Get the Right Loan: Questions That Protect Your Business

Hello and welcome. My name is Tavishma Ayede. I'm focused on solving sales and marketing challenges through business education and I'm making today's recording at home. It's a holiday, so the kids are home and of course, the neighbors, everybody's home. So expect to hear some interruptions in the background. Now, if you're impressed by the time you're done listening to this episode, please spread the word so that your friends and family members in Nigeria and abroad can benefit from the questions that we tackle.

They can do that by subscribing on Spotify, YouTube, Apple or any player of their choice. And if you, dear listener, would love to connect with me, then call SMS or WhatsApp me on 08064662140. Now today on the podcast, we're going to look at questions that you should ask in case you want to take out a loan from a microfinance bank. Now, obviously for me, this is like a last case resort, I mean, for most people because there's some people who are trying to start big businesses that require a lot of capital, like the podcast listener who is thinking of setting up a plant that produces or rather that refines marine engine oil, that is engine oil that is used on things like tankers, boats,

speed boats, ships, you know, those sorts of things. Now that kind of business is capital intensive and usually it's beyond the scope of what one person is going to be able to do. Like down with a for instance, who is now talking about opening a the largest seaport in Africa. I think I'll be in West Africa in is it Calabar? I can't remember where he plans to do it. So you know, you have the port in Lagos and then down with a wants to open another one.

And of course trying to finance those kinds of things require major bar. It's not the kind of thing that one person will open your pocket and then finance the whole thing. So just like doubt is going to have to look at financing options. People who want to start off businesses that require big, big, big money, you know, plenty of capital investments, you know, they're going to have to look for major loans. However, a lot of us listening to this podcast and lots of people getting into the game are not trying to get into business at that level.

And that is the reason why I keep on saying on the podcast, on my radio show that the best way to finance your business actually is to get customers to finance the business. Get customers to finance the business. What that means is go and look for people who want your product or service, get them to pay. Make sure that there's a healthy profit margin. Go and get more orders. After a while, raise your prices, take the extra income,

plug it back into your business and grow your business that way organically in the beginning. For now, a time will come when you can now look for loans from banks. Well, however, now lots of people who assume that you know, financing is their problem, so shall any which are the most get loan. So if that's the case, I say, well, you know what microfinance banks because at the very least the interest rates are cheaper than normal banks.

So if you go to microfinance bank and you say that they're too expensive, then well, what was you or your is your own? It means you won't do anything. You just sit down there and keep complaining about finance, which is also the main reason why I keep telling people that, look, financing business through customers is the best way to grow the business. Because those of you who are convinced that finance is your problem and nobody can tell you otherwise, that finance is your problem.

When you go out and you try and look for finance and you don't get it on any good times, what do you do? You go back and you sit at home and then you say, well, at least I tried. But really, have you tried anyway? So for today's our podcast episode is for those people who insist I must carry a loan. I must get a loan. All right, no problem. So you must get a loan. Of course, no one. Commercial banks, that'll be a problem.

Microfinance banks might be an easier way to go. At least you need to have a couple of questions ready. So that's the reason why I'm making today's podcast episode, particularly because of one radio show listener who thinks that the only option available for her and her business is to borrow me. I disagree, but The thing is, you know, I can't force you to do what it is that you don't want to do. If you have said you must borrow, OK, no problem, let's look at how you must borrow with through microfinance banks.

Now my recommendation is this. If you're going to go in through a microfinance bank or any bank or any other formal institution to look for a loan, you have to go in prepared with your own questions. Because lots of people just go in and they say I want to raise loan and then they sit down and and you know, whatever it is that the sales or marketing person says, you know, that's all that they listen to. And that's not how to make a good decision.

So before you go into the office of the microfinance bank, prepare some questions on your own. Don't just prepare it in your head. Write the thing down so that you remember to ask because it happens lots of times that you're going in for a business meeting or you want to go on. I mean you understand now like even normal something like you, let's say you go to Lanza registry in Abuja or in your state because you want to inquire about something.

You know, mom sees land, pop sees land and then you go there you think is a good meeting by the time you get home. You now remember I didn't ask about Disney, I didn't ask about that thing. These things happen. So write it down. If you don't prepare ahead of time and if you don't write things down, you just go in and listen to a sales speech. And to be honest, the sales speech is just going to sound like white noise because the people in the sales and marketing departments of any institution have been trained on some standard sales pitch pictures of the company.

