Nigerian small businesses seeking institutional credit need to focus on cash flow and financial discipline rather than headline profitability.
Sola Adeyiga, managing director of CreditPRO Finance Company Limited, made this known at the 11th edition of the FATE Foundation Annual Business Conference, held recently in Lagos, under the theme ‘Beyond Borders: Transforming MSMEs for Global Competitiveness.’
The conference convened entrepreneurs, business leaders and industry stakeholders to examine strategies for positioning Nigerian micro, small and medium enterprises for scale beyond the domestic market.
Addressing credit readiness, Adeyiga said lenders assess businesses through the 5 Cs of Credit – character, capacity, capital, conditions and collateral – and that profitability alone does not determine access to finance.
According to him, repayment capacity depends on the availability and timing of cash flow, not paper profit, with lenders reviewing how effectively a business generates and manages cash, meets existing obligations and responds to market shifts.
‘Loans are serviced by liquid cash flow, not paper profitability,’ he said, urging founders to understand their cash conversion cycles and maintain disciplined financial practices.
He noted that while collateral can provide security for a facility, it does not substitute for a viable business model or adequate repayment capacity.
The discussion comes as Nigerian MSMEs face tightening credit conditions and growing pressure to formalize operations to attract institutional capital.
Lenders have increasingly emphasized record-keeping, account activity and credit history as prerequisites for lending, particularly for businesses looking to expand regionally or internationally.
Participants were advised to maintain proper financial records, separate personal and business finances, route transactions through formal accounts, protect credit histories and maintain transparent communication with financial institutions.
CreditPRO, which was admitted earlier this year into the FATE School Transformers Programme for growth-stage enterprises, was a corporate sponsor of the conference.
The company said its participation reflects an ongoing focus on enterprise development, adding that creditworthiness is built through day-to-day management decisions long before financing is sought.
For Nigerian MSMEs pursuing opportunities beyond domestic markets, being finance-ready will depend as much on internal controls and cash management as on growth ambitions, Adeyiga said.