As Nigerian small businesses grapple with high borrowing costs, limited access to credit and economic uncertainty, FirstBank Nigeria has advised entrepreneurs to focus on building healthy cash flow, saying it has become the most important factor in securing business loans.
Idris Olalekan Garuba, the bank’s Business Manager, Retail Banking Group (RBG), Ejigbo Branch, said many business owners still believe collateral such as landed property is the key requirement for accessing credit. However, he explained that banks now place greater emphasis on a business’s cash flow and ability to repay loans.
Speaking on the sidelines of the graduation ceremony for a three-week free skills acquisition programme for 500 youths and women organised by the Blessed GUMPAT Foundation in collaboration with the Ejigbo Local Council Development Area (LCDA) in Lagos, Garuba urged entrepreneurs to maintain accurate financial records and ensure consistent business transactions. “What we look at first is your cash flow, which simply means the money coming into your account, your business turnover. That tells us your ability to repay a loan. Collateral is usually our last consideration,” he said.
According to him, businesses with strong and consistent turnover stand a better chance of securing financing, while weak cash flow remains one of the leading reasons loan applications are rejected. “If the cash flow is not strong enough, it becomes difficult for the bank to approve a loan because repayment capacity is our primary concern,” he added.
Garuba noted that improving access to finance requires more than making loans available. He said entrepreneurs also need financial literacy, sound record-keeping practices and stronger banking relationships to improve their chances of obtaining credit.
He praised the organisers of the entrepreneurship programme, describing skills acquisition as an effective response to rising unemployment. “Business empowerment and skills acquisition are critical at a time when entrepreneurship is becoming increasingly important, not just in Nigeria but globally. Programmes like this help create business owners, employers of labour and agents of economic development,” he said.
Garuba highlighted FirstBank’s digital banking initiatives, saying prospective customers can now open accounts instantly without visiting a banking hall.
According to him, customers can generate account numbers through the bank’s digital onboarding platforms or with the assistance of marketing representatives at events. “Banking has gone digital. You no longer need to visit a branch before opening an account. Right here at this event, our officers can open an account for you instantly.”
He added that the bank offers specialised current account products, including the FirstSME Deluxe Account, which allows eligible customers to operate their accounts without paying maintenance fees.
Garuba said FirstBank provides a range of financing solutions designed to support businesses at different stages of growth.
These include short-term overdrafts, working capital loans, equipment financing, business expansion facilities and the FirstTrader Solution, which offers financing for periods of three to six months.
He explained that equipment financing enables entrepreneurs to acquire productive assets such as solar power systems, office furniture and machinery, while longer-term loans are available for expansion and construction projects.
Although larger facilities may still require collateral, Garuba said many short-term business loans are approved primarily on the strength of an applicant’s cash flow and turnover.
