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| Chief Anayo Nwosu |
Let borrowing from a bank be your last option to increase your
working capital.
Even the bankers, knowing how delicate their product is, have
named their loans RISK ASSETS. They know why.
Every banker knows that there is every probability that a borrower
may not be able to repay a loan he or she has borrowed even with good
intentions hence, they set aside a portion of their future profit to provide for
a possible loss of the loan amount.
Central Bank of Nigeria also knows that loans, even to the most
trustworthy customer, may not be repaid as at when due. In my career as a
finance person, most people who call the name of the Lord or Allah so often don't
repay loan as timely as seemingly irreligious ones.
Therefore, CBN has given banks, a prudential guideline on how to
treat loans which endpoint is that the bank should use a portion of its profit
or capital to replace any amount of loan a borrower could not pay as agreed in
the offer letter. It is that bad.
The failure of a customer to pay his/her loans leads to the
termination of the careers of his account officers and loss of profit or
capital to his/her banks.
Most times, the money realized from the sale of the collateral
pledged by the borrower many not be sufficient to offset the outstanding
principal and accumulated interests.
To punish loan defaulters, CBN has banned banks from lending to
anybody or a director of a company or his new company, who has a bad loan in
his name or that of his other or old company and whose name has been submitted
to credit bureaux that maintain the list all borrowers in Nigeria.
With this in mind, my dear friend, think well before you approach
a bank to ask for loan.
The following advice may be useful to small and medium enterprises
owners who are desirous of bank support :
1. Don't borrow more than 25% of your total working capital from a
bank. At such levels of loan, it would be easier for you to repay on time.
2. Do not use bank's loan to finance a speculative business which
has a high probability of failure. E.g. Using bank loan to stock a product like
palm oil, hoping to sell when the prices move up. What if the prices move down?
3. Do not use bank loan to import perishable products like fish
and fruit juices or even drugs. Delayed shipment or mechanical failure could
lead to the product spoilage and a huge financial loss.
4. Do not use bank loan to finance, stock or import contraband no
matter the assurances of the clearing agents. Once customs seize the goods, you
are doomed.
5. Never use bank's money to finance luxury items. That's a stupid
thing to do. If a bank finances your mortgage, ensure that all or part of the
apartment is rented to yield income to help you service the loan.
When you have a misfortune of failing to repay your loan, don't
run away from your banker, engage them.
Enlist a lawyer and accountant to help you in negotiating a
foreclosure of a loan you can no longer repay. Get a discounted full and final
settlement amount usually tenored for 90 days and sell your collateral
yourself. When the bank sells, you may get a lower sales figure for so many
reasons I will state another day. The buyer shall pay the sales proceeds into
your account in the lending bank who will in turn release the title documents
to the buyer.
When you want to sell the property pledged against a loan, never
disclose to the buyer the real reason why you are selling to avoid wicked
pricing. Ensure that you have already agreed on the selling price before you
give out a copy of the title document for legal search.
Evidence that you borrowed and did all you could to pay down your
loan in banks is a certificate of good character and a beautiful music to the
ears of bankers. It matters a lot.
Please note that even when you die owing a bank, you may spend a
long time in purgatory (if you are catholic faithful) until your loan is fully
repaid by your heirs; prayer alone on a day like today- All Souls Day- can't
purify you. Non-catholic debtors would go straight to hell as they rejected the
grace of purgatory while on earth.
Remember, no debtor shall enter Paradise. Debt is a blemish and a
tar on the White Garment.
Therefore, don't borrow if you can't repay or do all you can to
repay. This applies to debtors to individuals or institutions.
Have you heard this? Many Nigerian exporters have been defrauded of huge amount of money in the process of exporting commodities to foreign countries. Do you know why? They were not trained on export operations, management, documentations and the best methods of payment in export trade. This is terrible!!! Nigerians cannot continue to lose money to foreigners in the course of export business. Exporters, why don’t you get a practical manual that teaches the stages of export trade from processing and packaging of commodities to receipt of payment by the foreign buyers. It teaches export operations, export management, export documentations and methods of payment in export trade? It is a contemporary step-by-step guide to export trade. It tells all the contemporary dynamics in export trade. To get it, click on the link below:
http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
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