SMEs ADVISED TO SEEK LONG- TERM LOANS

The Chief Operating Officer of Ghana Home Loans Company, Mr Kojo Addo Kufuor, has advised Small and Medium Enterprises (SME) owners to take advantage of the company’s Equity Release Mortgages (ERM) product in their quest to source funds for their new businesses.

The Equity Release Mortgage is a special product that provides long term loans to SMEs which requires raising capital to support their operations.

Mr Addo Kufuor, who gave the advice in an interaction with the GRAPHIC BUSINESS in Accra said funding for SMEs had been a thorny issue as may commercial banks were mostly reluctant to provide such long term funding to SMEs, particularly, start- ups.

"Indeed available data from the Registrar General’s Department indicate that 90 per cent of registered Ghanaian companies are Micro, Small and/or Medium Scale Enterprises,” he said.

However, he regretted that in spite of the fact that the SME sector created a lot of avenues for employment, the sector was not being properly “lubricated”.

Many banks, he said, however could not be blamed for being hesitant to provide funding for new businesses because such businesses had no track record and also, they were usually unable to show sufficient financial statements to support their claims although they might have very bright prospects.

Mr Addo Kufuor said the ERM offered a more suitable alternative to SME owners who lack lack the funding sources and urged them to come on board.

“There is no down payment required for this mortgage and all fees and charges can be added to the loan to make it easier for the borrower to pay back in monthly installments over a period of 20 years”, Mr Kufuor said.

He said,” Conditions required to release an equity mortgage is the ability of an applicant to own a home while maintaining a regular source of income.”

He added that before deploying risk capital into any project or business idea, an entrepreneur would be advised to ensure that he/ she owned a house at a least.

Mr Addo Kufour said people should focus on the future as there was the need to obtain an additional source of income as expenditure kept changing while income received was constant.