Sunday 18092016

SUNDAY Vanguard, SEPTEMBER 18, 2016, PAGE 39
With Emeka Anaeto (08104056415)
emekaanaeto16@gmail.com
YOUR BUSINESS & YOUR BANK
HOW TO GET
BANK LOANS
Last week we discussed how to get
your bank to finance your contract or
LPO and we noted that such
transactions are governed by a set of rules as
well as terms and conditions.
We also stated that the banks set criteria
which are largely uniform across all banks
with just a few exceptions. We gave four of
such criteria which are generally applicable
to most banks as pre-conditions for getting
loan or finance for your business or contract.
Tax returns become
another pain for small
businesses
By Emeka Anaeto,
Economy Editor
THERE are indications
that a bullish tax regime
of the current
governments both at
federal and state levels as well
as the local governments have
turned into another nightmare to
small businesses.
Most SME operators and
economy commentators have
attributed the increased tax
pressures on the decline in oil
revenue which had hitherto
contributed to over 80 per cent of
government revenues. Hence
most governments, especially
States and local governments
have intensified efforts at
increasing their internally
generated revenue, IGR, to
support themselves.
But SME operators are raising
alarm over the development as
they said it portends additional
danger to their survival.
An operator of a cybercafé on
Otigba Street, Ikeja, Lagos, Mr.
Kehinde Orojimi, told Sunday
Vanguard last week that he had
received visits from at least four
groups of tax and levy men within
one week alone demanding for
evidences of payments of the
various taxes, levies and permits.
According to him, “the number
of taxes and levies they now ask
for is increasing and it is affecting
the profit I make on this business.
“I don’t even remember the
names they call some of the taxes
and levies because they are so
•SMEs in Nigeria
•The situation is getting worse — Sam Ohuabunwa
•We are meeting with Finance Minister —NASME Chairman
many with new ones coming up
every time.”
The issue of multiple taxations
have been on the front burner of
discussions on Nigeria’s
business environment for a long
time now, but it had appeared to
be normal that not many
businesses honour the obligations.
This appear to be undermining
even the governments that
imposed the taxes as Orojimi
disclosed that in most cases he
ends up bribing the tax men and
get them to overlook his business
when next they come hunting for
taxes.
However, the situation appears
to be getting more complicated
with some new developments in
the taxation policy.
Another small business owner,
Mr. Kenneth Nwaofor, told SME
Reports that he could not open a
current account for his company,
Seamless Investments Limited,
because the bank asked for his tax
certificate which he does not have.
He said the development has
stalled some of the business deals
he would have executed since
payment would be made into the
account as specified by the client.
Consequently, he said he has
started processing his tax papers
for the company in other to
continue his business.
Commenting on this situation,
Mazi Sam Ohuabunwa, chairman
of African Centre for Business
Development, Strategy and
Innovation confirmed this
development as he told Sunday
Vanguard that the situation is
worsening.
According to him: “I wrote an
article on the desperate IGR pursuit
in Lagos state. If Lagos is an
example, a lot is going to happen.
Another small business
owner, Mr. Kenneth
Nwaofor, told SME Reports
that he could not open a
current account for his
company, Seamless Investments
Limited, because the
bank asked for his tax certificate
which he does not have
The states are not getting enough
money, so they are coming back.
They are telling us IGR, IGR is
from who? Increase taxation, when
you don’t have enough people to
pay taxation, you look at those
who have addresses, locations and
some activities and you off load it
on them”.
Reacting to this situation,
chairman of National Association
of Small and Medium
Enterprises, NASME, Lagos
chapter, Mr Ladi Jemi-Alade, told
Vanguard that the situation has
become unbearable with closure
of thousands of SMEs.
Consequently, he said the ongoing
stakeholders’
engagements with the various
government would address the
problem.
In today’s article we further focus on
business loan in line with the general
objective of this column – ‘Your Business &
Your Bank’.
Getting a loan from banks in Nigeria is not
as difficult as most people think, especially
those that have issues attempting to do so.
The problem is largely that of huge
communication gap (knowledge gap)
between the lender and the borrower, than
unavailability of loanable funds or
unwillingness of banks to lend. Also it is not
all about borrowers’ shortcomings as has
been overstretched in some quarters.
If only we note that banks have excess
funds which are ready for lending and at
same time the banks’ are not ready to throw
away depositors’ money simply because
somebody wants loan, the borrower-lender
field would become even.
Let’s examine a cross-section of a selected
few for the purpose of presenting a
representative case on this issue. In a future
edition we shall present some practical case
study of a typical Loan transaction cycle
(lender-borrower relations) in Nigerian
banks.
Below are some of the things one must have
in mind before going for a bank loan:
First the bank has a duty to protect itself or
its depositors’ funds from any loan that may
go bad. Hence the bank will have to examine
and appraise any credit facilities being
requested properly after which the request
may be granted or rejected. Some basic
conditions must be met before a customer
can apply for loan in the first instance
• Opening and operating of current account
for about six months (some banks have
relaxed this condition for small borrowers
recently);
•The account must be satisfactorily
operated, i.e deposits and withdrawals must
be reasonably stable and regular;
•Customer to have unquestionable
character and good health;
•Company registration details
•Business Case for the loan, rationale
behind it;
•Company Business Plan
•Your business financial statements
including an income statement, balance
sheet and cash flow statement;
•Personal Statements of assets and
liabilities of all the business partners,
members of the Board of Directors (may not
be required for small scale businesses)
•A 12 months cash flow statement of your
company.
Note that a satisfactory presentation of all
the above does not still qualify an
application for loan to be granted
automatically. Next week we shall be
examining other considerations for a
successful loan transaction between a bank
and its customer. We shall also be examining
some cobwebs embedded in a typical bank
loan transaction in Nigeria.