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Financial Challenges Small Business Start-ups May Face in The Future

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Most small business houses face the challenge of finance in the future. If you take a look at financial institutions and banks, they have been designed and built to provide services to large business houses. Their system and process for loan application have been designed for evaluating risks of big business with diverse resources.

The issues of data collection for business loans

Small businesses face problems due to data collection. The information collected is not consistent as three major credit bureaus are delivering and deciphering the creditworthiness of the candidate. There is an underwriting process that needs a lot of data and information when it comes to ascertaining the creditworthiness of the applicant. The process of underwriting needs data about the revenue of a small business. The process also needs to know about the history of borrowing of the candidate and the lines of credit. The time spent when it comes to collecting that data and information is endless and takes long.

Personal credit

Several money lenders will use the personal credit of a small business owner as a symbol of risk for the business as well. These money lenders resort to scoring models for individual candidates and large businesses. This process again deploys a lot of system override and judgment.  In short, the small business owner for a loan has to jump into many hoops and before you know it, he is generally caught in one of them.

The above is just the process that a small business owner faces with one money lender. If you multiply that by five lenders, he will be juggling with shopping rates making the loan application process a long one. The money lenders also need to get hold of different information for every applicant. This makes the process of applying for a loan hard for every small business owner as they fail to understand how they can improve their chances of finding a loan. The result is these business owners face themselves stuck in hoops of credit madness. This results in them using the same techniques for generating different outcomes hardly realizing why they are resorting to them.

What are the options for small business finance in the future?

Traditional money lenders are a great option for a small business. However, this would mean they need to develop a system to evaluate a small business by setting standards that are specific to their resources and size. Here, the applicant and the lending institution must make changes to their scoring models by automating the collection of data and streamlining the process for funding. This again will lead to a great level of success say esteemed money lending institutions in the nation like Liberty Lending US. Today, alternate finance provides a window for business loans that traditional lenders hope in the future to become.

Here they would need to create systems to evaluate a small business with standards that are specific to their resources and size. The following are some forms of alternative finance options for small businesses-

  1. Online lending- The process of online lending is the same as banks. However, the product here is more streamlined. These online loans generally have a qualifying criterion that is less stringent over banks. This applies to credit rating, tenure, and revenue. The process is established on online platforms that permit funding and application in the same field. This means there are lesser reviews and improved accessibility. Online lenders will reduce the wait time for qualification for the business loan. They assess a lot of data over credit history and applicants do not need to apply for extensive collateral. Some online lenders have an application process that is streamlined. They focus on data connections that are live in order to assess the business performance of a company in real-time rather than credit score. This gives small businesses the chance to use their lines of credit for the approval of the loan. Benefits are also highlighted for applicants. They can maintain the control as well as equity of their business. They get the chance to keep their personal finances separate. They can also avoid separating those that are close to them as they get access to funds via a third party.

 

  1. Crowdfunding- This is another alternate platform for getting a small business loan. Here, there is online pitching where the owners of small businesses have to convince others that their businesses are worth an investment. The process of crowdfunding entails people asking others to invest in a certain product, business or a campaign. The funds do not have to be paid directly. Here, owners of small businesses may offer a free version of the product or a specific percentage of the future revenue expected.

 

  1. Invoice Factoring- Invoice factoring is another alternate funding process for small businesses. Here, the process involves outstanding invoices over the credit history of the business. In this process, the company that specializes in invoice factoring buys the unpaid invoices of the business at a discounted price. This places the focus on the ability of the customer to pay over the small business. The process of invoice factoring is generally streamlined, and it allows the company to attach all the invoices they want to be funded. The owners of small businesses often see the rebates on the same day. Another advantage of invoice factoring is paperwork is reduced. This means the process is faster and you get the funds you need for the development of your small business!

Therefore, when it comes to applying for alternate finance for small business loans, applicants can resort to the above forms of alternate finance. They are simple and more streamlined over conventional bank loans. Moreover, they are quicker to apply for, and the criteria for application is not stringent like that of conventional loans. Apply for them and get the much- needed financial support you need for your small business. Loan application does not have to be a hassle some anymore!

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IPPIS: Oil Workers Threaten To Shut Down, Sunday

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Senior oil workers under the aegis of the Petroleum and Natural Gas Senior Staff Association (PENGASSAN) and Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) have threatened to shut down all oil operations by Sunday, if the Federal Government failed to pay their salaries latest today.
The oil workers, who had embarked on a peaceful warning protest since Wednesday issued the threat when they gathered at the Petroleum Training Institute (PTI), Effurun in the continuation of the agitation, yesterday.
The protesters, who adorned red T-shirts carried assorted placards with inscriptions such as “No To Forceful Enrollment into IPPIS”; “Release Our Salaries Now or No Dialogue”; and “We Are Not Against IPPIS but Create Another Platform That Address Our Peculiarities”, amongst others.
Addressing the protesting workers, the Vice Chairman, Warri Zonal Council of PENGASSAN and Secretary of Regulators Forum, Prince Audu Oshiokhamele, warned that “if the salaries are not released by Friday, then all oil operations will be shut down by midnight of Sunday.”
He declared, “I want to assure you, our union members, that if our salaries are not released before Friday (tomorrow), by 12 midnight, on Sunday we will shut down the whole nation. What we are just doing now is a warning protest but by Sunday, the music will change”.
Also addressing the protesters, Oshiokhamele, who was in company of Mr. James Esiomor, PTI branch Chairman of PENGASSAN and Mr. Ejokirhie Jahpurpose, Chairman of PTI branch of NUPENG, expressed surprise that the Federal Ministry of Finance claimed ignorance of non-payment of their salaries in the last three months.

