BOA to start unsecured lending
Bank of Africa executive director Bernard Magulu (centre), general manager business development Claver Serumaga (right) together with staff and SME customers at the launch of the SME Business Financing Offering at Hotel Africana in Kampala last week. Photo BY Stephen Otage
What you need to know:
- Reason. The bank says it appreciates the role SMEs play in the economy.
Kampala. Bank of Africa (BoA) Uganda has launched a new business financing arrangement which gives loans to businesses within 48 hours provided they are registered.
Speaking at the launch last week, Bernard Robinson Mugalu, the bank’s managing director, said in the current economic environment, there is need to appreciate that Small and Medium Enterprises (SMEs) constitute 90 per cent of the private sector, employing more than 2.5 million which is a huge workforce and yet are left out of the traditional financing available to lenders.
“SMEs constitute over 90 per cent of the private sector, employing over 2.5 million people which is a larger sector to explore because of its chunk of revenue,” he said, adding that this sector is often left out of the traditional financing available to lenders.
“This platform is a straightforward access to funding for what we consider to be the very backbone of our economy,” he said explaining that besides this new product, the bank provides unsecured bid guarantee of up to Shs200 million, unsecured invoice discounting up to the same amount and asset finance loan for business machinery, trucks and equipment within 48 hours.
On ensuring compliance in case the borrowers fail to refund the money, Mr Claver Serumaga, the bank’s general manager business development, said the financial institution has created an SME Business forum which acts as an avenue for the companies to engage with Uganda Registration Services Bureau and The Uganda Insurers Association to explain to them the importance of registering businesses and how to mitigate risks through insurance.
He added that they are offering better, regulated and an alternative financing model that can change the financial picture of thousands of SMEs around the country.
Last week, the bank held the first business forum with business owners drawn from Kampala and up country. Mr Serumaga said by introducing the product to the SMEs, they want to demonstrate that they understand the needs and aspirations which underpin the actions of SME owners.
Unsecured loan
No collateral. An unsecured loan is a loan that is issued and supported only by the borrower’s creditworthiness, rather than by any type of collateral. It is obtained without the use of property as collateral for the loan, and it is also called a signature loan or a personal loan.
