The National Institute of Credit Administration has said loans with low interest rates and flexible repayment terms will boost the profitability of Small and Medium scale Enterprises.
The Chief Executive Officer of NICA, Prof. Chris Onalo, said this in a statement released on Sunday.
He said a business-friendly loan would encourage intending and existing entrepreneurs to borrow to start new businesses and expand existing ones.
“It is difficult for businesses to break even with high-interest rate loans because the SMEs have other high operating costs, which will make repayment a challenge to them.
“To be better competitors and be empowered to expand their trades, businesses should have access to single-digit interest-rate loans with flexible repayment options.
“This is the ideal situation that will boost a business-friendly environment.”
Onalo called for support that would enable businesses to thrive better in the country because they provide livelihood to a large proportion of the population.
The NICA boss averred that businesses in advanced countries are well positioned to compete better in their countries, and even in other countries where they expand because of access to low-interest rate loans which are usually lower single digits.
While observing that lending institutions may not want to offer long-term loans in some cases, the NICA boss advocated flexible loan solutions that would help to reduce repayment strain on business owners’ finances.
With access to flexible repayment terms, NICA said, entrepreneurs would avoid patronising loan sharks, and choose from a variety of loan durations that suit their repayment plans to fit their budget and financial goals.
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