FirstBank Advises SMEs to Prioritise Cash Flow to Improve Access to Business Loans
FirstBank has advised Nigerian SMEs to strengthen cash flow and maintain proper financial records, saying repayment capacity now carries more weight than collateral in business loan approvals.
By Kikelomo D.
FirstBank Nigeria has encouraged small and medium-sized enterprises (SMEs) to focus on maintaining strong cash flow and accurate financial records, saying these factors play a greater role in securing business loans than physical collateral.
The advice comes as many Nigerian businesses continue to face tight credit conditions, rising interest rates and broader economic challenges that have made access to financing increasingly difficult.
Speaking during the graduation ceremony of a three-week free skills acquisition programme for 500 youths and women organised by the Blessed GUMPAT Foundation in partnership with the Ejigbo Local Council Development Area (LCDA) in Lagos, Idris Olalekan Garuba, Business Manager of FirstBank’s Retail Banking Group, Ejigbo Branch, said banks now place greater emphasis on a business’s financial performance when evaluating loan applications.
Garuba explained that while many entrepreneurs still believe they need landed property or other tangible assets before approaching a bank for financing, lenders are increasingly interested in whether a business generates sufficient and consistent income to repay borrowed funds.
According to him, regular business turnover reflected in bank account transactions provides a clearer picture of an enterprise’s financial health and repayment capacity than the value of assets offered as security.
He noted that collateral is often considered only after a lender has established that a business has reliable cash flow and can comfortably meet its loan obligations.
Garuba added that businesses with steady revenue and well-documented financial records generally have a stronger chance of accessing credit, while inconsistent cash flow remains one of the leading reasons many loan requests are unsuccessful.
He urged entrepreneurs to embrace proper bookkeeping, channel business transactions through their bank accounts, and build credible financial histories, saying these practices improve both access to financing and long-term business sustainability.
Industry analysts have consistently advised SMEs to strengthen financial management and maintain transparent records as financial institutions increasingly adopt cash flow-based lending models to support business growth while reducing credit risk.