And these people can vomit these things in their sleep. As in, if a sales and marketing staff of, let's say, Access Bank is sleeping and you're going to slap them. So yeah, give me sales pitch, they will just vomit everything. Access Bank founded in this that offer products of this blah blah, blah, blah, blah, interest rate also blah blah blah. We've contributed this to the social economy of Nigeria. Board of directors is that they will vomit everything instantly because they've been taught to cram nothing and unfortunately all that vomiting that over meet on you, you won't be able to now pick out the important thing that you need to decide whether you're going to get a loan or not.

So compile a list of questions. Now, apart from that, some people make the mistake of just, you know, there's a microfinance bank at the beginning of my estate to go and check that one. And then from there they will decide, OK, loan is not for me or loan is too expensive. Now, how do you know you only went to one place and you only went to the place that was closest to your house? If you're sure is about this thing, sit down, come up with a list or maybe ask around, you know some other traders in your estate or some other traders in the market, Ask them.

But I'm have you taking loan. What kind of loan and from where? Write down, compile a list of five or six. Then you go and visit all of them, call up all of them, ask them these questions. From there you can now decide whether OK, it's too expensive or it's not too expensive. Maybe the one that's at the beginning of your estate, the rate is too high. Did you go and check another place that even if the rate is high, other things are more favorable.

So you never know. So compile a list of questions, then compiled a list of banks. Because if this is your first time getting a loan from any formal institution, whether microfinance bank or not, The thing is most likely it's your first time, so you have nothing to compare to. That's the reason why you need to come up with a list of banks. So you can't compare them then. OK, on the bond house, I talk about how the sales skills that we need when we're interacting with customers, you know, asking customers questions, you know,

things like that. I mentioned that it comes in in handy in other aspects of our lives, like when we're dealing with our spouses, for instance. I mean, Lord knows my wife says I have a God complex and I don't listen to her. Funny thing is mom, she also says the same thing. My brother says the same thing. So I guess I need to tap it down. I stop feeling as if I'm God. So I need to be taking my own advice and asking people much more questions and trying to listen more when I'm at home and, you know, when I'm with family.

So where was I before I started confessing my sins? OK, so these skills that we talk about over here on the podcast, listening and asking questions, come in very handy in other aspects of life. And this is one of those aspects. So normally we are the ones who are trying to sell something to someone, but there comes a time when we want to go and buy something or want to go and apply for loan. Knowing how to ask questions,

what kind of questions to ask and being able to listen and separate the wheat from the shark will also come in handy. And this is one of those situations. So if you've been listening to this podcast for a very long time and you want to go and talk to members of staff in the microfinance bank or any other kind of formal financial institution, you already have the skills that you're going to use and they'll be able to help you to get get along.

So the group, the questions that we're going to ask, I came up with a couple. Let me see, this is 1234. OK, I came up with four groups of questions. So we're going to come up with questions on sorry, one moment. I'm looking at the questions again. OK, So we're going to ask questions about the loan itself. Also going to ask questions about how you qualify the loan, how you how you qualify for the loan and how you're going to apply for the loan.

Then we should also ask questions about collateral for the loan or security for the loan. And then we also have questions around payment and support. So again, the questions that we should prepare before we go to talk to the bank, questions about the loan itself, What kind of loan is this? Questions about how to qualify and apply. Do I qualify? If so, how do I actually apply? Then questions around repayment and support.

Are you going to give me an extra support? What if I have trouble paying? What's going to happen then? What else? OK, questions about collateral or security. This loan that you're going to give me, are you going to hold something just in case I can't pay back? And what is it that you want to hold? These questions are very, very important because I have family members who want to go and take one guy particularly, I want to go and take a loan from One Financial institution and any he didn't read the fine print, they didn't collect any collateral.

But The thing is they got access to his phone book. And so every single time that is my dear brother, not my blood brother anyway. But you know how he is now has in in Niger, you know anybody from your village is your brother. So, so anytime this my dear brother misses a payment, they just send text message to everybody with him. So unfortunately now my brother, everybody in his life knows that he has carried loan and that he hasn't paid and this is how much like he's owing.

