FNB Segment Head/Growth – SME, Sam Ikela, said the fund forms part of the lender’s plan to plough back into society and boost MSMEs.
Projects or businesses funded through this fund are expected to create more than 500 direct and indirect jobs.
Ikela said the objective of the fund is to support, develop and grow the MSME sector by providing the necessary financial and technical assistance on a sustainable basis.
He added that the special fund was established to address, among others, the lack of financing to MSMEs due to limitations in collateral and equity.
“Some of the requirements include a business plan; cash flow projections; business financial statements; personal balance sheet; key workforce CV; company registration documents; proof of registration with relevant authorities such as the municipality, social security commission,” Ikela said.
To qualify, customers should also have banked with FNB for at least six months or have a solid history at another financial institution.
Interest rates will be prime linked and priced according to the credit risk of each MSME.
A management fee of 1,5 percent of the loan received is payable by the client.
Applicants that include strong business cases and viable intent to employ others are important when loans are considered and will receive preference, especially when these initiatives are developed on the basis of the Harambee Prosperity Plan and various National Development Goals.
“We have designed a fund or scheme that will look at the issue of lack of collateral for our MSME’s and this product tries to address that predicament when entrepreneurs approach us for financing, but do not have the necessary collateral to start up their businesses,” Ikela further said.
“If an entrepreneur has a viable SME and showcases the capability to pay back the money and wants to apply for a loan, the criteria can be segmented in terms of micro, medium and small businesses.
“These normally require different capital requirements to start up. The micro, such as home based businesses, normally requires about N$1 million, while medium businesses are SMEs in the bigger playing fields such as manufacturing or retailing or other, who may require funds from N$5 million going up.
“We do not discriminate; hence each and every application is treated on its own merit.”
With regards to defaulters Ikela said, “We are taking a big risk with these funds.”