Saturday, 6 April 2019

BORROWING: INFROMATION MAKES THE DIFFERENCE

By Nnabugwu Chizoba (Charismatic Chizy)
 
Dear All, entrepreneurs and start-ups in particular, let me start this piece on this note:

To manage a business is to manage its information, and to manage its information is to manage the business. Discuss.

Please, pause here and ponder over the statement. It is one of the assignments I encountered in the early days of my tertiary education. It was given to us by Mr. Chijioke, our lecturer. He was a young, handsome and very easy going type who will not miss any opportunity to discipline a student the moment mischief, stupidity, or ignorance sets in. He is one lecturer that treated us like mates. His assignment left an indelible mark in my heart about information. I have deliberately avoided the use of his second name or attach any initial to his name in this write-up. To us, his name is Mr. Chijioke, no more, no less.

Completing the said assignment opened my eyes to the importance of information to every business and business transactions: operations, success, survival or failure. Hence, my point that all Loan applications, disbursements, and management are influenced one way or the other by information at the disposal of a borrower, loan seeker or applicant, before, during and after the loan processes and procedures.   

Therefore, in addition to identifying a very lucrative business opportunity that could necessitate going for loan, it is advisable to seek more information, among which is very good knowledge of your industry. Same is true of knowledge of market dynamics, and clear understanding of the role that competition plays. It is also necessary to have a good idea of the economy and economic policies. Understanding of these issues helps you to articulate your financial needs properly, and by so doing boost your chances of securing the loan and getting the best out of it: generating higher profit, repaying loan and interest and investing more. 

The above notwithstanding, you must go beyond the Terms and conditions (TC), which most loan seekers often concentrate on or prefer to look at. Terms and conditions cover mostly, issues such as the collateral, tenor and interest rate, as they relate to the loan.

If the Terms and conditions are so important that many people focus on it, let me shock you a little with the revelation that there is something that is even more crucial when discussing loans, which borrowers overlook, but which you must embrace closely: Other Terms and Conditions (OTC).
When a loan goes bad, it is not the Terms and conditions that matter most, mind you, but Other Terms and Conditions. The reason is simple; OTC contains what the bank will do in the event of loan default. The content is crucial and by implication holds a lot about your ability to liquidate the loan/interest or not. 

The “Secret Charges”, borrowers lament of, stem from poor mastery of Other Terms and Conditions, an indication that most borrowers limit their knowledge of loan related issues to: due date, interest rate and more importantly the fact that their collateral will be sold to recover the loan in case of default.

 Remain blessed and active, till I come again,

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