So anyway, you know, I've been out of law for a while, so I'm not sure how legal these tactics are. But you know, sometimes you go and take a loan, you don't read the fine print properly and you don't realize that oh, OK, this thing, you actually signed off for it. So anyway, so ask questions. All right, so let's begin questions. OK, about the loan. So since this woman now who wants the loan, she's an Agri business, you need to ask them what kind of loans do you offer?

You hear what they will say. Do you have any loans that are tailored to people in the Agri business? And they hear what you have to say. Because sometimes people go and they take a loan that is more suited for one type of product or one type of business and then they try and use it to finance something else. Doesn't work that way. Go and ask. He'd be surprised. Like back when I was a an imperial in secondary school, Mumsy needed to take some loans.

I think I can't remember the name of the bank anyway, that were offering some loans amongst you want to apply. But unfortunately the loans that were being offered were not offered for business purposes. They were offered for mostly, you know, cosmetic stuff like buy car or finance travel or things like that. And I remember my mum was very upset for a while. And in fact, we think of some controversy not because of my mum, but because of other people she was written about in this day and some other national newspapers at the time.

So basically they were saying, now look, this bank, you can't say you want to support women to grow their businesses, But then when women come to take loan from you, you say no, only give you a loan to buy a car. I only give you a loan so you can travel abroad. Is that what you're saying? Women are, the women are only concerned about travelling abroad and buy a brand new car, you know, anyway. But I'm just trying to say is that when banks make these loans available, they really make it for specific products, even if it's just we're only giving women money so they can buy clothes, they can travel abroad and they can buy a car, even though that whole thing was ill advised.

But you should ask, in this case, the woman should ask what kind of loans do you offer agricultural businesses? Do you offer loans for agricultural businesses? OK, this is my own particular agricultural business. This is exactly what I do. Do you have any products that tie into this situation? Then the woman is a new business. She also should ask, do you give loans to new businesses? Something should ask because if they don't give loans to new businesses, there's no point in you sitting down for 30 minutes and listening to the sales pitch.

Ask them, do you give loans to new businesses? No, we only give loans to business people who have been in business for three years. So OK, sorry, in that case, let me leave. My business is only six months, so I ask then interest rate. That's the one woman is afraid of, actually. But you can't be staying in your house and be afraid of interest rates when you've not asked. Go out and ask. Now you're surprised. It might not be as bad as you think, but that too many people in the business fair who are afraid about something and they stay at home and they're hindered by that fear.

Go and ask first. You might hear that is not as bad as you think, or you might hear that is as bad as you think, but there's support. So you can rough it. You can pull things through. So for those of you who are thinking, excuse me, financing is my problem, I don't know how to get a loan. Stop staying in the house and saying high interest rate, high interest rate, high interest rate. Then if anybody asks you which bank do you go to, say I didn't go and visit any bank.

You didn't visit any bank, so why are you shouting high interest rate? Go and call up a few people first, then the tenor of the loan. How long are you going to give this loan for? And then grace period really, really important because that's the one that causes serious problem. I've seen it when selling financial products because like for insurance, you're supposed to pay your premiums on time and there's a grace period of, and I

can't remember, depends on the product, but you know, you need to know that OK, if I'm supposed to pay on the 1st of every month, but I can't pay on the 1st, what I'm able to pay on the 3rd, on the 4th, is that OK? You need to ask that question so that won't cause a quarrel in the future. Then apart from grace period, you need to ask about the repayment schedule. Am I going to be dropping money weekly? Is it going to be monthly?

Is it going to be quarterly? You know, also very, very, very important. Like for the financial products that I just mentioned, there are some that had to be paid monthly and some quarterly. But then there was some products that would allow you to just say, you know what, let me just pay this thing annually, you know, in advance. So instead of paying quarterlies every 3-3 months, I mean every 4-4 months, instead of paying every three months, every 4-4

months, once we finish December and we're entering January, just calculate from January to December how much and let me just pay one time back. Let me just pay annual. So some things that some financial products that let you do that, then of course you need to ask, do you need me to write a business plan? Quite frankly, you know, to be honest, I haven't confirmed from microfinance banks that that is the case. But as a general rule, if you're going to a formal institution,

you have to put something on pen and paper as a general rule. So your uncle can give you money based on recognition, Popsy can give you money based on you're my son, your friends can give you money based on you're my guy. But once you're going to an outsider and it's a formal institution, then expect to put something down on paper. Then ask questions about the collateral for the loan. What are you dropping as security?

