Cashflow imperative to accessing finance from banks, SMEs told
Cashflow information of an existing business is imperative to accessing finance from banks says Head of Commercial and Business Banking at First National Bank, Mark Achiampong.
According to him, banks rely heavily on the cashflow information of businesses particularly small and medium-sized enterprises (SMEs) in giving out credit.
Speaking at the African Business Innovation Forum on the topic Digitizing SME Banking: The Role of Banks and FinTechs in Ghana, Mr Achiampong averred cashflow of businesses helps banks understand the operations of businesses and the level of credit they need.
“We really rely on the cashflow information of businesses to understand how businesses work and to provide the needed credit support,” he stated.
The reliance on the cashflow of businesses by banks, Mr Achiampong noted is due to the observation that most businesses struggle with the provision of collateral for credit.
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“As long as businesses provide good data on cashflow, we as a bank are bound to support them. The reliance on cashflow is due to the realisation that most businesses are unable to provide collateral to access credit hence our dependence on the business’ cashflow,” he added.
Speaking on the ability of start-ups to gain access to credit from banks, Mr Achiampong stated banks are willing to provide credit to start-ups with adequate data that ensures the sustainability of their business.
“We provide credit to businesses at every stage, from start-up to full growth but that is based on the level of information we have about the business or start-up.
“We look at who you are selling to, how you are funding it and most importantly how you intend to sustain the business.
“We mostly find out that businesses particularly start-ups struggle with how to sustain the business and this we think is because there is not enough data in the economy for that. But if start-ups are able to provide data and proper records that ensures sustainability of their businesses, then we can fund them,” he stated.