Funding your export business? Depending on the size of commodity you’re looking to export, there are several options for funding available to you. Let’s review some of the options out there, and then you can decide which suits your best.
This option is best suitable for medium and large scale exporters are more likely to get loan from Commercial banks than small scale or even worse, beginners. These banks would most likely request bank statements showing how much you’ve invested in the business already and cash flow into your business. They’d also require you provide collateral and other necessary documents that show they can get their money back as agreed.
With the government working hard in diversifying country’s revenue from oil, they have continued to roll out several incentives to support non oil-exporters over the years.
Unlike private organizations like the commercial banks, you can get Government support(which can be in form of credits, grants, waivers, subsidies, etc.), at little or very low cost, which would turn out be the springboard to propel exporters to greater profitability.
We will look at several bodies through which government provide these supports:
a. Bank of industry(BOI)
The bank of industry provide several grants and funding support programs for exportation yearly. Most times these funds are released through several other bodies as related to the industry, like NEPC(Nigerian export promotion council), MAN(Manufacturers Association of Nigeria), etc.
b. The Nigerian Export Import (NEXIM) Bank
The NEXIM’s main purpose to provide financing for importers and exporters.
They offer wide range of funding options, such as:
• Direct Lending Facility (DLF)
• Export Credit Insurance Facility
• Stocking Facility (for manufacturing exporters)
• ECOWAS Interstate Road Transit Scheme
• Foreign Input Facility (for manufacturing exporters)
• Local Input facility
You can check up their website to see explore more options available and how to get them.
c. The NEPC (Nigerian Export Promotion Council)
The NEPC provide export incentives for exporters. These can be monetary, tax or legal provisions put together to support exporters of certain goods and services in Nigeria. There are two financial support programs the NEPC provide to exporters: Export development funds, which is more suitable for beginners and small scale exporters, and Export expansion grant(EEG), for large scale and more experienced exporters. You can always head over to their website to check the processes to get started.
Yes, your buyer can help fund your exportation. You can ask for upfront payment. However this method is often possible on the sound foundation of trust. So few question, why should any business trust you? What are the things about your business that can make any buyer trust you? For a beginner and small scale exporter, can you leverage other several respectable brands to give you much credibility? How do you go about that? It’s all left to you.
You can also get funding from associations. However you’d most likely have to be a trusted member before you can have such access. The good thing about these associations is the trade and industry knowledge you’d gain as you relate with other like minded exporters. To be a member, most require membership fee plus other vital documents. Although recruitment criteria vary across several associations, they want to add as much quality to their group as possible. They’d want to know if you’d be trusted.
There are several cooperatives you can join where you can get constant funding to facilitate your trade. The good thing about cooperatives is you can get loans at very low interest, so long as you’re diligent in your paying back of the loan. This method of getting fund is suitable for all exporters of different levels.
There’s no one in this world who can believe in your business as you do. One of your first steps in business would mostly come from you funding your business from your pocket. For small scale exporters, personal funding is a very viable option, because you’re operating on a small scale, it is easier to raise the capital from your savings. In the future should you decide to approach the banks, or any investor for funding your bigger trades, they can listen to you as they can see you’ve been investing in the business.
Friends and family
Friends and family will always be there to support you. Beautiful thing about this is most friends and family might not require interests, some can even give you enough time as you want to pay back- just ensure you refund.
Getting funding for your export endeavor is an essential part of your business, and you will need funds as business grow. You should always look to reduce the risk of funding your export by trying out some of the methods we shared on here.
For beginners and small scale exporters, try to be attentive to the several government incentives rolled out, and look for ways to benefit from them.