Paheja Siririka

WINDHOEK - Standard Bank Namibia’s Head of Small and Medium Enterprises (SMEs), Dennis Issac, said loan seekers should make sure they are ethical and willing to repay their dues whenever applications are to be submitted to the bank.

He was addressing visual artists at the Redbull Amaphiko Artist Workshop on Finance Management, highlighting important key elements the banks look at before granting any business a loan.

“One of the important aspects we look at when it comes to those applying for loans is their characters, are you a fair person? If you withdraw money early after payday to avoid your monthly deduction, that warrants a question to your character as a loan seeker. The bank zooms into your character,” he said.

Issac pointed out something that is mistaken by many. “There is a difference between the ability to repay the loan and a willingness to repay it. What I can tell you right now is people do have the ability to repay but sometimes don’t have the will do that,” stressed Issac.

He mentioned that to observe a loan seeker’s character, what the bank would usually do is scan through social media to determine the attitude when interacting on social media. “People zoom into these things to determine the type of person you are,” he stated.

A key aspect which determines whether the bank will grant a loan or not is the capacity. “We want to see whether your business can repay the loan. Under capacity we look at your capital by observing the profit and expenses of your business,” said Issac.

He said banks closely monitor the cash flow of businesses as well. “If you are a start-up, they will ask you for total cash flow and if you have been in existence for a while they will probably track down the past two or three years of statements to determine how much money you make,” he revealed.
Issac said entrepreneurs are not in the business sector just to run a business. “You are there to make money and the bank wants to know if you are going to make money as far as profit is concerned,” he added. 

A contingency plan is important for banks to consider giving a loan. “Do not put your eggs in one basket and this should well be stated, what is your back-up plan?”

Issac quantified that banks have also found a way to the element of capital when it comes to loan applications. “You want money but have you invested in the idea? We want to find out if you are confident enough to believe in your plan; simply provide an invoice of everything you have spent into your business.”
“If you look closely, there are people out there that are willing to help but you need to have a business model, you need to have a plan.” 

He advised business owners to invest in an accounting course to understand numbers. “Sometimes you would ask applicants to submit statements and receipts and when you are inquiring they have no idea what is written in the books.”