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!
Some Commercial drivers in Port Harcourt have said that the Federal Government’s N1,350 fuel discount is yet to reduce their daily operating cost.
A cross session of commercial drivers who spoke to The Tide correspondents in Port Harcourt said they are yet to feel the impact of the government discount, adding that most filling stations in the city are even selling above the pump price
A driver Jude Ogbo who operates the mile 1 Rumuokoro axis of Port Harcourt said plies the discount has not reflected in his daily fuel expenses.
“Since the discount was announced, many filling stations still sell at the old price. When you go there, you discover they sell you two litres at the price of one. For now, we have not seen any reduction,”_ he said.
Another commercial driver, Comrade Ishmael Uzeho who operates within the Port Harcourt metropolis, said the discount is not being implemented across the country.
“How has the discount affected us? I will say it has not. Many stations are not working. Only NNPC is working and that is just one person in the whole country. If government really wants to help, let the fuel price go down properly,”_ he said.
Uzeho added that if the price of fuel goes down, transport fares will also go down. He noted that his route fare has remained at N500.
On his part, Mr. Moses Dapa, Supervisor at Sam Jaja Foundation Transport Company, said the company has not increased its fares despite the high cost of fuel.
“We are still running normal price. We charge N2,000 and N5,000 depending on the destination. We will not increase our price. I don’t know about other parks, but for Sam Jaja, we are maintaining normal price,”_ Dapa said.
He appealed to passengers to understand that drivers are not using high fuel price as an excuse to charge excessive fares.
Other drivers who spoke said the federal government should monitor the NNPCL retail stations to ensure that the directive is implemented.
Recalled that The Federal Government in abid to reduce transportation cost in the country had announced a 30-day margin discount at NNPC Retail stations across the country from October 1 to 31,
However investigation revealed that the policy is yet to affect transportation cost in the country.
By; Stephens Sopakriba and Saint Davies
In a press statement released to The Tide’s source on Friday in Abuja, the group said Nigeria had a significant resource advantage due to its vast natural gas reserves.
“At a time when global energy markets face unprecedented volatility and rising operational costs, Nigeria stands on a massive resource advantage with its vast natural gas reserves,” the group said.
Highlighting this potential, Alfa Designs urged the nation to move past complaints over energy costs and aggressively embrace Compressed Natural Gas (CNG) as a sustainable engine for economic growth.
While federal policy adjustments have sought to cushion the impact of global energy shocks, industry experts emphasised that long-term relief hinges on a rapid, nationwide transition to gas.
“Transitioning away from expensive traditional petroleum products promises to ease the financial burden on ordinary citizens.
“It will also reposition Nigeria as an attractive industrial hub capable of drawing foreign direct investment and driving job creation,” it said.
To demonstrate the practical feasibility of this transition, the group said it recently partnered with a global Original Equipment Manufacturer (OEM) to lower the entry barriers for commercial drivers.
“By negotiating directly with the manufacturer, we reduced the total cost of acquiring and installing a CNG conversion kit for commercial tricycles (commonly known as Keke NAPEP) from up to N700,000 down to under N450,000.”
The group said this shift offers dramatic immediate financial benefits for local operators, with petrol currently selling at roughly N1,390 per liter.
It said that, in comparison, at a CNG equivalent price of about N98 per liter, a daily commercial driver using 10 liters of fuel reduces its daily energy expenditure from N13,900 to N3,980.
“This represents a daily net savings of N9,920, or more than 71 per cent.
“Over a standard 26-day working month, drivers save over N257,000, allowing them to fully recover the cost of the CNG conversion in less than 46 operational days.”
The company further stated that when scaled nationally, the economic implications are monumental.
“Nigeria consumes approximately 50 million liters of gasoline daily, costing roughly N69.5 billion per day.
“A nationwide 71 per cent reduction in fuel expenditure would generate daily national energy savings of N49.6 billion.
“On an annualised basis, this shift equates to approximately N18.1 trillion, or $13.5 billion, kept within the domestic economy.”
The group added that those recurring national savings would offer a vital mechanism to help address Nigeria’s estimated $2.3 trillion infrastructure deficit.
It said reinvesting those funds into the economy helps eliminate the 30 to 40 per cent operational overhead currently consumed by imported fossil fuels.
“The resulting boost to corporate margins expands the national tax base, generates reliable user-fee revenues to make major transit projects bankable, and creates a self-sustaining financial cycle,” it said.
