Access to affordable credit remains one of the most critical factors in enabling businesses to expand, manage cash flow, and seize new growth opportunities.
Yet, many enterprises continue to face financing constraints despite holding valuable investment assets.
According to the World Bank, inadequate access to finance remains among the key constraints preventing businesses from expanding and innovating.
Business owners navigate licensing requirements, county permits, taxes, rent, electricity, internet costs and employee salaries often before their businesses generate consistent revenue.
Many entrepreneurs argue that while taxation is essential for funding public services, compliance costs can become overwhelming for businesses still trying to establish themselves.
To address this challenge, financial institutions are increasingly responding with innovative lending solutions that allow businesses to unlock the value of their investments without having to sell them.
One such solution is a loans-against-shares facility, which enables businesses to leverage their share investments as collateral to access financing for working capital and other business needs.
The product provides an opportunity for businesses to convert dormant investment value into liquidity while retaining ownership of their shares.
Under NCBA’s Loans Secured by Shares facility, businesses can borrow up to 50 percent of the value of their shares, subject to an assessment of the company’s financial position and ability to repay.
The financing is designed to support enterprises seeking additional capital to sustain operations, fund expansion, or meet short-term financial obligations.
Unlike unsecured lending, the facility relies on the value of shares held as security, offering businesses an alternative source of financing without the need to dispose of their investment portfolio.
The loan amount is determined based on the business’ serviceability, with repayment capacity assessed using the company’s existing revenue streams.
The facility offers flexible repayment terms of up to 36 months, depending on the purpose of the loan. This allows businesses to align repayments with their cash flow cycles while maintaining financial stability.
As part of the lending arrangement, the pledged shares are held by NCBA Securities Ltd. throughout the loan period, providing a secure structure for both the borrower and the lender.
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