Every Tuesday at 7 PM, the Access Bank SME Digest Show on Classic FM 97.3 delivers invaluable insights for small and medium-sized businesses (SMEs) looking to grow and thrive in Nigeria’s evolving economic landscape.
In this episode, the discussion centered around “Borrow Smart, Grow Big: Should MSMEs Take Loans?” featuring Abiodun Olubito, Group Head of SME Banking at Access Bank. The conversation provided clarity on when and how businesses should leverage loans for sustainable growth.
Listen Below
Debunking Common Myths About Loans
One of the biggest misconceptions among business owners is that borrowing is inherently bad or that banks only lend to large corporations. However, the reality is that strategic borrowing can be a powerful tool for MSMEs when used correctly.
Key myths debunked:
- “Taking a loan means my business is failing.” – On the contrary, successful businesses regularly use credit to finance expansion, manage cash flow, and seize growth opportunities.
- “Banks don’t lend to small businesses.” – Many financial institutions, including Access Bank, offer loan products specifically tailored to MSMEs.
- “All debt is bad.” – Debt can be an enabler if used for productive activities that generate revenue and profit.
When Should MSMEs Take a Loan?
Not all loans are beneficial, and taking on debt without a clear purpose can harm a business. According to Abiodun Olubito, businesses should borrow when:
- Expanding operations – Whether opening a new branch, hiring more staff, or increasing production capacity, a loan can provide the necessary capital.
- Purchasing essential assets – Equipment, machinery, or inventory needed for business operations can be funded through loans.
- Fulfilling large orders – Sometimes, MSMEs receive big orders but lack the upfront capital to execute them. A short-term loan can bridge this gap.
Before taking a loan, business owners must ask:
Will this investment generate enough income to repay the loan? Does my business have the cash flow to sustain repayment?
Smart Borrowing Practices for MSMEs
To ensure a loan works for and not against your business, consider these best practices:
Borrow for Business, Not Personal Use
Mixing personal expenses with business loans can lead to financial mismanagement. MSMEs should keep finances separate and only borrow for business-related needs.
Choose the Right Financial Partner
Not all loans are created equal. Selecting a reputable bank like Access Bank ensures businesses avoid predatory lending practices that can cripple growth.
Structure Repayment Plans According to Cash Flow
Loans should be tailored to match business cash flow cycles. For example, a seasonal business should opt for flexible repayment plans that align with peak revenue months.
Avoid Over-borrowing
Taking on more debt than necessary can strain cash flow and make repayment difficult. MSMEs should borrow only what they need and ensure the loan serves a profitable purpose.
Loan Repayment & Financial Discipline
Taking a loan is just one part of the equation—repayment discipline is crucial. Business owners should:
- Have a clear repayment plan before taking the loan.
- Separate personal and business finances to avoid misusing funds.
- Engage with the bank early if they foresee challenges in meeting repayment deadlines.
By maintaining good repayment habits, businesses build trust with lenders, improving their chances of qualifying for higher credit limits in the future.
Building a Good Credit History
For MSMEs, a strong credit record unlocks better financing options and lower interest rates. To build and maintain a good credit profile:
- Borrow only when necessary and for productive purposes.
- Make timely repayments or prepay when possible.
- Work with reputable financial institutions that report positive credit behavior.
A good credit history doesn’t just benefit businesses in the short term—it lays the foundation for long-term financial growth and stability.
The Power of Business Loans: Engaging with MSMEs
The episode concluded with an interactive segment, inviting listeners to share how they would use a business loan to grow. Selected participants won exciting gifts, courtesy of Access Bank.
Final Thoughts: Loans as a Tool for Business Growth
Borrowing is not a sign of weakness—it’s a strategic move when done wisely. MSMEs looking to grow should:
- Understand when and why to take a loan.
- Ensure their business can generate returns on borrowed funds.
- Maintain financial discipline and a strong credit history.
For those ready to take the next step, Access Bank offers tailored SME loan solutions to help businesses scale. Entrepreneurs are encouraged to explore smart financing options that align with their growth strategy.
Want to learn more? Tune in to the Access Bank SME Digest Show every Tuesday at 7 PM on Classic FM 97.3 for expert insights, financial tips, and opportunities to help your business thrive!