As Nigerian businesses grapple with high borrowing costs, inflation and limited access to finance, FirstBank Nigeria has said healthy cash flow has become the most important factor in determining whether small businesses qualify for loans, with collateral now playing a secondary role.
Business Manager, Retail Banking Group (RBG), Ejigbo Branch, Idris Olalekan Garuba, said many entrepreneurs still assume that owning landed property or other physical assets is the primary requirement for securing bank loans, whereas lenders now place greater emphasis on a business’s cash flow and repayment capacity.
Garuba spoke on the sidelines of the graduation ceremony of the three-week free skills acquisition programme for 500 youths and women organised by the Blessed GUMPAT Foundation in collaboration with the Ejigbo Local Council Development Area (LCDA) in Lagos.
According to him, maintaining healthy business turnover and proper financial records significantly improves the chances of obtaining financing.
“What we look at first is your cash flow, which simply means the money coming into your account—your business turnover. That tells us your ability to repay a loan. Collateral is usually our last consideration,” he said.
He explained that businesses with weak cash flow often struggle to secure loans because repayment capacity remains the bank’s primary consideration.
Garuba noted that Nigeria’s micro, small and medium-sized enterprises (MSMEs), despite contributing substantially to employment and economic growth, continue to face a significant financing gap due to limited access to affordable credit.
He stressed that expanding financial inclusion requires more than lending, adding that entrepreneurs must also embrace financial literacy, proper record-keeping and stronger banking relationships.
Garuba also commended the organisers of the entrepreneurship programme, describing skills acquisition as an effective strategy for tackling unemployment and promoting enterprise development.
“Business empowerment and skills acquisition are critical at a time when entrepreneurship is becoming increasingly important, not just in Nigeria but globally. Programmes like this help create business owners, employers of labour and agents of economic development,” he said.
The FirstBank executive disclosed that the bank has continued to simplify banking services through digital platforms that enable customers to open accounts instantly without visiting a branch.
According to him, prospective customers can generate account numbers immediately through the bank’s digital onboarding platforms and marketing representatives.
He added that FirstBank also offers specialised current account products, including the FirstSME Deluxe Account, which allows eligible customers to operate their accounts without paying account maintenance charges.
Garuba said the bank provides a range of financing solutions for businesses, including overdrafts, working capital facilities, equipment financing, expansion loans and the FirstTrader Solution, which offers short-term financing for three to six months.
He explained that equipment financing enables entrepreneurs to acquire productive assets such as solar power systems, office furniture and other business equipment, while larger long-term facilities may require collateral.
However, he maintained that many short-term business loans are approved primarily on the strength of a customer’s turnover and cash flow.
Garuba also highlighted FirstGem, the bank’s specialised initiative for women-owned businesses, which provides concessionary financing alongside advisory and business support services for female entrepreneurs operating in sectors such as food processing, fashion, catering, soap production and manufacturing.
He said FirstBank has also expanded its advisory role through the SMEConnect Forum, where entrepreneurs receive training in financial management, accounting, digital technology and business development strategies.
According to him, the initiative helps small businesses strengthen their operations and become investment-ready.
Garuba stressed that sustainable economic development depends on creating successful entrepreneurs rather than merely providing financial assistance.
“Economic empowerment helps reduce unemployment, poverty and social vices. Those empowered today can become employers of labour tomorrow and contribute meaningfully to economic growth,” he said.
He reaffirmed the bank’s commitment to supporting entrepreneurs who maintain sound financial discipline and healthy banking relationships.
“As long as you are serious about your business and maintain a good banking relationship with us, FirstBank is always ready to support your growth,” Garuba added.
Industry analysts say the remarks reflect a growing trend in Nigeria’s banking industry, where lenders increasingly rely on transaction history, business performance and digital financial records to expand lending while managing credit risks in the country’s evolving SME sector.
