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Other Subjects. SNV PUM. Other subjects SNV PUM. Bank Loans and Funding A big leap. Bank Loans and Funding. I have received many complaints about basically the fact that Banks are not interested to lent money to agricultural projects.

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Other Subjects

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  1. Other Subjects SNV PUM

  2. Other subjects SNV PUM BankLoans and Funding A big leap

  3. Bank Loans and Funding • I have received many complaints about basically the fact that Banks are not interested to lent money to agricultural projects. • And if Banks would be interested, that interest rates are sky-high • I cannot comment on interest rates but want to ask the following question

  4. Bank Loans and Funding • Would you lent money to: • A company with outdated, not modern, equipment • That cannot really produce for export • Has a too low capacity • No equal quality raw materials nor equal quality end-products • No certificates • So: has to produce for a (stagnant) local market • No long term contracts with farmers nor with customers, no business-plan • Possibly a one time export order, but no guarantee for repeat orders • And above all: an owner that also has other, completely unrelated businesses and therefore cannot really devote his full attention to the project for which he wants to borrow money?

  5. Anybody answering with: yes?

  6. Bank Loan, Funding, Leasing • Funding may imply you are not fully owner • But it also implies support for the project from the funding co-owner • Bank Loan: high interest rates • Fund: part of the equity for the funder, but also lower investment by the initiators and therefore possibly easier to materialize. • Leasing: equipment can be used but not be owned until it is fully paid.

  7. Funding • During my study I stumbled across a possibly interesting fund from NAADS called CF • A call once a year • Requiring proper business-plans, which may not be easy to write and guarantee • But looks like an interesting opportunity • 50/50 equity • Your 50% also can be e.g. land, building, management and does not have to be cash • It makes sense to shop around and not just consider this opportunity

  8. Micro-leasing • Another option might become micro-leasing • Processor wants to buy a machine • The machine is paid by a financing company • And paid back by the entrepreneur from the revenues of product sales • System works in Kenya, for Uganda discussed by Swiss Contact

  9. The big leap forward • If small companies cannot get funds or loans, then what is a solution? • Join forces • Don’t build many drying plants in one area • Combine resources • Build one together • Make a good business-plan • Hire a professional manager or: • Let one of the owners pay full attention to the project • Find the proper support, financially, managerial and organizational, re. plant lay-out and routing, equipment, quality aspects etc. On any aspect required.

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