How To Get Business Loan In Nigeria – Getting a business loan is a major hurdle for most small businesses in Nigeria, largely due to the lack of adequate credit facilities for small business owners and entrepreneurs in the country. However, outside financing is often required to start or grow a business, or to cover day-to-day expenses, including payroll and inventory.
While it can be difficult to find, apply for, and get approved small business loans, the easier is the knowledge you have about them. This article describes the main ways and steps on How To Get Business Loan In Nigeria.
1. Banks and Financial Institutions
Individuals who want to start their own business but do not have the necessary resources to start a business can turn to banks to meet their financial needs.
Banks and financial institutions provide financial support to businesses at all stages. Banks will also begin lending if they are satisfied with the business model, the company’s expected returns, ability to repay the loan (through business or otherwise), management’s experience and expertise, and other collateral provided.
While most bank loans have high interest rates, do your homework by comparing different business loan options offered to small businesses by major banks in Nigeria. Before deciding which option to choose, make sure you fully understand the terms of the loan agreement and make sure you can repay within the window period.
2. Government Loan Programs
Government-sponsored loans are always preferred for smaller and growing businesses as they are more affordable.
Government corporate loans can help SMEs manage their day-to-day operating costs, growth and expansion costs, and get their infrastructure up and running. Several banks and financial institutions in Nigeria partner with the government to provide business loans under government-sponsored financing programs such as YouWin, BOI, NPower, etc.
Usually, these government-sponsored funds come in the form of an endowment or loan with low or no interest rates. This makes it very difficult to get one as you have to compete with several other entrepreneurs.
3. Loan providers
We’ve all been in a situation where we desperately needed some money to fix something. A bank loan takes time to get by, so what to do? This is where online loan service providers come to the rescue.
FINTECH has opened the door to quick and easy short-term credit for small businesses and individuals in Nigeria. Major private organizations such as Paylater (a subsidiary of OneFi), KiaKia, and Quickloans leading the way in providing short-term credit facilities. You can now apply for a quick loan online and receive your payment within 24 hours.
This type of loan is only provided for a very short period (usually 3-6 months) and is very limited in terms of access to finance, but it can be your safest option if you need quick cash for an order or shop of a product.
Conclusion – How To Get Business Loan In Nigeria
Once you’ve compared your options and determined which of the listed loan service providers you want to go with, it’s time to apply for the loans that meet your financing needs and qualify you.
The main criteria for business loan approval are the profitability of the business and the way the borrower manages the repayment. Depending on the lender, you may need to submit business documents such as a business plan, bank statements, tax returns, legal documents, etc.
