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. 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
Bank Loans and Funding Would you lent money to: A company with outdated, not modern, equipment That cannot really produce for export Has a too low capacity No equal quality raw materials nor equal quality end-products No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?
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.
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
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
The big leap forward If small companies cannot get funds or loans, then what is a solution? Join forces Dont 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.