The untold stories of the struggles in start-up businesses lay in the mouths of business owners. The major problem that small to medium-sized enterprises (SMEs) face is money for expansion. Naturally, cash flow enables them to make prompt financial decisions. But when they do not have this financial backup, their plans fall through. However, you can’t undermine their amazing goals to become the big guns in the market. And this is what business owners can achieve with SME loans in Ghana.
In this article, you’ll know more about SME loans in Ghana, requirements, how to apply and so on.
About SME loans in Ghana
SME means Small Medium Enterprises. SME loans in Ghana are business loans available to medium-sized enterprises in Ghana. Most microfinance and commercial banks in Ghana offer SME loans to businesses. Sometimes, you might not need collateral to secure an SME loan even with no waste of time.
They designed it to fit into the needs and requirements of small and medium enterprises. Also, it is the funding of small and medium-sized enterprises, and represents a major role of the general business finance market. Especially in which they gain, supply, capital and price from different firms.
However, SME loans are usually for those who are planning to start their own businesses to make a progressive impact on the industry and society.
What are the requirements for an SME loan in Ghana?
In order to qualify for any type of loan, be it a personal loan to meet your personal needs or business loan to expand your business. You must meet some requirements.
The following are the requirements you need to qualify for an SME loan in Ghana:
- Your personal/business bank account details
- Existing loan details
- Parent business/company/associates/group entity details
- Annual accounting report of your business
- Personal guarantee letters from directors/ partners/ promoters
- Business registration certificate/documents
- Registration certificate of business as SME
- A copy of sales tax returns filing documents
- A copy of income tax returns filing documents
- Any sector-specific licenses, such as drug licenses with a pharmaceutical enterprise.
How can I apply for an SME loan in Ghana?
You must apply for a loan before you can get it. Just like every other form of loan. You can:
- Visit the website of your lender, fill up the online application form of SME/ MSME loan to apply. Submit all the documents they will require completing the process.
- Go to any of their branches and request the SME loan you need.
What is the interest rate on SME loan Ghana?
Different lenders in Ghana offer SME loans for different interest rates. Interest. The interest rate may vary depending on the loan scheme you want and the financial institution involved. The lender usually considers factors like tenure, collateral provision, repayment option, loan amount, tenure, and the applicant’s creditworthiness.
What are the benefits of an SME loan in Ghana?
You stand to gain the following from SME loan in Ghana:
- SME loans include flexible repayment tenures ranging from one year to five months.
- Most times they do not require collateral to avail SME loans.
- Quick and easy online application process with shorter approval time.
- Documentation requirements are minimal.
What is the use of an SME loan in Ghana?
The purpose or use of the loan must be to meet business requirements and growth. They include purchasing raw materials or machinery, availing working capital, marketing products/services. Also, expanding the employee product line or base, entering a new geographic location, and so on.
Is there any specific age for SME loan applicants in Ghana?
The SME loan applicant must be between 25 years and 55 years.
Is there any required experience and proof?
You must have a minimum of three years business experience and past years’ business return.
What are types of SME loans in Ghana?
- Line of Credit
A Line of credit is a type of business loan whereby the lender will approve a credit limit for your business. You can take a loan up to the maximum limit as per your requirements. They will require you to repay the amount you used while repaying the loan. It is very essential for micro-businesses that have seasonal demands.
- Unsecured business loan
In this type of loan, you pledge nothing against the loan amount. The lender is to carry a higher level of risk with such loans. Also, they are more expensive than secured loans.
An unsecured business loan can be very helpful to small enterprises operating from a rented property.
- Secured business loan
This is the type of SME loan where you offer an asset against the loan amount. These are big-ticket loans, which come with flexible loan terms and repayment options.
- Working capital loan
These are short-term loans used for managing expenses of day-to-day business operations. From paying rent of your commercial property to the purchase of monthly business supplies, we can use a working capital loan in different ways. Every size of SME can consider this loan for a regular flow of money for business growth.
- Business Term Loan
This is a term loan, often called an installment loan. It is a traditional type of business loan in which the borrower receives a specific amount of money to pay back on a set schedule.
Typically, you repay loan term payments each month, but the pay schedule usually varies depending on the policies of the lender. They will apply for each payment toward the principal, or the balance of the loan. Also, to the interest charged by the lender.
Business owners typically enjoy the growth of their businesses. This joy isn’t just for the fun of it, but for peace and more disposable income that comes with it. All SME owners owe themselves one good, which is to take full advantage of the SME loans available to them. With these loans, they can expand their businesses. Consequently, these businesses will yield more interests.
However, after getting this loan, ensure you use them judiciously so that you’ll have a better opportunity to repay it timely. This is because prompt repayment of loans boosts your credit score and will ultimately make the credit bureaus recognize your good financial habit.
Other related articles:
Types of loans in Ghana – Meaning and advantages.
Peer to peer lending Ghana – What you should know