstacles continue to impede the sector’s growth and development. These obstacles include a lack of cash and financing, insufficient public infrastructure, and, most recently, the COVID -19 epidemic. The epidemic generated various anomalies in the country’s economic framework, forcing several fledgling enterprises and SMEs to fail.
Furthermore, the Nigerian business environment is quite difficult. According to the World Bank, Nigeria was placed 131st out of 189 countries in the 2020 Ease of Doing Business index. Furthermore, access to finance is a major impediment to SME growth.
Ayodele Ojosipe, Head, Enterprise Banking, Stanbic IBTC Bank PLC, explained that the product was established for SMEs that require financial help for commercial transactions as well as day-to-day business activities.
“One major issue for SMEs is access to funds that aid in the growth of their business,” he explained, “and because we at Stanbic IBTC understand how important funds are to the success of any business, we came up with this offering to ease the aftermath of the pandemic.”
SMEs will not be pressed to return the loan quickly with the SME temporary overdraft because the repayment plan is flexible and based on the enterprise’s cash flow. This provides some stability for the businesses, which will, in turn, strengthen the financial sector and help the Nigerian economy in general.
Another notable feature of the SME short-term loan is its ease of use. Regular loans typically necessitate extensive documentation, such as loan purpose papers and collateral. Obtaining this loan, on the other hand, needs minimum documentation, making it simple for SMEs to access funds for necessary costs and other company activities.