Firm tips SMEs on loan application

By Chimwemwe Mangazi:

A Lilongwe-based business and financial services consultancy firm, Foster Lewis, has challenged local small and medium enterprises (SMEs) to be systematic when pitching business ideas to commercial banks for loan consideration.

Foster Lewis Managing Director, Ian Foster, made the call at a workshop organised for SMEs on business proposal writing.

This comes at a time commercial banks continue throwing out loan applications from SMEs, rating them as lacking.

“SMEs need to articulate their cash flow, planned capital, expenditures, overhead expenditures, variable expenditures and cash to support the business in the short term, if they cannot demonstrate that they are unlikely to get a loan because they will not be able to make the repayment,” Foster said.

One of the participants, Swift Sew Tailoring School Managing Director Musonda Mitchell, said most conditions set by commercial banks are prohibitive.

“…there are so many processes required and so many offices to visit; there are times they expect you to come up with a business plan when these business plans are not so well explained to us. That is why we engage people who can draft one for us and sometimes it doesn’t really reflect business operations,” Mitchell said.

First Capital Bank Head of Branch Banking and Agriculture, Patrick Kabambe, who made a presentation during the training, said SMEs face challenges produce comprehensive and credible financial statements.

He said this is making it difficult for banks to analyse the viability of a businesses