How to get a Business Loan in Nigeria – Business can both be very amazing and frustrating in Nigeria, and the thin line that differentiates the frustrating Nigerian business and the flourishing businesses in Nigeria is the funding part of the business.
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There are a lot of businesses that have the potential to do some amazing stuff in this nation, but their lack of funding has denied them this opportunity. The funding challenge is especially pronounced among small businesses (startups mainly). Small businesses are usually the ones that thrive on the strength of an idea or an innovation which if adopted, can greatly influence the world. However, the funding challenge cripples the arms of small and even medium businesses in the Nigerian nation. Many small businesses start their operations off on the strength of personal finances or even donations. However, there comes a time when the business needs to expand its horizons, and the funding is usually a challenge at this stage.
In this article, we will guide you on how to get a reasonable loan for your business in Nigeria.
Getting a Loan in Nigeria
Getting a business loan in Nigeria can be a very tedious task, however, it is possible, but there are few guidelines to getting loans from different institutions. We will highlight the places where you can get a business loan in Nigeria as well as the factors that surround such loans in the lines below.
Banks are the first names that naturally come to mind when speaking of business loans in Nigeria. Banks are financial houses, and so the fact that they have the loan capacity to credit a small business is not in doubt. The challenge, however, is how to get the loan out of a bank. This challenge is one that must be carefully dealt with before approaching any bank for a loan, because banks get a lot of loan applications and so, your loan application has to stand out of the crowd to increase the chances of a successful loan application grant. There are a few red marks that banks watch out for both with the business and the business owner (or representatives) before either accepting or rejecting such a loan. One must, however, note that banks are finance houses, but they are also business inclined as they have the staff to pay and overhead costs to cover. It is, therefore, the intent of any bank to make a profit in borrowing any organization a loan. If the bank perceives that your organization may not be able to return the loaned amount within the specified timeframe, it lessens your chances of getting the loan approved.
With the inception of the Bank Verification Number (BVN) in Nigeria, all bank accounts are linked, and so it becomes easy to trace your banking record from any bank. And this is one of the things a bank will first of all check before even considering a loan application. The bank will check to see if you or your organization has ever borrowed money from any other bank. If you have borrowed before, the bank would then further go on and investigate if you paid back on the appropriate terms of the loan, if it is found that you owe any bank, it lessens your chances of getting a loan from any other bank.
Another thing a bank looks out for in considering a loan application is the presence of a good business structure. You must understand that a bank saves money for people, and the people will eventually come for their money sooner or later. If a bank now decides to give you a loan, it has to eliminate all the doubts that come with the business. A good business structure will attract a bank, and this is usually seen in the proper accountability of the organization. If you run your company with your personal account, it is less likely you will get a loan from a bank, and a bank will even consider a loan application from an organization with an accountant over one that does have an accountant. When you pass the accountant mark, the bank will cross-check all your account paper and make sure the company is operated as a proper organization and not personal business. Checking this will help the bank ensure you will spend the loan money on what you said in your loan application.
Another factor that helps your chances of getting a loan from a bank is a good understanding of your niche. A bank certainly wants to eliminate all elements of doubt that it is placing money in the care of an amateur, as this can hinder the refunding of the money. Be sure to have a very good knowledge of your industry and the current trends before approaching a bank for a loan.
One thing that discourages many from approaching banks for loans is the fact that a bank has rejected them before. However, you can try as many banks as you can for your loan. This is because some banks focus their trade around a particular industry, and so even if your proposal is the best in the century, they may not approve your loan request, but that may just be the niche that another bank focuses.
Some business owners want to stay away from bank loans because of the high-interest rate that accompanies them; however, if you don’t mind this, a bank is your best bet at getting a good loan for your business.
The government is another prominent name in the Nigerian loan circle. There are several loans from the government that supports businesses in their trade and art. It is important to seek out the government loans that are available in your niche or industry if you want a government loan. Although there are general business loans, the chances of getting such loans are considerably slim when compared to niche-based government loans.
The challenge with government loans is the fact that there is usually a whole lot of competition with this kind of loan because it is usually open to the general public. The fact that this kind of loan is open to the public makes it almost impossible to lay a hand on it in the end. But government loans are of very great advantage when one can get hands on them. Government loans are almost always with zero percent interest, and this is something that is a healthy fit for businesses, the businesses will only have to pay back the borrowed amount within the specified time. When a government loan is not with zero interest, the interest is usually very low, and the time of paying back is such that it is easy to pay back for business owners.
Although the chances of getting a government loan are slimmer when compared to a bank loan because of the massive competition which a business owner has to pass through before his/ her business proposal can come to the limelight, a government loan is preferable for small and medium scale businesses. Government loans are better for small businesses because they are affordable to pay back, and the terms of payment are usually very friendly. It is advisable that even if you have applied for a bank loan, try and apply for several government loans for your business as well, if the government loan comes through, you stand a better chance of business success.
This is the third name that comes to mind when thinking of a place for a business loan in Nigeria. Some organizations provide loan service both to organizations and individuals across the Nigerian nation. You only need to approach these organizations with your loan proposal.
With the development of technological innovations, there are more ways to access quick loans in Nigeria now more than ever. There are financial service operators that offer a quick loan service to individuals all around the nation now. The amazing thing about this kind of loan is the fact that it can be accessed in as short as twenty-four hours from the time of application. Loans from this source are usually small and can only do very little as far as businesses are concerned. Then the loans from these financial t5echnological innovations are usually short-termed, and a business may not be ready to pay back within the time frame which these organizations require back their funds.
Business is like a game and knowing the rules to play by certainly gives an advantage in the playing arena. One of the strengthening factors that make up the pillar of a good business is funding. However, many challenging circumstances are confronting Nigerian businesses in this regard. This is why we have put up this article to guide you on how to get a loan for your business in Nigeria. One way of getting a loan fast in Nigeria is not laying all eggs in a single basket.
As a business owner who seeks the expansion of your business brand, seek out many loan opportunities, and apply for them all, the more money to you have for your business, the better for the brand.
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