Business
Financial Challenges Small Business Start-ups May Face in The Future
Most small business houses face the challenge of finance in the future. If you take a look at financial institutions and banks, they have been designed and built to provide services to large business houses. Their system and process for loan application have been designed for evaluating risks of big business with diverse resources.
The issues of data collection for business loans
Small businesses face problems due to data collection. The information collected is not consistent as three major credit bureaus are delivering and deciphering the creditworthiness of the candidate. There is an underwriting process that needs a lot of data and information when it comes to ascertaining the creditworthiness of the applicant. The process of underwriting needs data about the revenue of a small business. The process also needs to know about the history of borrowing of the candidate and the lines of credit. The time spent when it comes to collecting that data and information is endless and takes long.
Personal credit
Several money lenders will use the personal credit of a small business owner as a symbol of risk for the business as well. These money lenders resort to scoring models for individual candidates and large businesses. This process again deploys a lot of system override and judgment. In short, the small business owner for a loan has to jump into many hoops and before you know it, he is generally caught in one of them.
The above is just the process that a small business owner faces with one money lender. If you multiply that by five lenders, he will be juggling with shopping rates making the loan application process a long one. The money lenders also need to get hold of different information for every applicant. This makes the process of applying for a loan hard for every small business owner as they fail to understand how they can improve their chances of finding a loan. The result is these business owners face themselves stuck in hoops of credit madness. This results in them using the same techniques for generating different outcomes hardly realizing why they are resorting to them.
What are the options for small business finance in the future?
Traditional money lenders are a great option for a small business. However, this would mean they need to develop a system to evaluate a small business by setting standards that are specific to their resources and size. Here, the applicant and the lending institution must make changes to their scoring models by automating the collection of data and streamlining the process for funding. This again will lead to a great level of success say esteemed money lending institutions in the nation like Liberty Lending US. Today, alternate finance provides a window for business loans that traditional lenders hope in the future to become.
Here they would need to create systems to evaluate a small business with standards that are specific to their resources and size. The following are some forms of alternative finance options for small businesses-
- Online lending- The process of online lending is the same as banks. However, the product here is more streamlined. These online loans generally have a qualifying criterion that is less stringent over banks. This applies to credit rating, tenure, and revenue. The process is established on online platforms that permit funding and application in the same field. This means there are lesser reviews and improved accessibility. Online lenders will reduce the wait time for qualification for the business loan. They assess a lot of data over credit history and applicants do not need to apply for extensive collateral. Some online lenders have an application process that is streamlined. They focus on data connections that are live in order to assess the business performance of a company in real-time rather than credit score. This gives small businesses the chance to use their lines of credit for the approval of the loan. Benefits are also highlighted for applicants. They can maintain the control as well as equity of their business. They get the chance to keep their personal finances separate. They can also avoid separating those that are close to them as they get access to funds via a third party.
- Crowdfunding- This is another alternate platform for getting a small business loan. Here, there is online pitching where the owners of small businesses have to convince others that their businesses are worth an investment. The process of crowdfunding entails people asking others to invest in a certain product, business or a campaign. The funds do not have to be paid directly. Here, owners of small businesses may offer a free version of the product or a specific percentage of the future revenue expected.
- Invoice Factoring- Invoice factoring is another alternate funding process for small businesses. Here, the process involves outstanding invoices over the credit history of the business. In this process, the company that specializes in invoice factoring buys the unpaid invoices of the business at a discounted price. This places the focus on the ability of the customer to pay over the small business. The process of invoice factoring is generally streamlined, and it allows the company to attach all the invoices they want to be funded. The owners of small businesses often see the rebates on the same day. Another advantage of invoice factoring is paperwork is reduced. This means the process is faster and you get the funds you need for the development of your small business!
Therefore, when it comes to applying for alternate finance for small business loans, applicants can resort to the above forms of alternate finance. They are simple and more streamlined over conventional bank loans. Moreover, they are quicker to apply for, and the criteria for application is not stringent like that of conventional loans. Apply for them and get the much- needed financial support you need for your small business. Loan application does not have to be a hassle some anymore!
Kolomoni Microfinance Bank has awarded grants to five female entrepreneurs to boost their businesses as part of its commitment to promoting women in business.
The initiative, organized to mark International Women’s Day, was themed “Accelerate Her Growth.”
According to the bank, the decision to support women was inspired by World Bank data, which shows that 41 percent of Nigeria’s micro-businesses are owned by women.
Delivering the keynote address, business strategist, Ebun Akinwale, emphasized that entrepreneurship requires resilience, creativity, and passion.
She illustrated this by recounting her own business challenges and highlighting the critical role passion plays in overcoming obstacles.
