In this quest to be financial secure, Lending is very crucial and helpful to individual, society, companies and government. Its very hard to pinpoint anyone from this role as ones' business flourish. Lending is the act of giving out money to individual, companies or governments with expectation that it will be repaid in due time possibly with interest.
However, money lended is very different from grants which are not repaid but money lended will be paid in batches or full in the future as agreed by the parties involved. With this past eight years, Nigerian government keep their financial bouyancy on the trillions of dollars lended. For instance, Nigeria received hugh money from China for many jnfrastructual development. This money is not free as stated earlier but will be repaid for the due course. According to their agreement, which contain terms and condition of the deal on which the money paid back with interest typically.
Lending is vital aspect of financial system as it promote economic growth and assist the party involved to meet its financial needs. Here are some reasons why Lending is very important for achieving financial bouyancy. They are:
INVESTMENT OPPORTUNITIES
Apart from many traditional banking system in Nigeria, recently there is high influx of lending institutions known as "online banking". Reason for the name is because they don't have physical presences in all the places but stays in major towns like Lagos or Abuja while providing their needed financial services to their clients. With internet and social media platforms, they interact with their clients and render their services which are easier and effective unlike the orthodox banks. Its a colateral free and no hidden charges but exorbitant interests. Although the interests are high, they still have many customers that depends on their services. Lending in this case serves as an investment avenues on which incomes are generated.
With money lended, an individual or establishments can attain to financial security by diversification of their investment portfolio and include items, not ordinarily their specializies but have great economic potential. For instance, one of the Nigerian company, Corcharis have chains of interests which is mostly on imported goods but naming their chairman as the one of board directors of a commercial bank, where he can access money easily. His company have diversified into agricultural services where they now produces rice, palm oil etc. Their venture needed capital and only few can afford that. But utilizing this opportunity, Corcharis will soon be household name within and outside nigerian shores like Aliko Dangote.
Some Countries and financial institutions also uses lending as an economic weapon and venture to grow wealth. Many african countries are now milking cows to powerful european countries in the past but China presently. Chinese government keep lending money to these gullible and corrupt african leaders. The money are not judiously invested and their countries resources will be at stake. Interests are paid back and those foreign countries will keep deciding on how those countries are run so as their investment will keep yielding.
CAPITAL ACCESSIBILITY
The major problem that hinder economic growth is lack of capital for optimum operation of an establishment. The ever growing expenses including payments of salaries, transportation, housing, educational and health expenses, start up and expanding expenses etc are needed to be handled regularly so lending provides easy access to money for such expenses. They are problem therein that needed urgent care for the income to be generated. Without taking care of these expenses, the investment will be seriously affected. Last year, aftermath of the Covid19 menance, from foreign lending institutions, Government of Nigeria was enabled to access and provides money for states throughout the federation as a "bail out" Money twice for their functionality on which they are needed to pay salaries of their civic workers and provides succors to their citizen.
With Fund at hand, The economic growth of establishment are promoted as it can easily invest in productive sectors and procuring of assets. Enterpeurship and innovation are encouraged, Jobs are created, scale scale business are empowered and allow to flourish thereby increasing the economic potentials.
FINANCIAL FLEXIBILITY
Alex Obi, a nigerian rich businessman was declared bankcrupty in certain year due to his inability to pay back the money from the bank. But having numerous assets and friends in higher places which was helpful to him to keep accessing of cash was able to maintain his economic status during his trying times. His revamped company now owes the largest stake in the electric distribution agencies of a whole region.
For one to be financial secured, One should be the ultimate decider of his economy. With the ability to get fund at all time and pay back effectively. One can be able to manage his financial obligation, take care of his expenses and maintain a balanced cash flow too.
Maintain a healthy Credit history
One of my worst experience as a merchant was my inability to access cash, not that I can't repay with any condition but I don't have any credit history with any lending institutions. With my transaction ledger, there is huge flow of cash both income and expenses but the lending company still denied me their service and offer it freely to my friends. When asked, they told me to build up my credit history. Right then, I started and my credit history is so good and healthy that the lending insitutions are now calling me to be offer their services.
A good credit history is built on responsible borrowing and repayment of loans in time with full interests. Apart from free lending services, a good credit history begets several benefits, it comes with lower interest rates, favorable terms and conditions, higher borrowing limits, and better financial opportunities.
CONCLUSION
Although lending services have numerous benefits which can makes one financial secure, it comes with risks. most common among them is excessive and overburden debt. Excessive borrowing beyond one's means of repayment that causes economic stress and affect the financial growth. Also, most of these lending institutions have certain charges, understands the terms before abiding.