And then if they don't collect security, what are the options? Like this, my cousin who go into trouble not knowing that even though didn't collect, collect their collateral, they were going to use your social capital and disgrace the hell out of you, even if you're late by one day. Yeah, just message everybody now, all your brothers and sisters, all your cousins, all your uncles, all your aunties, all your ex girlfriends,

everybody now knows that you're owing money. Terrible, very, very terrible. Then let's see. OK, Group guarantees. Now I don't know how whether this will work with microfinance banks, but with what are they called? I can't remember the the, these sorts of banks. There was this bank in in Asia, Grameen Bank, I think in India, they were supposed to give micro credit and it was supposed to be for women only. And I think in agricultural space, you know, just give women small credit.

Let the woman be able to buy maybe one cow or one goat, you know, from there should be able to enter animal husbandry, small, small like that. And they didn't have collateral because in those places in India, for instance, where women don't have more any property of their own anyway, you can't say give me landed document because like, which land does a woman have? So they used to give group collaterals. So maybe, maybe like women in like my mom sees local government.

Now all of them can come together and say, you know, the daughters of you know, so, so, so and so, you know, like I'm also people, people say, oh, mwada, something, something. All of them come together and apply for a loan and then the bank gives the money to the Omwada on the sorry evil people. I'm sure. I don't think I pronounced it correctly, but I know you guys know what I mean. So the idea is the loan is being given to the group as a whole and then you people are now policing each other to make sure that everybody pays.

Because if you don't pay, you will rub off poorly on all of you and it will affect the ability of the group to collect a loan in the future. So that way when it's now my own turn to pay everybody in the group who's intervention? How far have you paid? Have you paid a big go and pay, go and pay. Don't rubbish us, don't rubbish us. Go and pay. So they take some banks, they do take advantage of group dynamics like that to, to, to give loans.

But as far as I know, that is just when it comes to microcredit for banks like Grameen Bank. But Grameen, I don't think they're in Niger. As far as I know, it's an, it's an, it's mostly an Asian thing. And I think I've heard some people say it would be a good idea to start those kinds of microcredit initiatives in Niger. Excuse me. But like I said, I've been out of the formal sector for a very long time. So I really don't know how things are moving on that front.

But yeah, you can ask about collateral then, OK, payment and support, we ask them upfront. Look, if we start and then I start struggling, how far was what's going to happen? What's the worst that's going to happen? Because often see some unforeseen sorry circumstances happen. Woman is in agric, woman who is talking about the loan. I know sometimes, you know, low rainfall, not, you know, poor harvest, market fluctuation,

blah, blah, blah. So are there flexible repayment options? Can we restructure the debt? You know, things like that? What are the penalties for late payment? And then support, Yes, support. Really, really important, especially for microfinance banks because I know that there's some that offer support. So there's some microfinance banks that offer financial literacy training or they give business advisory services to people who take loans from them.

So in other words, OK, no problem, we'll give you the loan And just to make sure that your business succeed so that it's not basic for all of us, we will now provide you free legal services. So maybe at the end of every two, two months or you can come and take advantage of legal clinic. You come and sit down, listen to a lecture from lawyer, and then the lawyer will also stay behind after the meeting and give free advice for all of you so that there's no problem.

So that might some microfinance banks that do those sorts of things, business advisory services. So once in a while, come and learn some legal, you know, lawyer will help you once in a while, come and learn some accounting. You know why I will help you something like that. If you can get, in my opinion, sha, if you can get a microfinance bank that offers these kinds of business advisory support. For me, I think it's pure, I

think it shows that the bank is invested in you people's success. And I think it's a good, is a good resource to take advantage of. Because I'll put it, you know, some people say, oh, the lawyer that will come and give that kind of thing is not the best lawyer or whatever. See, I'm not going to wade into that debate. But The thing is at least that kind of lawyer who has been vetted by the bank and who is here, at least he's a resource that you did not have before.

