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Unlocking The Power Of Asset Finance: A Catalyst For Business Growth In Uganda

Sandra Kaggwa, Manager, Asset Finance at dfcu Bank

For both new and existing businesses, access to capital continues to pose a significant challenge. These enterprises often possess great potential for growth and innovation, but their progress is hindered by limited financial resources.

The ability to borrow from credible Financial Institutions is important if a business is to meet its short and long-term growth objectives. With Asset Finance, enterprises of various sizes can overcome capital constraints and maximize growth opportunities.

Sandra Kaggwa, Manager – Asset Finance at dfcu Bank write about how Asset Financing can help businesses realize their goals.

Asset Finance is a financing arrangement where a financial institution, such as a bank, assists businesses in acquiring essential assets based on their cash flows. Instead of requiring the business or individual to provide traditional collateral, like property or land, the asset itself serves as security. This concept is particularly transformative for SMEs, as it eliminates the need for substantial upfront capital or existing assets to secure a loan.

Consider the scenario of a small transport business owner who aims to expand their fleet by acquiring a new vehicle. With Asset Finance, the business owner can approach a bank, such as dfcu Bank, which will then purchase the vehicle on their behalf. The bank typically covers up to 90% of the vehicle’s cost, allowing the business owner to repay the amount in convenient instalments. What’s remarkable is that the newly acquired vehicle itself acts as collateral, freeing the business from the burden of putting up additional assets.

dfcu Bank’s Asset Finance solutions simplify the borrowing process, making it accessible to a broad spectrum of potential borrowers; from sole proprietors to registered companies, anyone with regular cash flows can qualify to access our products and services.

The empowerment brought about by Asset Finance is far-reaching because SMEs can leverage this financing tool to work around limited working capital. With Asset Financing, business owners are able to pay employee salaries, undertake marketing initiatives, and meet operational expenses. In a country like Uganda, where SMEs are integral to the economy’s fabric, such empowerment has a ripple effect that extends beyond individual businesses.

One of the most significant challenges SMEs face is accessing funds for expansion. Traditional lending mechanisms often demand a sizeable amount of  collateral, which the SMEs do not have access to. Asset Finance, however, acts as a catalyst by enabling them to acquire assets that directly contribute to their operations. This financing mechanism equips them with the means to expand their capacities, enhance services, and contribute more substantially to Uganda’s economy.

The impact of asset finance on job creation and economic growth cannot be understated. As SMEs grow and flourish, they require a more extensive workforce to meet increased demands. This surge in job opportunities is a tool for combating unemployment and uplifting communities.

In conclusion, Asset Finance has emerged as a transformative force in Uganda’s business landscape. By eliminating the need for significant upfront capital and traditional collateral, and offering tax benefits, this financing mechanism empowers SMEs to harness their true potential.

The Author is the Manager – Asset Finance at dfcu Bank.

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