Nigeria’s statutory body for the control, supervision, and regulation of the credit management profession, the National Institute of Credit Administration, has said availability of loans with low interest rates and flexible repayment terms will boost profitability of small and medium enterprises in the country,
In a statement issued by the Chief Executive Officer of NICA, Prof. Chris Onalo, the institute said a business-friendly loan will encourage intending and existing business owners to borrow to start new businesses, and expand existing ones.
According to the institute, businesses in advanced countries are well positioned to compete better in their countries, and even in other countries were they expand to because of access to low interest rate loans which are usually lower single digits.
The statement said, “It is difficult for businesses to break even with high interest rate loans because the SMEs have other high operating costs which will make repayment a challenge to them. To be better competitors and be empowered to expand their trades, businesses should have access to single digit interest rate loans with flexible repayment option. This is the ideal situation that will boost a business friendly environment.”
The institutes advocates support that will enable businesses to thrive better in the country because they provide livelihood to a large proportion of the population.
According to NICA, access to cheap loans will provide more finance to SMEs because they will have more money to save, it will reduce their debt repayment burden, and increase capital for expansion as they will pay less over the life span of the loan.
While observing that lending institutions may not want to offer long term loans in some cases, NICA advocates flexible loan solutions will help to reduce repayment strain on the business owners’ finances.
With access to flexible repayment terms, NICA says, entrepreneurs will avoid patronizing loan sharks, and choose from a variety of loan durations that suits their repayment plans to fit their budget and financial goals.
NICA says that cheap loans with flexible repayment terms allow borrowers to choose from a variety of loan durations, and plan for their financial goals.
The institute advocates good credit access because this helps to reduce the cost of debt and default rates among the SMEs.
According to NICA, increase in the success rate of SMEs in the country will help to boost the country’s Gross Domestic Product.