So I mean, what are we talking? I really think it's a good thing. At least there's another person that you can call, you can SMS, you can what's up to say? This is my situation. You know how far the lawyer of course, who has been vetted by the microfinance bank, he already knows, you know, all of you in a way, if you understand what I'm saying, he won't be looking at you to be charging millions and millions because you know he understands that well is our people.

So even if he's charging you, you use one kind I and charge you won't be shouldn't be too much anyway, reading between the lines. So if the bank offers that kind of business advisory support and stuff like that, I think it's good. So for now, I would say that's it and that's all. If you have insisted that you must take a loan, at the very least, I push people towards microfinance banks because they're cheaper than commercial banks.

But Please remember, I keep saying it time and time again. If you must finance your business, the best way to finance your business in the beginning is through customers. Let me repeat, the best way to finance your business is through customers. Let me say one more time in case there's somebody who hasn't gotten it, The best way in the beginning to finance your business is through customers. We will all get to the stage where we need to get big, big money and big, big loans to finance our business.

But in the beginning, it is through customers. Get more customers, get more people to buy. See, when it comes to business growth, traditionally in sales, they say we have 3 levels. Number one is get more customers. If you only have one customer per week, you'll cover a multitude of sins. If you're able to grow to 2 customers per week and then three customers per week, so that is level 1, add more customers. Level #2 is the people that you get.

Get them to increase average order value. Let them be buying more and more things from you. Level #2 level #3 is customer lifetime value. Get them to stay with you for as long as possible. That way you're going to be able to, well, you have to give value, will be able to extract more value from the situation. So that's level #3 what else? OK, some people say there's 4 levels. Level #4 is raise your prices. So as you're doing all of these things together, your business is growing.

So let's say on average, you're having 22 customers per month, 22 customers per month. The goal is, should be to grow to, you know, from 2:00 to 3:00, from 3 to 4, from 4 to 5, from 5:00 to 8:00. Be doing that per month. As you're doing that, your business is growing, revenue is growing. Then get those people to stay long. Instead of somebody buying from you January, February, and then the person disappears, try and get the person to stay January,

February all the way through to, you know, November, December or maybe even March of next year. Your business is growing, you get more revenue. Then you can also be increasing the price. The price increase doesn't even have to be massive because after a while, OK, it's like my kids school after you know, this whole fuel price, whatever and then they raise school fees. I think they raised it by I think at first they raised it by like maybe like 150 per head.

You know, even me, I wanted to shout like 150. You guys want to kill me. Like me, I have two kids and you know, there's some some families there that had like 6 children in that school. I look at them and I want to walk up them and say Bros like hi, how you doing it? Let me only have two kids and you know any time they say school fees my legs will begin to shake and you have 5 like how you guys doing? Anyway, so The thing is you raise it 100K150K per head.

It is small, but then if you look at the fact that in Abuja, you know the average school has like maybe 2003 thousand children, you can see that just that small thing, you add 50K on top everybody per head. But The thing is the 2000 kids there, so it's 50K times 2000. You can see a small increase, big money. It's the same thing with price increases. It doesn't always have to be huge. You don't always have to double your price.

It can be small, small, small, small. In fact, there are some people that that's how I recommend they do the thing. Like the fellow who's doing CV, he wants to go from, he said he's going to go from three, five to five. And that's like perfect, very good. It's not too big to rock a boat. And then it is noticeable because that extra 35 to five that is that's one five, that extra 1/5. By the time you multiply that by, you know, the number of clients that he has, you know,

it's something. But then you come increasing small, small from three five you get to 5 from 5 you get to 7 five from 75 you go to 8 from 8 you go to 9 from 9 you go to 11. You know, small, small, small, small, small, small. So that's I just before it like that. But anyway, summary what I've been saying the best way traditionally for newbies, for new people coming into the game is to get more customers. We get more customers by becoming good in sales and becoming good in marketing.

But for those of you who have insisted that finance is your problem like this, my friend here who I said that's how she's going to grow her every business, then OK, Microfinance Bank and today's episode, we have looked at a number of things, a number of questions that you should ask these people before you go and get that loan so you don't fall into unnecessary busy at the end of the day. So that's it and that's all. Remember if you'd love to connect with me then call SMS or WhatsApp me on 08064662140.

Thank you very much for your time and attention. I'll catch you next time. Same place in your headphones or in your speakers.