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Friday, July 1, 2022

Businesses urged to strike balance between equity and debt

The Director of Retail Banking, Charles Addo, has said businesses should not underestimate the importance of pumping in their own money before seeking financial support.

Speaking during the on-air series of the Citi Business Festival, Mr. Addo explained that having that equity helps in minimising the risk.

Evidence of equity from retailers seeking financial support from banks is considered a green flag by lenders.

“Once there is some form of equity inside a business, it shows that the shareholders have shown a bit more commitment, and they care about ensuring the business doesn’t collapse,” Mr. Addo said.

When people only invest borrowed money into their businesses, he added that “if it goes bust, you may not give it the necessary attention that it needs as well.”

Ultimately, Mr. Addo urged entrepreneurs to find the balance between borrowing money for their business and investing in their own business.

“Striking the balance between equity and debt is the best. Either one is fine.”

Mr. Addo spoke on what to look out for, when it comes to ‘Financing Retail’ on today’s edition of the #CitiBusinessFestival on-air series.

The 2022 edition of the Citi Business Festival is mainly sponsored by ABSA Bank, with support from MTN Momo and MTN Business, Ghana Investment Promotion Centre, IT Consortium and GIRSAL.

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