How Access Bank offers Collateral-free Loans, Business Support to SMEs

The inaugural episode of the SME Digest/Access Bank entrepreneurship radio show kicked off with the Emerging Business Team of the Bank led by Mrs Ayo Olojede discussing how small and medium enterprises can get financial and other supports from Access Bank, especially business loan without collateral.

Below is the excerpt of the transcript.

Ayo, can you briefly let us into the offerings of the Access Bank Emerging Business proposition?

At Access Bank we are very passionate about supporting SMEs and our solution is a convergence of the ecosystem of offerings that is aligned with the challenges that SMEs face. What are those challenges? Challenges that bothering on business management practices, capacity building, marketing and selling of their products or services, and the icing for us is their access to finance. We have designed our entire proposition in such a way that when you are banking with us, everything that keeps you up at night, all of the pain points in running your business smoothly, we are able to handle them for you. That is what our Emerging Business offering is all about.

The latest SMEDAN (Small and Medium Enterprises Development Agency of Nigeria) and the NBS (National Bureau of Statistics) reports noted that we now have over 41 million businesses nationwide, in the category of micro, small and medium enterprises, MSMEs; How does the bank cater for the banking needs of the different segments?

At Access Bank, we first of all understand the diverseness of SMEs; with that we have dimensioned them based on their needs, their demography, their business turnover and sizes. We have specific products tailored to cater to each of the segment. We have what we call the growing business, the basic business and the established SME. For the growing business we know that some of them are not structured, they are unregistered; So we have partnered with law firms to register their businesses for them and also give them the opportunity to run a business bank account. Another thing we do is that we help them with cost savings and we’ve categorise them as people who have turnover of between N50 and N180 million. Most times if they are going to run their business based on that turnover, some of them will spend as high as N12,000 on CoT. But at Access Bank, we just have a fixed subscription fee of four thousand naira. So if you do the calculations, you will see that we are giving them up to 70% of cost savings so that they can channel their funds to other aspects of the business. We have the people we consider the established business. We also provide the opportunity of cost savings of up to 85%. This is part of our strategy in the Emerging Business. We provide customers the opportunity to run their business, grow their business and support them through other innovative products. Like those in the import, they form queue and the batch FX where a customer can build up funds and make a bulk transfer if up to $50,000. This is what we do at Access Bank to support our SMEs.

You have positioned your product as providing more than banking solutions, what can you offer SMEs beyond the regular banking services?

It is about adding value to our customers’ businesses because we want to help the businesses grow. We have realized that it is not just finance that these businesses need; They need to build capacity. So we have a lot of initiatives tailored towards building their capacity. We have a lot of trainings, we have seminars, workshops and we have partnered with a lot of industry specialist, both international and local and we’ve seen that this has been very helpful in helping their businesses grow. Apart from these we also have technological offerings for SMEs, because we realised that there is need for their businesses to be efficient and effective. We thought; what other way can they achieve that than being in tune with technology? So we have different supports like website design that we offer to our Emerging Business customers. We also have a business management solution which we offer them. These packages are severely discounted.

Access to finance is widely regarded as the major challenge for most MSMEs in Nigeria, what is Access Bank doing for small businesses in this regard?

At the heart of what we do are our loan offerings for our customers. We realised that it is simply not possible for business owners to scale up their business drawing funds from their pocket. As your business grows, you will need money to hire new employees, to purchase new equipment and open new branches in other locations. So it is important that as a business owner you begin to consider the various financing options that is available to you and how you can position yourself to make sure you are able to access that finance. Let me quickly talk about why banks say no to SMEs. Generally, people talk about how access to finance is the biggest challenge SMEs face with the growth of their businesses. But most of them have challenge of poor finance records, misalignment with the cash flow, not knowing which portion of sales proceed is their profit. Most of them also have challenges with collateral. What we have done at Access Bank is that we have invested in a specific lending assessment method that takes care of all of these challenges. As a result we are able to lend to customers who are new to borrowing and who have never taken our facilities before. With this we have been able to assist SMEs who ordinarily would not have been able to access finance. Our requirements are very relaxed. We have loans like MediLoan that is collateral-free. We also can ask for flexible collateral option based on what you want and we leverage the National Collateral Registry to be able to register such as asset. We have lending officers who will also engage you, and in the course of engaging with you, they help you through building up a balance sheet, financial statement and cash flow that adjust all of your household expenses – the reason being that most SMEs have one pocket, everything that they make goes into one pocket. In the course of putting everything together, we will be able to differentiate what you are to spend on your household and what goes into your business and what amount of money is free that you can reinvest into your business. On that basis, we determine your loan requirements. Whether you are a school owner, a health practitioner or you are into IT, or any other business you can access up to N10 million without collateral. All of the value chain in the health sector we are able to support and additionally provide advisory support through our partnership with Medical Credit Fund (MCF). They will help you as a doctor or pharmacists see your practice as a business.

What do SMEs require in order to access a loan from your bank? Do I need to be a customer of the Bank?

You don’t need to have an account with us. We will first of all do a credit check on you to know your credit score. If it is clean, we will then proceed to demand for your business records. If these two things are fine, you are close to qualifying for a loan. We are not looking for the things that banks generally require. But the good thing about us is that, if you don’t have these things, we work with you to help you achieve them all. But note that when you eventually qualify to get the loan.

Tell us about your specific loan offerings for SMEs in Health, Technology and Education. 

We have MediLoan for pharmacists, hospitals and diagnostic centres. This loan is available for different things like, working capital, equipment financing and expansion. It is a very flexible loan, if you ask for three million; we won’t ask you for any collateral at all. We can lend as much as three hundred and fifty million to buy equipment because we know how expensive medical equipments are. Our partnership with Medical Credit Fund (MCF) allows us to offer technical assistance to our customers. Medical practitioners have a quality standard rating for operating. Our partnership with MCF allows them come into our customers’ facility and help them attain a high quality standard in healthcare.

We also have a loan for schools. The loan is tailored for people who are in the business of running schools. The account for schools is called ‘The Diamond School Advantage’, DSA. This account gives school owners the advantage of collateral free loan to buy equipment, renovate their schools and also working capital.

We have the creative sector loan. Through the CBN on-lending initiative targeted at the Creative sector, Access Bank supports businesses in the fashion industry, IT, Movie and Music production. You can enjoy up to N500million at a discounted interest rate of 9% for repayment duration of up to 10 years.

Access Bank is really passionate about growing the engine of the economy which SMEs represent.