Ready access to credit (loans) is an integral part of sustaining a small business and building it into a larger enterprise. Two primary ways to access the required funding is either through equity or loans.
Although equity funds might seem like the best bet, a wiser alternative would be to get a loan. The process of acquiring bank loans can be quite daunting with strict conditions attached. To curb these excesses for small businesses, the Nigerian Government has come up with the Government Intervention Fund for businesses.
What is A Government Intervention Fund?
The government intervention fund is a funding initiative by the Federal Government of Nigeria. This initiative provides loans to Micro, Small, and Medium Enterprises (MSME) at a 9% per annum all-inclusive interest rate.
Why You Need A Government Intervention Fund
Subsidized and Flexible Repayment Options
Most of the government intervention funds come with subsidized and flexible repayment options. In addition to this, payback might also take a more extended time than other funding sources. The payback span for most of these loans takes as long as 5 to 10 years.
Having a subsidized interest rate and a flexible repayment plan makes it easier for a business owner to afford such a loan.
Working Capital
For a small business to thrive in the market among competitions, access to sufficient working capital is vital. In the absence of capital, such business is at risk of shutting down. Most businesses seek external funding to supply this working capital, and such funding can come in various forms.
One of these means is the Government Intervention Fund. With this fund, business owners can bridge the gap between the demand and supply of products and services. According to the British Business Bank’s 2019 Business Funding Survey, working capital ranks as the most common reason a small business seeks funding.
With sufficient working capital, a business can take advantage of new opportunities to further expand the business. Also, it will cover the necessary expenses for the duration of the loan.
Asset Purchase
The process of growing your small business while increasing sales alongside doesn’t come as easy. More often than not, it requires purchasing new machinery and tools that are above your financial capability.
Although you might have sufficient funds to cover up the area of working capital expenses, purchasing assets/machinery is a different ballgame entirely. However, that is not to say there is no hope. The government intervention fund has got you covered. What’s more? It allows you the luxury of spreading the costs of purchasing a new asset.
Assets for your business can come in various forms such as vehicles, IT equipment, office space, machinery, etc. In return, these assets will create an opportunity for growth.
Cash Flow Problem
A cash flow problem is defined as the inability of a business to pay up its liabilities.
Let’s face it, even the fastest growing and most successful businesses get hit by cash flow problems. Most times, the growing companies are the ones at greater risk. As customers increase, there is a need to invest in equipment, raw materials, and labour.
However, that is not all there is to cash flow problems. Seasonal slowdowns and recession can also contribute to cash flow issues, which can hit a business. With the right funding in place, your business can stay afloat through any situation.
Growth Funding
As a business owner looking to grow your business and take it to the next level, funding is necessary. Growth can come in various forms – increase sales, expand products and services, hire new staff, pay for rent, etc.
Whichever angle your expansion is coming from, a government intervention fund can help bring your growth plans to reality. Once you have daily costs covered for your business, an intervention fund might be the solution you need to grow your business.
An added advantage of an intervention fund is that there is a repayment plan over the loan term. This plan makes it easy to plan your finances as your business grows.
Grow Your Agricultural Business
Do you own an agriculture business, or planning to start one? If you fall into either of the two categories, the Agric-Business Small and Medium Enterprises Investment Scheme (AGSMEIS) is just perfect for you.
AGSMEIS is a government intervention funding scheme to promote Agriculture business in the country. For you to thrive in the Agricultural sector, this loan is your most reliable option of funding.
Agriculture has been and is still making such a massive wave in the economy today. As a result, you need an intervention loan to keep your business thriving and afloat.
Getting a Property
One of the most expensive investments you’ll make as a business owner is getting new property. This investment will cost quite a fortune; however, you can rely on the intervention fund to carry this out.
The government intervention loan is necessary if you’re looking to get a new warehouse, office space, etc.
Conclusion
Government intervention loans, unlike other loans out there, provide a safer option for business owners. Also, they come with less stringent requirements, i.e., lower down payment, less strict debt ratios, and lesser collateral requirements than traditional loans.
Despite these advantages, government loans come with specific requirements you must meet before you get funds. To apply for any of these loans, you should check out the requirements first to ensure you’re eligible.