Negative Credit History Limits MSMEs’ Access To Funding

Tosin Kolade
Jul, Mon, 2025

Economy/Business

Negative credit history limits MSMEs’ access to funding – Expert

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By Rukayat Moisemhe

Credit expert, Mr Gbemi Adelekan, has warned that a negative credit profile could hinder Micro, Small, and Medium Enterprises (MSMEs) from accessing vital financial opportunities.

Adelekan, also President, Money Lenders Association (MLA), made this known on Sunday in Lagos during an interview with the News Agency of Nigeria (NAN) in Lagos.

NAN reports that a healthy credit profile is a critical part of building financial wellbeing and not just a financial record but a powerful business asset.

It relates to various aspects of being financially literate, understanding finance including budgeting, responsible borrowing, and maintaining a good credit history and track record.

Adelekan, however, said digital money lenders in Nigeria had noticed a trend, especially with micro-loans where individuals moved from one lender to another for funding in spite of having bad debts with other lenders.

He stated that for MSMEs that often operate with limited capital and tight cash flows, maintaining good credit could be the difference between growth and stagnation.

The expert revealed that money lenders, inclusive of banks, financial technology firms and cooperatives now employed the use of technology to assess risks worthiness of borrowers.

According to him, healthy credit history makes it easier to get approval for funding, negotiate better interest rates and gain access to larger loan amounts when needed.

Adelekan noted that many digital lenders in Nigeria and across Africa relied heavily on data and credit scores to approve loans.

He said that MSMEs with multiple unpaid loans, frequent defaults and poor repayment records often got blacklisted or disqualified from future opportunities.

“Do you realise that most licensed lenders in the country will first check your credit reports with the Central Bank of Nigeria (CBN) approved credit bureaus when you apply for a loan?

“With a negative credit profile, a person is more likely to miss out on major opportunities, like getting loans for unexpected expenses or to support their business endeavours, now and in future.

“That is because the more loans are left unserviced, the lower the chance of qualifying for any other loans or accessing credit with good terms and conditions which in turn saves money on interest,” he said.

Adelekan, also, Chief Executive Officer, Trafalgar Associates, owners of Kwikpay Credit, revealed that out of the over 1,000 personal and business loan applicants received daily nationwide, almost 40 per cent of them have bad credit history.

This figure, he stressed, must be reduced to the barest minimum to restore access to financing, protect business credibility and reputation, prevent over indebtedness and debt traps and open doors to growth opportunities.

He said that the company had plans to assist customers with its soon coming loan product service linked to financial education and financial wellbeing for customers.

Adelekan added the product would encourage customers to consider the repayment of defaults with other lenders when repaying monthly.

He said it would consider additional factors such as educational background, employment, and income to assess loan eligibility.

“Reducing negative credit value is about restoring trust, unlocking opportunities, and positioning businesses or personal finances for long-term success.

“A healthy credit profile will be the passport that would take MSMEs to a better financial future,” he said.(NAN)

Edited by Olawunmi Ashafa

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