Finances businesses in Zambia

Banks and microfinance companies in Zambia offer financial services to individuals and companies. Some of the services include loans, personal banking, mortgages and insurance. Find the companies that offer these services on this site. Most commercial banks will offer personal banking facilities and loans for a mortgage and an asset such as a vehicle or home furniture. There is also a host of microfinancing enterprises where individuals can raise capital to finance a small business or assets for a home improvement project. All insurance companies offer insurance for various needs such as home, education, funeral or life insurance policies for individuals.

The financial services sector provides financial services to people and corporations. This segment of the economy is made up of a variety of financial firms including banks, investment houses, lenders, finance companies, real estate brokers, and insurance companies. As noted above, the financial services industry is probably the most important sector of the economy, leading the world in terms of earnings and equity market capitalization. Large conglomerates dominate this sector, but it also includes a diverse range of smaller companies.

Business financing

In order to expand your business, you might need access to capital through financing. However, finding the right funding model is vitally important. This is because if you get from the wrong sources, you may lose part of your company or find yourself locked into repayment terms that impair your growth for many years into the future.

Before sourcing finance, you must first:

• Determine how much finance you will need
• Develop a sound business plan
• Consider the time frame you will need to repay the loan
• Determine your capacity to repay the loan

Types of finance

There are two main types of finance which include:

Debt finance – money borrowed from external lenders, such as a bank, or micro-financing institution.

Equity finance – investing your own money, or funds from other stakeholders, in exchange for partial ownership.

Sources of finances

• Financial institutions – Microfinancing institutions, banks, credit unions and building societies. It can be provided as loans, overdrafts and lines of credit.
• Finance companies – most finance companies offer finance products via a retailer.
• Retailers – Purchase of goods for your business through store credit via a finance company. This can attract high-interest rates; however, some retailers offer an interest-free period.
• Suppliers – trade credit allows you to delay payment for goods.
• Factor companies – also referred to as debtor’s finance. Factoring is when a business sells its accounts receivable (invoices) to a third party (called a factor) so that it can receive cash without waiting 30 or 60 days for customer payment. Customers pay their invoices directly to the factoring company. The cost for providing this service will vary between companies and it is important for you to research these costs before entering into any agreement.
• Invoice finance – essentially the same as factoring, however invoices are paid to your business and customers are not aware of your arrangements with the financier.
• Peer-to-peer lenders - matches people who have money to invest with people looking for a loan. Loans may need to be repaid within a certain time period and interest rates may vary according to the level of risk.
• Family or friends – may offer you money as a loan. To avoid misunderstanding it is important to have a formal written agreement specifying the terms of the loan, repayment requirements and terms of interest. Seek legal advice to draw up the loan agreement.