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MSMEs and Record Keeping and Access to Funding
By Mary Awoniyi
NOVEMBER 25, 2023
How are your customers solving problem of record keeping today?
Many MSMEs do not know about alternative funding sources available to them.
In the cases where they are aware of the funding sources available to them, they do not have the proper documentation required to approach the funding institutions to start the conversation to access the funding.
MSMEs generally either continue to do business with no extra funding thereby remaining small and unprofitable or they borrow money from their families or friends in many cases at a very high-interest rate. (i.e. 20-50%)
Other MSMEs resort to borrowing from cooperatives or faith-based institutions such as NGOs or churches.
Our latest interaction with SMEs shows that they are willing to pay for these services as long as there is someone ready to provide the services to them. They are also willing to adopt and migrate to an app that guarantees seamless access to loans as against the hassle they go through to access loans with traditional banking institutions they are currently banking with.
"For instance, our market research shows that SMEs are willing to pay between $40 to $80 on a monthly basis for a data entry expert to help keep their books in other. "
Our Experience networking with or serving local or community banks
We are in contact with local microfinance banks in Nigeria. We have been interacting on the nature of complimenting role our FinTech would be playing in the small business lending space in the country. Our technology is closing the gap in the AI-enabled credit decisioning and the inventory area in the market while the micro-finance banks continue to make the finances available to small businesses.
Many other institutional lenders do not border much about lending to SMEs due to the transaction cost and risks associated with lending to SMEs. Those who manage to do the lending deliver loans at interests ranging from 40-50% per annum.
Published Date: November 25, 2023