An Article on Njoroge, an SME Owner Who Has Been Missing Out on Bank Loans and What He Can Do Differently.

The partnership between SMEs and banks plays a vital role in the growth and success of SMEs, allowing them to expand and effectively serve a diverse customer base.

Most of these businesses, unfortunately, miss out on bank loans, leading to a lack of funds for driving innovation, implementing new ideas, and expanding their operations.?

Njoroge, a passionate entrepreneur who loves grilling and dreams of running a successful Nyama Choma business, embarked on his journey by setting up his grill at Gikomba in 2022. Since then, the delicious aroma of his cooking has consistently attracted a diverse group of customers, establishing his business as a popular spot in the area.

Yet, like many small businesses, Njoroge encountered challenges. Limited funds restrained his ability to expand his space, hire more workers, and diversify his menu to meet the surging demand.

Recognizing the need for financial support, Njoroge approached a local bank for a loan. Unfortunately, he hit a roadblock due to the absence of formal financial records and a credit history. Adding to the difficulty, Njoroge lacked the knowledge and skills to make a compelling case for his loan application.

Having relied on friends and family for support, Njoroge faced skepticism about his dream to transform his Nyama Choma joint into one of Nairobi's premier grilling spots. And the only bet was to get help from the bank. Disheartened and discouraged, he contemplated walking away from the bank, leaving his aspirations behind.

However, just as Njoroge was about to exit, the bank manager invited him to a sit-down discussion.?

During this meeting, the manager shared valuable insights into the steps Njoroge could take to approach things differently and potentially secure the support he needed to realize his ambitious vision.

1. Officially register his business and open a dedicated business bank account, ensuring a clear separation between his business finances and personal accounts.

2. Craft a solid business plan. This demonstrates to the bank that Njoroge has a clear vision, understands his business, and has a strategic plan for growth.

3. Maintain transparent financial records. This provides evidence of financial responsibility, giving the bank confidence in Njoroge's ability to manage and repay a loan.

4. Build a positive credit history. This establishes trust with the bank by showcasing responsible financial behavior, making Njoroge a less risky candidate for a loan.

5. Seek business mentorship. This offers guidance and insights from experienced entrepreneurs. Join Kenya National Chamber of Commerce.

6. Attend free entrepreneurship training offered by the bank. The training provides an opportunity to acquire new skills and knowledge related to entrepreneurship, financial management, and business operations, which can enhance his ability to run a successful business.

Kenyan banks have been actively supporting small and medium enterprises (SMEs), offering training on entrepreneurship and providing crucial financial support.?

Among these, Equity Bank Limited stands out for its pivotal role in SME support, placing a strong emphasis on boosting the financial literacy, financial support and entrepreneurship skills of these businesses.

For instance, In 2022, the Group trained 2,411,105 women and youth in financial education, equipping them with essential financial skills. An additional 406,421 SMEs received training in entrepreneurship.

As the momentum builds, the landscape for SMEs in Kenya is becoming more conducive to flourishing enterprises and entrepreneurs who, like Njoroge, can now navigate the business world with greater confidence and support.