The event underscored Kolomoni’s mission to empower women and support small businesses in Nigeria.
Other speakers at the occasion were Odunayo Oyebolu, a seasoned entrepreneur; Victori Ajiboye, a marketing strategist with global experience; and Simi Ojumu, a finance expert.
The beneficiaries said the financial support was a validation of their hard work and a boost of confidence towards scaling through in their businesses.
The winners were selected after sharing their entrepreneurial journeys and presenting business proposals for financial assistance from the bank.
The 8th edition of the Nigeria Small and Medium Enterprises (SMEs) Summit and Awards (Nigeria SMEAwards) is set to take place in Lagos for the first time in its history, marking a significant milestone for this prestigious event.
Endorsed by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), the annual awards celebrate the entrepreneurial spirit driving Nigeria’s economy.
The visionary convener of NigeriaSMEAwards 2025, Adedayo Olalekan, said, “Governors from Zamfara, Sokoto, Ebonyi, Borno, Enugu, Ekiti, Benue, and Kaduna States have all implemented transformative initiatives that have greatly benefitted local enterprises.
“Their contributions will serve as a beacon of inspiration for the nation.”
Speaking at a recent press conference in Lagos, Olalekan emphasised that the event would introduce a fresh and unique approach, moving away from tradition.
“Despite economic challenges, Nigerians continue to show an unwavering commitment to progress”, he said.
He noted that the awards will not only honor outstanding individuals, but also recognise the critical role state governments play in nurturing vibrant SMEs.
“State governments have been instrumental in fostering a supportive environment for SMEs, which in turn benefits both the awardees and the larger economy.
“With major banks like Providus, Access, and First Banks competing for top honors, the 8th NigeriaSMEAwards promises to be a night of celebration, recognising exceptional contributions to Nigeria’s SME landscape”, Olalekan added.
Amid global challenges such as inflation, geopolitical instability, and the ongoing conflict in Ukraine, Nigerians continue to show remarkable resilience.
Their efforts, according to reports, have contributed to job creation, economic growth, and overall prosperity, with SMEs at the forefront of this success.
This year’s awards will recognise governors who have made significant strides in advancing the SME sector within their states.
Small and Medium Enterprises (SMEs) consultants in Rivers State have called on entrepreneurs to be focused and avoid distractions.
The experts, who were speaking on the recent developments about the change of leadership in the state, said entrepreneurs need to put more efforts in their businesses in order to break even in the present situation in Rivers State.
Speaking in a chat with The Tide, an international SMEs consultant, Amb. Larry Goodwill Ajiola, said the political moves is capable of distracting SMEs who are not grounded in their businesses, adding that “the serious minded business men and women would utilise the opportunity to increase their revenues”.
Amb Ajiola, who is the President and Chief Executive Officer (CEO) of Rumuomasi Co-operative and Credit Society Limited, Port Harcourt, said, “Rugged entrepreneurs look out for business opportunities in situations around them, whether good or bad”.
He reiterated that the loan facility given to 3,000 SMEs in the state revived and expanded businesses, adding that the empowered businesses should continue to push, no matter the situation.
“credit is a powerful tool for achieving financial security.
“We can only keep imagin the economic value that the over 3,000 MSMEs would add to the positive economic dynamics of Rivers State and the Local Government Areas in terms of Gross Domestic Prooduct (GDP), increased tax returns, employment creation, income distribution, and production of goods and services”, he said.
Another SMEs Expert, a business consultant and SMEs trainer, Mr. Chisom Sam-Orji, in his advice, noted that every SME in the state should realize that change is the only constant thing.
He said SMEs should also know that “tough times never last, but tough people do”, adding the need for every entrepreneur to stay focused on creating value and remain resilient.
“This is not the time to be distracted by every noise around your space, but to maximize every time you have to focus on the essentials and keep creating value.
“For some people, it may just be the time to diversify, create new products and services to serve a new or existing market. But this must be based on the facts available to you via research and market surveys”, he said.
The SMEs expert also said the present time in the life of an entrepreneur is a time to cut off unnecessary excesses that surround one’s business.
“Those extra costs that may hamper your growth in this season and beyond, and focus on just essentials.
“SMEs should find certain leverages that are available to aid their business growth. This could be in form of grants, knowledge, and other leverage tools.
“Collaboration is one big way to grow in this season. Finding ways to collaborate with like minds instead of competing could enable a product or service gain advantage in the market and beyond.
“They should also find ways to sustain and grow their customer relationship as this is key to sustaining business flow. They must seek new and efficient ways to serve their customers and gain their loyalty”, he stated.
He further called on every entrepreneur to keep building capacity and never take their eyes off their visions, adding the need to muster every courage it takes to keep building and moving forward.
Lilian Peters