Part of the key requirements for accessing bank loan is the packaging of a bankable business plan.
A business plan is a formal statement of business goals, reasons they are attainable and plans for reaching them. A business plan is bankable if it can compel a bank to grant loan on the basis of a clear evidence in the plan that the business has cash-flow, it is profitable and therefore can repay the loan.
Business management experts say the primary value of a business plan will be to create a written outline that evaluates all aspects of the financial viability of a business venture including a description and analysis of the business prospects.
They believe that preparing and maintaining a business plan is important for any business regardless of its size or nature.
Consequently, all financial institutions in Nigeria and everywhere in the world would ask loan applicants to provide a business plan considered bankable.
But most Nigerian banks complain that most of the business plans received from micro, small and medium enterprises in Nigeria are largely too weak to enable them access loan facilities.
According to a loan officer in Access Bank Plc, over 95 per cent of loan applicants in the category of SMEs fail banks’credit appraisals and consequently unable to get loans.
He explained that two major problems with the business plans are lack of adequate information and outright falsehood in the information provided.
Explaining further, he stated that while some of the loan applicants lack professional knowledge for preparing a standard business plan they do not have the resources or the desire to pay for such professional services.
However, he also explained that some fraudulent applicants come up with beautifully and professionally packaged business plan which they must have paid a lot of money to obtain only for banks’ verifications to point to some fictitiousness in some key documents that back up the claims in the business plan.
Principal Consultant, HT Limited, one of the Business Development Services Providers, BDSPs, appointed by Bank of Industry, BoI, to prepare SMEs for its loans, said the problems associated with business plan was the unwillingness of the loan applicants to pay the right price for a quality business plan.
She said some of them that come for BoI loans through the BDSPs usually assumed that the prescribed consultancy fee of N10,000 to N50,0000 for preparing them for the loans also covers the preparation of a business plan.
She explained that a standard business plan will cost nothing less than N80,000, adding that some consultants would ask for as much as N150,000.
These amounts, according to her, appear to be too high for an average Nigerian SME operator who would want things cheap.
Eventually the SME entrepreneur would end up with a substandard business plan which would not stand the test of a bank’s credit appraisals.