If you’re a business owner in Nigeria, you know that finding the right business loans can be a daunting task. With so many lenders and loan options available, it can be difficult to navigate the landscape and find the best solution for your specific needs.
However, with the right knowledge and strategies, you can secure the funds you need to grow and thrive. In this ultimate guide, we’ll take a comprehensive look at the top lenders and strategies for finding the best business loans in Nigeria.
Whether you’re just starting out or looking to expand your existing business, this guide will provide you with the information you need to make an informed decision and secure the financing you need to succeed.
There are several reasons why your business may need a loan.
You may have outgrown your initial office location, or it probably just needs a facelift. You may be having to deal with more demands than your present output.
All of these are pointers to the fact that business is booming and you’re ready to expand.
However, because your business is ready for expansion, doesn’t mean you have the cash on hand to make it happen.
Whether you’re looking for short-term or long-term options, traditional bank loans or alternative financing solutions, this guide has everything you need to know about finding the best business loan in Nigeria.
Business loans: How do they work?
Business loans let eligible business owners borrow funds to cover company-related purchases, operating expenses or expansion.
They can help you access the capital your business needs to thrive.
Business loans in Nigeria are also a form of financing that can be used to help you start or expand your business.
There are many different types of business loans available, and the best loan for your business will depend on your specific needs.
You’ll need to know what type of loan you’re looking for and what your options are.
The different types of business loans in Nigeria
There are many different types of business loans in Nigeria, each with its own set of benefits and drawbacks.
The most common types of business loans are short-term loans, long-term loans, and lines of credit.
Short-term loans are typically used for small, one-time expenses such as equipment purchases or emergency repairs.
They typically have terms of less than one year and can be either secured or unsecured.
Long-term loans, on the other hand, are best suited for large investments, such as real estate or expansion projects. They usually have terms of five years or more and may be either secured or unsecured.
Another type of business loan is a line of credit. Lines of credit provide borrowers with access to a set amount of funds that can be used as needed.
This flexibility makes lines of credit a good option for businesses that need funding for short-term projects or unexpected expenses.
Be sure to read the fine print carefully so that you understand all the fees and terms associated with each loan. It’s also important to shop around and compare interest rates to ensure that you’re getting the best deal possible.
How to qualify for a business loan in Nigeria
To qualify for a business loan in Nigeria, you will need to have a good credit score and a strong business plan.
The first step is to approach a lender and request a loan application. You will need to provide the lender with your business plan, financial statements, and proof of collateral.
The lender will then review your application and decide on whether or not to approve the loan. If you are approved, you will be required to sign a contract and agree to repay the loan according to the terms of the agreement.
Application process for business loans in Nigeria
The process for applying for a business loan in Nigeria is relatively straightforward. However, there are a few things you need to keep in mind to ensure that you have the best chance of securing the financing you need.
Here are the key steps to follow when applying for a business loan in Nigeria:
1. Research your options
2. Know your need
3. Gather your documentation
4. Submit your application
5. Wait for approval
Top lenders for business loans in Nigeria
Expectedly, business loans in Nigeria can be difficult to access. But don’t despair – there are still plenty of options available if you know where to look.
There are strategies you can use to increase your chances of approval.
For instance, before you start looking for a loan, it’s important to have a clear idea of what you need the money for and how much you’ll need to borrow. This will help you narrow down your options and make sure you don’t over-borrow and end up in debt.
Once you’ve done that, it’s time to start shopping around. The best place to start is with banks or other financial institutions that you already have a relationship with.
If you have a good credit history and a solid business plan, they’re more likely to be willing to lend to you.
The key is to do your research and compare offers from multiple lenders before deciding on one. Make sure you understand the terms and conditions of the loan.
Below is a list of some of top best lenders for business loans in Nigeria.
1. Guaranty Trust Bank
GTBank offers a wide range of facilities to help you unlock the potential of your business.
