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Clueless – potential borrowers with no plan

Published:Sunday | May 8, 2016 | 12:00 AMAnastasia Cunningham

John Brown walks into the financial institution and asks to speak with a loan officer.

"Good morning, Mr Brown, how can I assist you today?" the loan officer asks pleasantly.

"A want a money to do a ting, how much a can get?" Mr Brown replies.

"What do you want the money for? And how much money do you need?" the loan officer presses.

"Mi nuh know. Me just want a money fi do a ting. How much money me can get? Me wi use it fi do anyting," Mr Brown insists.

Unfortunately, this scenario is all too common among persons seeking to start their own businesses, many with no plan whatsoever, reported Harold Davis, deputy chief executive officer of the Jamaica Business Development Corporation (JBDC).


naive, clueless approach


Speaking last week during a Gleaner Growth Forum, Davis said: "When we had the loan programme, we had too many instances where persons come to us, and when we asked them how much money they want, they ask us, 'how much you have' or 'how much you lending'. Then when we ask what do they want it for, they say 'me nuh know, how much yuh have can gi me'."

Valerie Veira, chief executive officer of the JBDC, said this naive, clueless approach is from both persons with no viable business proposition as well as those with a very profitable plan but who lack the ability to present it.

"One man came to me that he wanted a $7 million loan to buy cow, but beyond that he had no viable business plan. It just wasn't workable. And then you have some who really do have a viable business proposition, but they have no idea how to pitch it," said Veira.

This clueless approach by potential entrepreneurs has forced the JBDC and other lending institutions to create plans to aid potential small and medium-sized enterprises (SMEs) with creating viable business plans, proper money management and how to set up and operate a business, as well as examining whatever skills they have that can be turned into a moneymaking venture.

"We have to play our part to prepare our people to go into business. It is about us helping to prepare those clients so that when they go to that table, whether for a loan or grant, they can pitch it in a real way. And that's why we are out there teaching and preparing persons how to present a good, viable business proposition," stated Veira.

Davis added, "The reality is that the profile of the sector has changed, SMEs are now recognised as a viable business, so in order for us to close the gap, we have to get to that point where it is an entrepreneur and a banker that is having a conversation. And to get to that point, the entrepreneur needs to first of all see himself as a prospective entity to invest in and approach it in professional manner."

Audrey Tugwell Henry, senior general manager, retail banking division at the National Commercial Bank, said her organisation also had the same challenges, which forced them to develop a far-reaching approach to assisting SMEs.

"What we often find is that a lot of persons come to us are not prepared to borrow. Meaning that, they have not organised their thought process to help to see the cash flows that will help them to carry on a sustainable business. In fact, we get loan requests where the purpose is not defined, in that, persons don't know why they want to borrow, they just know that they want some money to do something," said Henry.

"The reality is that, although we want to help, we also operate a business and have a responsibility to the depositors for the money we are lending, so our interest is really to prepare the SMEs to efficiently and properly borrow.

"So when they borrow to put money in a business, that business can actually function well and reap rewards to repay the loan. It is a business, and we are making an investment in you, so that you, the customers, and us can do well," added Henry.