Before a young entrepreneur walks into a bank with a business plan and a prayer to seek a loan, a digital finance expert is offering a critical advice in this endeavor.
Maame Yaa Owusu-Amoah, a technical specialist in Digital Finance, who was speaking on the latest edition of The High Street Talks says young founders must understand which kind of financing fits which stage of their business. At the very start, she said, a startup simply will not have what a bank needs to say yes.
This, she argued, is not the end of the road. It is the beginning of a smarter one.
Her first option is crowdfunding. She noted that her team supported the Securities and Exchange Commission (SEC) in bringing out crowdfunding guidelines, and that licensed providers such as Grow4Me can help businesses raise funds this way. Her advice to young business owners to look at it as a real business opportunity.
Her second is the Solace Merchant Platform, which gives a lender, in this case Solace Microfinance, a 360-degree view of a business. The platform handles collections and payments, so the lender can see money flowing in. It can then offer a percentage of those inflows as a loan, because the numbers show the business can repay. She described the interest rate as quite good for a business that is starting out and wants to grow.
Then comes the step-up. Once a business has grown and its books look good, it has a record. It has built some credit history and some credibility. That, she said, is when a bank becomes a sensible conversation, because it now has something to lend against.
The route she lays out runs from roadside kiosk to bank boardroom, one funding stage at a time.
“As a young person starting a business, the bank is not your go-to immediately,” Owusu-Amoah said. Businesses, she added, need to build the capacity to engage banks at that level.
Her closing advice was to look out for the other options available. Crowdfunding and merchant-platform lending are only two of them, she said, and both can be looked up.
For the many young Ghanaians weighing how to fund a first venture, the question she posed is worth sitting with: must it always be loans?
