The Managing Director/Chief Executive Officer of Crownrise Finance Plc, Mr. Babatunde Rufai-Lariba, has given a near convincing reason on why many start-ups seeking access to credit from banks, microfinance banks and finance companies hardly get the facility after all.
In an interview, he explained that “When start-ups approach financial institutions for credit, they often hide many things. They forget that the institutions are not stupid; they have to analyse and check their books”.
“There are so many ways to assess prospective lenders to know whether you have the capacity to pay back or not. Once we (financial institutions) see any threat, we may decide not to tell you before taking a decision on your application. That is what is causing the major problem of lack of access to credit by many start-ups. If you choose to ask them how they intend to run the business, they think you want to steal their idea. And when you give them funds to go and do certain things, you begin to see problems.
According to him, “Start-ups must be open to tell the other parties, especially the financial institution, that this and this is what is wrong with the business. A problem shared is already solved. Have you seen a situation where someone is given money and about two weeks later, the man is dead? What happens to the family? But if at all anything should happen, there must be a structure on ground.
While giving further example with his experience in managing the company, he said “When I left this place in 2010 when some people invited me to come and run their mortgage bank for them, I started with them and ran it for some years”.
“While I was away, there was a structure in place in the system. It was not difficult for someone to step into my shoes. This is the major problem with the MSMEs – lack of a structure in place. Rufai-Lariba added that “This is why the CBN gave us a condition for the special intervention fund; they wanted us to use it as a special purpose vehicle”
On the activities of the finance companies, he said “As a finance company, we can only go out there and ask people to give us money; and when they do, it will be recorded that they have lent us money. But in commercial banks, it is recorded as deposits. Apart from this, we do virtually everything the commercial banks are doing: we do lending, syndicate loans, project financing, lease finance and operating lease”.
“Of all the several things we can do, Crownrise Finance has carefully selected our focus areas: we are focusing on lease finance and operating lease, project financing and investment advisory. We are now going fully into operating lease and loan syndication.
He noted that his group have seen the gap in operating lease and we want to tap into it, saying “We will focus on operating lease in various sectors including maritime, construction, manufacturing, aviation etc. In aviation, we can syndicate with others because the requirement may be enormous. This is why we are issuing the N1bn bond. About 40 per cent of that fund will be channelled into leasing and particularly operating lease”.