For the majority of small enterprises in Nigeria, getting a business loan is a significant obstacle. This is mostly because the nation’s entrepreneurs and small business owners lack access to suitable credit facilities. But getting outside funding is frequently required to launch, expand, or pay for ongoing costs like payroll and inventory.
Finding, qualifying for, and receiving approval for small-business loans can be challenging, but the more information you have, the simpler it will be. The main strategies and actions you can use to obtain a business loan are highlighted in this article.
Below are three important guides to getting a business loan in Nigeria.
1. Financial Institutions & Banks
People who want to launch their own business but lack the necessary finances to do so might turn to banks for financial assistance.
Businesses at different stages can get financial support from banks and other financial organisations. Banks will lend even to start-ups if they are happy with the company plan, anticipated profits, ability to repay the loan (either through increased sales or other means), management experience and skill, and other security offered.
Even if the majority of bank loans have high-interest rates, it’s still crucial to complete your research and compare the many small business loan options offered by Nigeria’s top banks. Make sure you completely understand the terms of the loan agreement and are confident in your ability to repay the loan within the window period before deciding which choice to choose.
2. Government Loan Schemes
Because they are more inexpensive, government-sponsored loans are consistently the favoured option for smaller and expanding firms.
Government business loans can assist MSMEs in managing their ongoing operational expenditures, those associated with development and expansion, and the expansion of their infrastructure. In Nigeria, a number of banks and financial institutions are collaborating with the government to offer business loans through government-sponsored funding initiatives including YouWin, BOI, NIRSAL, NYIP, NPower, and others.
These publicly-funded funds typically take the form of grants or loans with low or no interest rates. This makes getting one extremely challenging because you have to outbid numerous other business owners.
3. Providers of Loan Services
We’ve all experienced situations where we needed money quickly to take care of something. What can you do while you wait for a bank loan to be approved? Online lending service providers can help you out in this situation.
Fintech has made it possible for Nigerian small enterprises and individuals to obtain quick and simple short-term loans. providing short-term credit facilities, with well-known private companies like Paylater (a OneFi subsidiary), KiaKia, & Quick loans taking the lead. Today, you may apply for quick loans online and receive a payment within a day.
This type of loan is only offered for a very short time (often 3–6 months) and has very strict funding requirements, but it can be your best bet if you need rapid cash to finish a customer order or restock your inventory.
It’s time to apply for the loans that meet your financial demands and that you are eligible for after weighing your options and deciding which of the mentioned loan service providers you wish to work with.
The profitability of the company and the borrower’s ability to make repayment are the two main factors in determining whether a business loan will be approved. You may be required to provide business documents, like a business plan, bank statements, tax returns, legal paperwork, etc., depending on the lender.