Temitope
Temitope Akinola
Getting loans for business in Nigeria is getting more easier than never before. According to the 2015 Ease of Doing Business Report by doingbusiness.org, Nigeria is said to be the 52nd country in the world where you can easily obtain loans and credit facilities for business. That’s a great improvement considering the fact that 189 economies were analyzed and that Nigeria ranked 125th in the outgoing year.
While the report above is factual, the reality now is how such loans can be accessible to business owners and new start-ups like you. If you don’t have the right information, you may not be able to have access to loans and credit facilities available in Nigeria.
First and foremost, you need to understand the different kinds of credit loans available so that you will know which one to choose base on the kind of business you’re doing. According to entrepreneurshipsecret.com, the following are some of the types of loans and facilities available in Nigeria.
Loan from Credit/Thrift Cooperative societies: This is one of the traditional means of obtaining a loan, there are many of these societies around and one of the conditions of accessing such loans is to be a member and perform membership obligations. When this is done, loans can be accessed easily. Interest rates for this kind of loan are also affordable compared to those of commercial banks and microfinance banks.
Overdraft: This is an arrangement between a bank and an account holder to withdraw more than the available balance in the account owner’s bank account. It is available in both commercial and microfinance banks and it can only last for some days or few weeks. Overdraft is subject to renewal as long as the previous one has been cleared. An account holder must have a good record of frequent transaction with the bank to access this loan.
Trade Credit: If your business has to do with buying and selling, then you can leverage on this. It has to do with making an arrangement with a supplier where you can make payment after the goods must have been sold. To be able to access this, you must have some level of integrity with supplier or at least someone who can stand in for you. You can also make an initial commitment by buying goods over a period of time from the supplier before requesting for a credit.
Short term loan: This kind of loans is repayable within six calendar months. It is available in microfinance banks and commercial banks too.
Medium term loan: They are available in both micro finance and commercial banks but are not as easily accessible compare to short term loans.
Long term loan: This can be repaid in a period of two years or more. It is usually sourced for capital project and it may be difficult for small business owners to access such funds. Long term loans are provided by specialized banks such as Bank of Industry, Nexim etc.
Apart from the well-known commercial and micro-finance banks, there are other established financial institutions that give loans to both existing business owners and new start-ups. Some of these institutions are not for profit organizations therefore their interest rates are affordable. Examples of such are LAPO, Advans Lafayette etc. Businesslist.com.ng also has some of them.
Get your business plan ready so that you can present it when requested. Some financial institutions will not offer you loan if you don’t have a business plan. You may also be required to provide two or more guarantors before you can be given a loan.
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