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Ecobank offers cheap loans to tech companies, entrepreneurs

For many businesses, getting funds to drive business growth is one of the downsides to the entrepreneurship journey in Nigeria as there are few local lenders that are willing to walk in uncharted territory.

However, taking a bold step, Ecobank Nigeria Limited is offering a 9% interest rate for qualified technology businesses or entrepreneurs that want to buy certain equipment or gadgets to scale business operations.

MarketForces Africa gathered that the single-digit interest rate loan comes under the Central Bank of Nigeria’s (CBN) creative industry initiative with 10 years repayment period.

Apart from the single-digit interest rate, there is also a 3 years moratorium, a legal obligation to a debtor to postpone payments. The extension, often, is designed for businesses to come up with a workable payment plan.

The single-digit interest rate loan opportunity is extended to Ecobank customers – existing and potential – that require new equipment or gadgets for the tech business operations at 20% equity contribution.

According to MarketForces consumer products research, the equity contribution to be made available by interested companies is determined from the equipment cost price obtained via the supplier’s proforma invoice; detailing other specifications.

By its features, the creative industry support for tech businesses is considered a sweetheart deal at a single-digit interest rate compared with purely commercial loan offerings.

Again, a number of technology companies that accessed the fund from Ecobank told MarketForces Africa that the Pan African lender made it a bit easier and disbursement comes faster.

This open lending offer is designed to support business growth in the technologies segment of the economy, startup businesses that need to expand operations will be adequately funded.

It is safe to note that the finance lease arrangement transfers ownership to customers after a proper contract arrangement has been made. Single-digit cost of funds isn’t as heavy as it used to be. The interest rate per annum is 9%, according to Ecobank.

What that means is that a loan of N1 million for a 12-month period requires an interest payment of N90,000. Say the amount is higher, Tech business owners can actually spread repayment over the next 10 years for any equipment acquired.

While the repayment period comes in a decade, there is also three years moratorium to settle obligations. This gives enough time for tech businesses to hack growth and settles obligations All that is required is proper records for business transactions and loan repayment plans – which is not really rocket science.

Nothing exists in a vacuum, even nature abhors it. So, the offer comes with terms and conditions. Let me break it down. To obtain this loan, you are required to provide collateral. According to Ecobank, the required collateral for you to obtain the loan to buy the equipment can be a mortgage debenture.

Ecobank said you can also submit a lien on stocks of trade and items of equipment. A serious business owner would agree that this is not too much to ask considering the value added to your business.

Explaining, LSintelligence Associates said, “If you have a company that needs to expand. Assuming it requires N50 million worth of equipment to scale. A financial consultant knows that your problem is not N50 million requires to get the equipment.

“The problem is to determine whether the equipment will generate a direct or an indirect amount equivalent to the principal +interest rate at the due date. So, you will need to do a detailed capital expenditure plan, detailing the pattern of your inflow and outflow to determine your net position”.

If the asset will help to grow your business and its net position is positive, you might have to consider the option to drive growth, Tech entrepreneurs should do their homework very well to take this opportunity.

As long as your return on investment is greater than 9%, plus a management fee (if any) as the bank is silent on this, then take the loan.

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