THE BANK LOAN THORN

Deborah Mutale had just clocked six months working for the local council as a Planner. She was feeling lucky because she had completed at the University of Zambia in December 2020 and Already in January 2021 she was in employment . She was excited particularly on the fact that her Bank ZANACO had told her that if she banked with them for 6 months continuously, she would qualify for a loan as much as K100,000. She had been waiting for this moment for 6 months and during the last month of her qualifying for the loan was stressful. She was wondering what to do with the money when it was credited to her account . She thought of buying a car . Then thought of starting businesses to double her income . She thought about building , buying a plot and building slowly . She had been talking to a lot of people and also getting varying advice from people . Start a business then it will buy a house , no just buy a car business is risky , don’t get a loan just save , invest in my business and become my partner etc.

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After numerous follow ups with the banks and signing a lot of documents for an extra 2 months in , the loan was finally credited to her Account with the maximum loan she would get K100,000 on her K8000 salary over 4 years at 3500 loan repayments. Deborah went NUTS ! with that kind of money , in school she used to get K500 per month and now she had K100,000 . She went straight to the istore and bought herself an iphone 7 for 10,000 . She wanted an iphone 13 pro max but thought she would get it after business plans materialized .

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Deborah was very open that she had money and was looking for investments . She got advice from her friends and went on to buy clothing from Dubai for resale at K40,000 . She invested in a partnership with her long-time friend with a K20,000 in a chicken business . Her father heard about the loan and also requested that she lends him just a 4000 for his business and she gave him 6000 because she knew she owed her education to him . She went nuts with her girlfriends and just took a trip clubbing and chilling in a 4000 . Deborah was with remaining with 20000 and her father owed her 6000 , so technically 26,000 balance .

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Her goods arrived and found that she didn’t account for customs costs . She ended up paying a 6500 for the goods and that was after a lot of debating with ZRA . She brought the goods home and decided to sell them on credit . The products went fast and her credit book as amounting to K150,000 over two months . Some people even bought for cash at a discount amounting to k4000 in sales . 3 months passed and she realised that people were not paying her as discussed . She also didn’t have that pushy personality so she was getting about K22,500 from the credit sales after battling with people . She had the problem of ordering now because she needed atleast 40,000 in order to benefit from economies of scale , so she was waiting 2 months before she could place an order . Another issue was that the loan was taking a K3500 per month for 4 years leaving her with a net of 4500 (8000 Salary- 3500 loan ) . It wasn’t enough for her diva life so she was using some of the monies to supplement her lifestyle . Rent , Hair, Transport, and playing sometimes which was affecting the ordering also .

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Some people that got credit just decided not to pay her and that amount to K25000 from the 150,000.

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THE MONEY LENT TO DAD

After months , She asked her father occasionally and politely when he would pay the loan and story telling was the name of the game . Deborah quickly realised she was not getting her money back and just decided to forget about it to preserve their relationship. After all , she owed her life to him .

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THE PARTNERSHIP WITH HER FRIEND

The chicken business was doing fine for the first 2 batches but after that her friend was not really willing to keep sharing the profit . The mistake deborah made was she was getting profit but not getting her captial input back per month . so if the profits where 15000 in the 3 months , Deborah would only get K7500 (50/ 50 profit sharing ratio) and not request her capital back . She was of the understanding that her friend would keep using the capital input to generate the revenue but her friend felt like deborah was not putting in any effort and starting becoming difficult as time passed .

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Her friend eventually stopped selling chickens because she claimed to have run out of capital for reasons best known to herself . Although Deborah calculates that she got atleast close to 4 payments from her friend but felt kind of robbed ! and their friendship afterwards become sour .

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THE WORK SITUATION

Deborah was no longer the planner at work , She was known as the business lady at work , who wanted to sell you stuff . She lost all focus on her work and was not progressing professionally . She was then transferred from Lusaka to Choma , Which put a serious dent in her business of selling clothes . Slowly but surely the K100,000 she got finnished over 2 years and all the proceeds from the business , she had gotten all that she could from it and was now remaining with a loan to serve for 2 more years . Her net was 4500 now .

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Sometimes the government did not even pay on time . Deborah really really hated work and felt like it was a punishment , She was working for rent and could not stop because of the loan . She was not good at her job because of distractions and interviews revealed her incompetence. She felt stuck and demotivated.

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MORAL OF THE STORY

This is what happens almost all the time you get a loan at the bank, You think you know what you are doing then in under 2 years you will know that you don’t know what you are doing. Loans are not good for business. What other mistakes do you think she made in her business dealings?

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