THE PRIVATE SECTOR FEDERATION (PSF) is reviewing its policy on loan guarantee for business people who want to start business after acquiring skills from the federation’s incubation centre. This comes after a big number of those that benefitted from the facility defaulted.
According to the director for member service, capacity building and entrepreneurship promotion at PSF, Rwf200m had been set aside for the facility, but the federation is now hesitant to support other start-ups.
This development questions the values of many business people and also shows in a way why local enterprises collapse or fail to get financial support.
If you as business cannot win the trust of financiers and well-wishers, how do you expect to survive? It is no secret that most businesses depend on funding from financial institutions. So, if some businesses are defaulting, how do they expect to stay credible or get more support from other well-meaning organisations?
This behaviour is unacceptable because it affects thousands of would be beneficiaries from such a financial facility. It should also be discouraged by all that want the financial sector to grow. Besides, this practice discourages other organisations from supporting the entrepreneurship sub-sector because the values of stakeholders are now questionable.
Business people can avoid problems of defaulting by taking loans they can be able to pay back in easy installments. This is a win-win situation and ensures sustainability of such facilities.
It is important to remember that for one to succeed in any venture, they have to build a clean track record, especially with financial institutions, sector bodies and clients. Without support of these groups, whatever you do will surely crumble.
Let’s not forget that trust and business are inseparable.