HOW TO ACCESS LOAN IN NIGERIA
Getting a loan in Nigeria is a major challenge, especially for small businesses in Nigeria. This is because of the lack of proper credit facilities for small business owners in the country. External finance is important for small business owners to grow their business or cover the day-to-day expenses of the business. In this writing, we highlight below, the key ways and steps you can take to secure a loan for your business.
- Bank and Financial Institution
As a young business owner that is just coming up, who need fund to commence operations can approach banks to meet their financial needs. It is one of the duties of Banks and financial institutions to provide financial assistance for businesses, especially those at an early stage. Banks and financial institutions will lend money to the small business owners if they are satisfied with the business model, project returns of the business, and ability to pay back the loan. Although most banks loans come with high-interest rates, it is important that you do assignments by comparing several loan options available for small businesses by major banks in Nigeria. Also, ensure you understand the terms and conditions of the option of loan you are going for, with an assurance that you can pay back within the specified period.
- Government Loan Schemes
These loans are more affordable and small business owners prefer this type of loan. Government business loans can help small and medium enterprise manage their day-to-day operational expenses, growth, and expansion costs. Most banks and financial institutions in the country are working with the government to provide business loans under government-aided funding programs. Although, government-sponsored funds come in form of grants or loans with little interest rate. Getting this type of loan could be difficult because you have to compete with various other business owners.
- Loan Service Provider
There are times that a business owner or an individual would need cash to sort out something very urgent, knowing fully that bank loan or government loan may take time, so what do you do? This is where online loan service providers come in. There are several online service providers where you can easily get a loan within short notice. Most are private organizations like Pay later and Kiakia; these are organizations that provide short-term credit facilities. This type of loan is only provided for a short period of time (3-6 months) and they are very limited in terms of how much funding can be accessed but could be your safest option in case you need cash to fulfill a client order or stock your inventory.
OTHER SOURCES OF GETTING A LOAN
- Bank of Industry (BOI)
The bank of industry in Nigeria provides loans for small, medium, and large enterprises in the country; new or existing businesses seeking expansion too can apply for the loan. You can access a loan from the bank of the industry through the following steps
- Write a formal application letter
- Completion of Bank of Industry’s questionnaire
- Submission of forms and questionnaire
Having met the above requirements, you access a bank of industry loans easily.
- Friends and family
Another set of people that can help raise money or startup capital is your closest people; friends, and family. Although before you could get the money from them, they have to trust your capacity. All you need is to introduce your business idea regardless of how small or little the business is; they might be willing to help financially. In order to get them interested, you can guarantee to give them something consequently as the business grows.
REQUIREMENT TO BE ELIGIBLE FOR LOAN IN NIGERIA
Whether you are getting your loan from a private individual, government loan, or loan from the financial institution, there are basic requirements that you must satisfy as a borrower, few of them are listed below;
- Employment and income
In any of the bodies listed above (private, government, and or financial institutions), you as a borrower, need to have current employees have a certain amount of money you are earning every month to be eligible for a loan. Why because they believe it is through this mean they expect you to repay their loan.
As an applicant for a loan, there is a form you need to fill. This form there contains information about your employment and your income range to know whether you are eligible and capable of the loan you intend to borrow. Sometimes, you may find out that a person has no job, and their income is a fraction of what they’ve stated. Thus, this helps lenders to make their final decision, in terms of who to give and who not to give a loan.
- Purpose and Terms of the Loan
Before getting a loan for your business, you need to know the reason(s) for getting the loan; because lenders are more interested in what you want to use the loan for. It is important to know the purpose of the loan because the high cost of interest is not charged, the borrower wants to use the loan shopping customers’ items for the brand name. Thus, the purpose and term of the loan are important to confirm interest rates and fees charged.
- Guarantor Information
A guarantor is an extra person involved in the loan, the guarantor. It is always the habit of a lender to speak to the guarantor. These individuals are usually friends or close family members, who need to understand their roles and responsibilities. A few days to the set date for the loan to be repaid, the lender will contact the borrower to remind them about the repayment. The lender ensures he contacts the borrower several times and offers alternative payment plans, if the borrower fails to meet up with the time of repayment; they offer alternative payment plans before asking the guarantor to pay the bill.
However, if the loan is successfully funded within 2 days of applying, the money is sent to the guarantor first. This is because the lender wants peace of mind knowing that the huge loan, potentially in millions of naira is going to a person with a good credit score.
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