It might not be a good time to turn to a financial institution as an entrepreneur for a loan especially, in this challenging economic environment. That’s the view of financial consultant Charles Mensah. 

According to him, the interest on bank loans has led to the collapse of many small businesses.

Speaking with JOY BUSINESS at a workshop to build the capacity of about 70 entrepreneurs, Mr. Mensah said most entrepreneurs “rush and borrow money for an expansion when they have not even studied the market so sometimes the interest burden alone eats into their profits.

“In this regard when there is a small challenge and makes it difficult for them to eventually expand and the original office that they even had will then be taken off, or they would go bankrupt just because the way they did the structure.”

Mr. Mensah adds that “if you want to expand your business, you don’t necessarily have to go and borrow at the first instance. If you have a consistent flow of profitability in the last couple of years or some orders from some of your clients then you can fall on what I call ‘retained profits’.”

He wants entrepreneurs to plough back profits into the business especially, for the expansion.