Some of its business loan offerings include Overdraft, Hub Advance, Fashion Industry Credit as well as Food Industry Credit.
Some of its requirements include:
1. A duly registered company with Corporate Affairs Commission
2. Business should be at least 1 (one) year.
3. Business must have a clean Credit Bureau Report with no unpaid obligations.
4. Business must have a satisfactory CRMS report of owners, sponsors and directors.
2. Heritage Bank
Heritage Bank aims to deliver a banking experience beyond the traditional to its customers.
It also has a wide array of loan schemes tailor-made for the agriculture ecosystem.
These include Anchor Borrowers Programme, Commercial Agriculture Credit Scheme, Maize Aggregation Scheme (MAS), Micro Small and Medium Enterprises Development Fund (MSMEDF), Paddy Aggregator Scheme (PAS) as well as Real Sector Support Facility.
3. Wema Bank Business Loan
Wema Bank is constantly introducing products and services tailored to the needs of its customers at every stage of their lives.
It offers Small Business Loans and other SME Loans including Female Support Loan, Pharma Loan, Wema Medi Loan, School Support Facility, as well as the Green Energy Finance Facility.
4. Ecobank All-Purpose Loan
Ecobank, with a pan-African presence, offers its customers the freedom to borrow and pay back slowly.
Its all-purpose loan offers the opportunity to borrow for your business or personal need. It also offers a flexible repayment plan and the option to access additional funds after repayment over time.
First City Monument Bank (FCMB) Limited is a member of FCMB Group Plc, which is one of the leading financial services institutions in Nigeria.
The bank has an SME Development Finance Facility, which offers asset finance for the acquisition of commercial properties to assist businesses and break free of restrictive lease agreements.
It also has the SME Working Capital Facility to support businesses with funds to satisfy both maturing short-term obligations and upcoming operational expenses.
6. First Bank
First Bank of Nigeria Limited (FirstBank) is the premier Bank in West Africa with its impact woven into the fabric of society. The bank has SME Products Financing, a loan facility designed to support the growth of your business with the required funds.
7. Jaiz Bank
A premier Non-Interest Bank in Nigeria, Jaiz Bank PLC has the JAIZ/SMEDAN Matching Funds Partnership, a programme designed to achieve financial inclusion through the provision of finance to entrepreneurs who are either un-served or under-served with regards to access to finance and other developmental support services.
A digital bank, Carbon empowers individuals with access to credit, simple payment solutions, high-yield investment opportunities and easy-to-use tools for personal financial management.
Its Business Loans give out up to Twenty Million Naira (₦20,000,000) to expand your business quickly without any collateral.
Factors that determine whether your business loan will get approved
While business loans can be secured or unsecured, meaning they may or may not require collaterals, lending platforms are known to consider certain factors before granting one.
Some of the deciding factors include.
1. Credit history
2. Cash flow
4. Repayment capacity
Every business needs documents to properly operate and expand. Although different lenders may have different eligibility criteria for approving business loans, they all ask for relevant documents.
Some of the documents required by lending platforms before granting a loan to a business include.
1. Identity proof
2. Address proof
3. Income proof – bank statement of the last six months.
4. Financial documents – last two years ITR, balance sheet, income & profit loss account for the last two years, etc.
5. Proof of business continuation
6. Business ownership proof
7. Last three years audited financials
With nairaCompare’s loan comparison tool, you can check your eligibility and apply for a Business Loan.
How to Find the Best Business Loans in Nigeria
The process of finding the best business loans in Nigeria can be daunting.
However, there are a few things that you can do to increase your chances of finding the best loan for your business.
First, you should try to get recommendations from other businesses or individuals who have recently taken out a loan. This will give you an idea of which lenders are providing the best terms and conditions.
If you’re searching for the right lender to fund your business, take the time to read online reviews and learn about the experiences of other borrowers. When you’re ready to compare and apply for business loans, visit nairaCompare to find the best loan option for your business!