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Rivers Commissioner Harps On Petroleum Prices Stability

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The Rivers State Commissioner for Energy and Natural Resources, Dr Peter Meede, has stated the need for the Federal Government to ensure stability in the pump price of petrol in the country.
Meede said this while addressing the head of Port Harcourt Zone of the Petroleum Product Pricing Regulatory Agency (PPRA), Mr Ikien Sika, who paid him a visit in his office in Port Harcourt.
The commissioner said the instability in the pump prices of Petroleum products was responsible for the sharp practices some marketers engaged in.
He noted that the ministry would not tolerate the activities of dishonest marketers in the state, adding that it was not good for economic planning
According to him, “a situation where today we have a different price, next month we have a different price, the other month again you have a different price is not good for planning. We will not allow them to take advantage of Rivers people in terms of under dispensing of products, selling fake products that would undermine the security, safety and lives of Rivers people.
“I want you to collaborate with the ministry, let the people operating this industry in Rivers State understand that the ministry is alive and ready to support them to do their business but in a situation where they will compromise the standard of the product, we will not take that.”
He furthermore, said that the state governor, Chief Nyesom Wike, had ensured a conducive environment for doing business in Rivers State, which he pointed out would benefit petroleum marketers and warned that any attempt to short change Rivers people would not be tolerated.
He said, “you can hear that there is problem in Lagos and other states, but th-e sector in Rivers State here is relatively safe, but we need that collaboration. You can see that we’re partners in progress and we would appreciate that you continue to support us. A situation where people demarket Rivers State is over, the days where people would say ‘don’t go to Rivers state, is over. His Excellency has worked so hard to ensure that the environment of Rivers state, security of Rivers State, the economy of rivers state is on the front burner, that’s why you see the best we were doing in ensuring that peace and other forms of businesses thrive in Rivers State.’’
Responding, the head of Port Harcourt Zone of the Petroleum Product Pricing Regulatory Agency (PPPRA), Mr Ikien Sika said the agency was pleased with the peaceful co-existence between petroleum marketers and the state.
“We have to commend the governor and then of course the honourable commissioner, but there is still something and we have to tell ourselves the truth. In my house today I cannot open the windows, because of the soot. These are some of the things which I have noticed, but other things I was told that has actually reduced to a large extent”, he said.
He observed that the fluctuation of pump prices in petrol is an indication that the federal government will soon deregulate the petrol sector.
On his part, the Zonal Chairman of the Petroleum Product Retail Outlet Owners Association of Nigeria, Prince Sunny Ugbe, said that federal government was wrong to allow petroleum product marketers to determine the price of petroleum products in the country.
Prince Ugbe also noted that the PPPRA recently increased Ex-depot price of petrol and left the marketers to fix the retail price
He called on the federal government to fix the moribund refineries across the country as part of measure to ensuring a smooth process of deregulation of the petroleum sector

 

By: Tonye Nria-Dappa

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FG To Deduct Illegal Mining Fees From States’ Allocations

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The Federal Government on Wednesday resolved that henceforth, it would be deducting any illegal fees imposed on mining companies by state governments from the allocation of such states.
It has therefore directed the Minister of Finance, Budget and National Planning, Zainab Ahmed, to begin to implement the directive.
The decision was reached at a meeting of the Federal Executive Council presided over by the President, Major General Muhammadu Buhari (retd.).
The Minister of Information and Culture, Lai Mohammed, disclosed this to State House correspondents at the end of the meeting held at the Presidential Villa, Abuja.
Mohammed said the decision was taken to eradicate double taxation in the mining sector and also gain investors’ confidence.
He said, “On the issue of double taxation whereby mining companies are taxed by local and state governments, two decisions were taken.
“One is that the council directed the Minister of Finance, Budget and National Planning to deduct directly from federal allocations of states which have deprived Federal Government of Nigeria’s revenue due to it by imposition of illegal taxes and levies on mining companies in their states.
“In other words, if a particular state engages in double taxation, you are imposing illegal taxes on a duly registered mining company, and it is reported to government, the Ministry of Finance, Budget and National Planning will deduct that money from your allocation.
“The intent is to ensure that we don’t scare away investors, be they local or foreign. This will go a long way to reassure the investors that Nigeria is a safe place to invest now.”
The minister added that FEC also directed the National Economic Council to dialogue with the state governors in order to make them understand that states can participate in mining as corporate bodies by registering companies.
He reiterated the position of the law that the Federal Government had the exclusive right to mine and manage all mineral resources.
Mohammed added that the Minister of Mines and Steel Development, Olamilekan Adegbite, who presented a memorandum to the council, also identified insecurity in certain parts of the country as one of the major challenges facing the mining sector.
He noted that in the North Western part of the country, mining had been suspended because of the activities of bandits and kidnappers.
He added that the industry was also faced with the problem of collision between some stakeholders, sometimes the traditional rulers.
He also reported certain decisions of past government in the area of storage of explosives that were used for mining.
Mohammed said, “Before now, the position is that any miner that wants to use explosives for mining must store them in either the military barracks or police facilities.
“So, he (Adegbite) asked for special dispensation to build special facilities at least one in each of the geo-political zones of the country. He also complained about extortion, the position of community development agreement, and the issue of many illegal miners.”
The minister said the council noted that insecurity and illegal mining had led to a huge loss of money and directed the National Security Adviser, Babagana Monguno, to set up a special unit domiciled in Abuja to carry out targeted operations at identified and confirmed illegal mining sites nationwide.

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