Heritage Bank launches strategy to ease access to funding for SMEs
Heritage Bank Limited said it has introduced a strategy which would allow Small and Medium Enterprises (SMEs) to work in group in order to access funding from the bank.
Disclosing this, the Group Head, SMEs, Heritage Bank, Bayo Ogunnusi, said the strategy was conceived because of the high cost of doing business in the country and the need to stimulate growth in the national economy.
'It is novel in that we try to work with SMEs as a group. If you approach the bank as a group of SMEs for loan, the interest rate can be renegotiated. Of course, interest rate is also a function of the risk that you perceive,' he explained.
Ogunnusi noted that banks have since renewed their interest on SMEs since the 50 per cent Cash Reserve Requirement (CRR) was imposed on public sector deposits.
He said: 'As it is now, the CRR for public sector funds have been increased to 50 per cent and what that means is that a lot of banks now need to focus on SMEs.
'However, understanding how to deal with SMEs in terms of funding and knowing their operational mode are all different things. So, a lot of banks don't know how to deal with SMEs. But in Heritage Bank, we have the expertise, knowledge and we know the way SMEs operate.
'Our objective is to grow the business and not just to fund it. Of course, a lot of people walk into banks and say they want money and by the time you get to their business, you find out that they are not doing anything.'
Ogunnusi maintained that as a bank that supports small businesses, any SME in whatever sector is welcome to the institution, adding that it does not segregate.
'Somebody can be selling recharge card on the road today and in five years' time, he becomes a major dealer in MTN if properly mentored, structured and properly developed,' he added.