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On the Wednesday, June 14, 2023, edition of the Citi Business Festival on-air series, Audrey Abakah, the Director of SME, Agency Banking & Partnerships at Absa shed light on Absa’s comprehensive financing solutions designed specifically to support small and medium-sized enterprises (SMEs) in Ghana.
Madam Abakah introduced an array of financing programs available to SMEs through Absa, including Impact Finance, Business solution loans, Enterprise supply chain development loans, term loans, commercial asset financing, and revolving overdraft facilities.
Impact Finance
The primary objective of Absa’s Impact Finance program, she noted, is to create 50,000 jobs across Ghana, with a particular emphasis on empowering young entrepreneurs.
The program also seeks to promote the growth and development of businesses, recognizing the difficulties faced by SMEs in the current economic landscape.
Expressing her empathy for struggling business owners, Madam Abakah shared her first-hand experiences, having engaged with over 100 SMEs and heard their stories of hardship.
“SMEs have the opportunity to access up to one million cedis without providing collateral, a unique offering not currently available from any other financial institution. Moreover, eligible SMEs can access funds of up to 11 million cedis, with an additional provision to obtain up to 500,000 cedis without the need for security. Remarkably, the entire process takes a mere two weeks to complete.”
While these financing options are primarily available to Absa customers, non-customers can access them after creating an account. To qualify for an unsecured loan, prospective borrowers need to maintain their Absa accounts for a minimum of three months and submit a year’s bank statement.
However, collateralized loans are accessible immediately upon account creation. Additionally, beneficiaries are encouraged to undergo free business training, funded by the Mastercard Foundation, to enhance their entrepreneurial skills. Ensuring the continuity of businesses beyond the current owners is also a significant consideration.
The program’s eligibility criteria focus on women-owned SMEs, businesses with women owning approximately 50% of the shares, young entrepreneurs with a minimum of three years of operational experience, and Agribusinesses.
One of the most captivating aspects of Absa’s financing programs lies in the absence of collateral requirements for beneficiaries. SMEs have the opportunity to access up to one million cedis without providing collateral, a unique offering not currently available from any other financial institution.
Moreover, eligible SMEs can access funds of up to 11 million cedis, with an additional provision to obtain up to 500,000 cedis without the need for security.
While these financing options are primarily available to Absa customers, non-customers can access them after creating an account. To qualify for an unsecured loan, prospective borrowers need to maintain their Absa accounts for a minimum of three months and submit a year’s bank statement.
However, Madam Abakah noted that collateralised loans are accessible immediately upon account creation. Additionally, beneficiaries are encouraged to undergo free business training, funded by the Mastercard Foundation, to enhance their entrepreneurial skills. Ensuring the continuity of businesses beyond the current owners is also a significant consideration.
Business Solution loan
The Business Solution loan, designed for short-term finance, offers quick cash to bolster businesses’ working capital. This unsecured loan allows eligible Absa clients who have been running their businesses for approximately six months to express interest and receive funds within 48 hours, with the minimum loan amount set at 50,000 cedis and a maximum of 500,000 cedis.
Absa’s Term loan, on the other hand, targets businesses seeking funding for fixed assets, such as machinery or property leasing. This secured facility permits SMEs to access up to 25 million dollars for a period ranging from one to seven years. To qualify for this loan, applicants must have a six-month relationship with Absa.
Madam Abakah further emphasized the importance of effective management and personal character when seeking financing options. She stated, “Management is key, your character, openness in your engagements with us are all important.” Absa recognizes that the success of SMEs goes beyond financial support and extends to the capabilities and integrity of the entrepreneurs behind these businesses.
Enterprise supply chain development loan
Discussing the enterprise supply chain development loan, Abakah described it as a form of contract financing. The Ghanaian government is actively promoting local content and encouraging multinationals to contract with local companies.
However, while these local companies may possess the capacity to fulfil the contracts, they often lack the full capital required to do so. In such cases, Absa steps in to support these local companies by providing funding up to 80% of the contract value. The loan amount is determined based on the company’s capacity to deliver and the size of the contract, leveraging the reputation and credibility of the anchor companies involved.
Commercial asset financing
Absa’s commercial asset financing focuses on movable assets such as cars, tractors, and other equipment. SMEs can access this financing option for a minimum tenure of six months, with a maximum period of 60 months. This facility enables businesses to acquire essential assets crucial for their operations, offering flexibility and convenience in managing their capital expenditure.
Revolving loans
Lastly, she highlighted the revolving loans available through Absa, which primarily serve as working capital loans. These loans function as a limit marked on the SME’s account, akin to an overdraft facility. This arrangement allows businesses to access additional funds when needed, providing them with the necessary liquidity to meet their day-to-day operational requirements.
The Citi Business Festival 2023 is powered by Citi TV and Citi FM in partnership with Absa and is proudly sponsored by MTN MOMO, MTN Business and Zeepay with support from GIRSAL.
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