TRAINING OF TRAINERS TOT FOR UWEZO FUND MANAGEMENT

TRAINING OF TRAINERS (TOT) FOR UWEZO FUND MANAGEMENT COMMITTEE ON SOURCES OF BUSINESS FUNDS MODULE

Session outline 1. Identify various sources of business funding 2. Identify conditions for each source of funding

Sources of business funding • Personal and/or family savings including retirement benefits, pension, bank savings, shares, awards. • Family and friends. • Conversion of assets into business investment e. g. sale of land, vehicle, equipment, house etc. • Government grants and special projects, ( e. g. Uwezo fund, YEDF, WEF, Njaa Marufuku, SME fund) • Short, medium and long term borrowing from financial institutions • Microfinance institutions, NGOs and CBOs • Inviting partners into the business.

Sources of business funding…(2) • Angel investors and Venture Capitalists • Membership of savings & credit societies (Co-ops, table banking, rotating savings & credit associations). • Supplier credit for working capital • LPO financing, Invoice discounting. • Pre-payments by customers. • Hire purchase • Leasing of equipment • Other local sources

Conditions for each source of funding • Security – e. g. title deed, guarantors, log book, share certificates • Savings – e. g. 6 months savings, have operated table banking • Purpose of loan – why the money is required • Amount of loan – some give specific periods • History of the borrower – repayment history, credit reference bureau • Insurance – • Repayment period – short term or long term • Type of business to be funded

Effective use of business finances • Honour contractual arrangements with the lender – pay when due • Ensure funds are utilized for the intended purposes • Avoid diversion of funds to unplanned activities or conversion from one item of the project to another. • Have an implementation plan for your activities with timelines. • Stick your budget as much as possible.

Group work • Aim: To analyze the conditions provided by the existing lenders in your locality • Instructions: – Use information that you know about existing lenders in your locality to analyze and compare so you are able to select the most suitable one for your business.

• Thank you for participating • Any questions?