Credit scheme gives nod to 67 businesses

Credit scheme gives nod to 67 businesses

MASERU – THE government-backed credit guarantee scheme targeting young entrepreneurs has approved 67 businesses.
The total loans given to these businesses amount to M10 247 675, with the maximum amount of the loan being M200 000.
Although 67 applications have been approved from over 900 submitted, only one business has reached the final stage to receive the money.
This is because even after screening and approval by the board, proposals still need to be evaluated by the bank.

“This list of approved businesses simply means that the ministry is willing to guarantee the identified businesses with the said amounts,” said Lehlohonolo Maboka, the Small Businesses Development Ministry’s Acting Senior Enterprise Development Officer.
Maboka said applicants should show commitment by submitting all the required documents and making continuous follow-ups.
Thus far over a hundred businesses have been rejected.

“However, this does not mean that one’s chances are exhausted. Some try again and at the end if they provide what the bank wants they will succeed,” Maboka said.
He stressed that they are aware of some shortcomings of the scheme as the banks still impose stringent conditions to give loans.
“We are in discussions to see that, going forward, the bank’s requirements can be accommodative of those with brilliant business ideas who have never ventured into business.”
Maboka said most applications are not from the youth as was expected but from individuals who have been in business before.

Although approved proposals have exceeded the set amount of M10 million, the ministry is still accepting applications as they believe banks will consider all the approved proposals.
Getting the 67 businesses to be approved has not been an easy task, he said.
“Some individuals submit half a page proposals and although some listen when you tell them to go back and make certain changes, some just go and never come back,” Maboka said.
He added that another challenge is that of individuals who approach the fund with the mentality that their political affiliations or relations will help them.

“They submit their proposals and when you tell them to go back and fix some things they take their applications to the minister or PS with the hope that when submitted from their offices the proposals will go through, only to find out that they will undergo the same process and if something was not corrected the proposal will still fail.”
He said most of those who use consultants fail.

“It is almost like these consultants do not do any research, they use the one size fits all model and submit the same proposal which worked somewhere without finding out the needs of the bank.”
He stressed that the bank seems to be very particular about documents that accompany the business proposal.
“They write beautiful English but fail to produce the necessary documents like financial statements, tax certificates and licences.”
Maboka urged the youths to start with what they have because having a business goes a long way.

“Their proposals should also include a letter of intent from the identified market, it will not guarantee funding but it goes a long way in showing that your business idea is not only a good idea on paper.” According to Maboka most of the people who submit proposals are those in business informally and as a result they do not have necessary required documents because they lack business management skills like bookkeeping.

Maboka indicated that although there are challenges here and there, generally Basotho are willing to take their advice and make suggested corrections.
“This programme has really helped a lot in terms of providing guidance and capacitating applicants in relation to business plans. Even though some do not get their proposals approved they say that they have earned something and can use their business plans somewhere in future and they will be aware of what is required where business proposals are concerned.”
The partial credit guarantee scheme pilot project housed at the Ministry of Small Businesses started in December 2017.
It is an effort to improve access to finance for Small Micro and Medium Enterprises in the quest to grow the economy, reduce unemployment and alleviate poverty.

Lemohang Rakotsoane

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