Business Loans May 15 2024 | 21 mins read

5 Short-Term Business Loans for Small Businesses in Nigeria, 2024

Small businesses in Nigeria often face cash flow challenges, making access to short-term financing crucial for meeting immediate needs like inventory purchases, bridging cash flow gaps, or seizing growth opportunities. However, responsible borrowing and thorough lender comparison are essential to avoid crippling debt burdens. This article highlights 5 short-term business loans for Nigerian small businesses in 2024, considering factors like loan amounts, interest rates, repayment terms, and eligibility criteria.

Common uses for short-term loans include inventory restocking, covering operational expenses during lean periods, and funding quick expansions or renovations. By understanding their specific financing needs, small business owners can make informed decisions and leverage these loans judiciously to fuel growth.

5 Short-Term Business Loans for Small Businesses

1. Renmoney Self-Employed Loan

Renmoney offers some of the highest business loan amounts in Nigeria of up to ₦5 million. Their interest rates, while higher than some competitors, are still relatively affordable. Renmoney allows existing borrowers to apply for top-up loans, providing extra capital as needed. However, eligibility is tighter, often requiring at least ₦50,000 in monthly revenues and collateral for larger loans.

Details

Loan Type	Amount Range	Interest Rate/Fees	Repayment Terms	Unique Benefits/Drawbacks	Qualification Highlights
Term loan	₦100,000 - ₦5,000,000	6.3% flat monthly interest rate, 1% management fee.	3 - 9 months	High loan limits but stricter requirements. Allows borrowers to top-up existing loans.	Minimum 1 year in business, ₦50,000 monthly revenue, collateral may be required for larger loans.

To apply for the Renmoney Business Loan, click here.

2. Fairmoney Business Loan

Fairmoney is a trendsetter in digital lending for Nigerian businesses. Their business loan application can be completed entirely online in minutes. Upon approval, funds are disbursed to your account within 24-48 hours. The 3% flat interest rate is very competitive, with no hidden fees. While maximum loan amounts are lower than some banks, Fairmoney excels at providing smaller businesses with fast, affordable credit.

Details

Loan Type	Amount Range	Interest Rate/Fees	Repayment Terms	Unique Benefits/Drawbacks	Qualification Highlights
Term loan	₦50,000 - ₦5,000,000	3% flat monthly interest rate, no processing fees.	3 - 12 months	One of the fastest online application and disbursement processes. However, loan amounts are limited compared to some competitors.	Business must be at least 6 months old, provide valid ID, 3 months of bank statements, business registration documents.

3. Lapo Microfinance Bank - SME Loan

LAPO Microfinance Bank provides affordable SME loans to its existing customer base. Loan amounts up to ₦5 million are available to qualifying borrowers. The key drawback is that you must have an existing relationship with LAPO as a customer to be eligible. But for those already banking with them, it can be a great low-cost option for short-term business financing.

Details

Loan Type	Amount Range	Interest Rate/Fees	Repayment Terms	Unique Benefits/Drawbacks	Qualification Highlights
Term loan	₦10,000 - ₦5,000,000	10% flat monthly interest rate.	1 - 12 months	Lower rates than most MFBs, but only available to existing LAPO customers.	Active LAPO account for 6+ months, valid ID, business registration

To apply for the Lapo Microfinance Bank SME Loan, click here.

4. Letshego Retail Unsecured MSE Loan

Letshego offers a flexible range of loan amounts and repayment terms for small businesses in Nigeria. While the interest rates are slightly higher than some competitors, the longer repayment periods of up to 24 months can provide much-needed breathing room for businesses with more gradual cash flows. Letshego's application process is also known to be relatively swift, helping businesses secure funding quickly.

Details

Loan Type	Amount Range	Interest Rate/Fees	Repayment Terms	Unique Benefits/Drawbacks	Qualification Highlights
Term loan	₦200,000 - ₦5,000,000	5.6% flat monthly interest rate.	1 - 24 months	Longer repayment terms available, but higher interest rates.	At least 6 months in business, valid ID, bank statements, business registration documents.

To apply for the Letshego Business Loan, click here.

5. QuickCheck Business Loan

QuickCheck's merchant cash advance is an innovative short-term financing option that ties repayment directly to your business's sales volume. This can be advantageous for businesses with fluctuating revenues, as repayments automatically adjust based on your cash flow.

QuickCheck's application process is straightforward, and funds can be disbursed quickly once approved. Eligibility criteria focus on demonstrating consistent sales volumes rather than stringent credit checks, making this an attractive option for businesses with limited credit history.

Details

Loan Type	Amount Range	Interest Rate/Fees	Repayment Terms	Unique Benefits/Drawbacks	Qualification Highlights
Merchant cash advance	₦50,000 - ₦2,000,000	Factor rates ranging from 1.2 - 1.5, processing fees apply	Automatic daily or weekly deductions based on sales volume	Convenient repayment tied to sales.	At least 6 months in business, minimum ₦100,000 monthly revenue, valid ID, business registration.

All financial institutions highlighted in this list are licensed by the central bank of Nigeria. You can verify here.

Important Considerations Before Applying

Creditworthiness is important when applying for any loan, and short-term business loans are no exception. Lenders will scrutinize your credit scores and debt-to-income ratios to gauge your ability to repay the loan. Maintaining a healthy credit profile by paying bills on time and minimizing outstanding debts can significantly improve your chances of approval and securing favourable interest rates.
A well-crafted business plan is often a make-or-break factor in the loan application process. Lenders want to see a clear roadmap for how you intend to use the funds and generate enough revenue to repay the loan. Your business plan should include detailed financial projections, market analysis, and a solid strategy for achieving your goals.
Understanding the true cost of borrowing is crucial. While some lenders may advertise low interest rates, be wary of additional fees that can drive up the overall cost. Pay close attention to the difference between annual percentage rates (APRs) and flat rates, as well as any processing fees or origination charges. Thoroughly review the repayment schedule and calculate the total interest you'll pay over the life of the loan.
While short-term loans can provide a much-needed cash infusion, they should be used judiciously and not as a band-aid for deeper financial issues. Explore alternative financing options like microfinance institutions, government grants, or investor funding if your needs align better with their offerings. In some cases, addressing operational inefficiencies or restructuring your business model may be more prudent than taking on additional debt.

Tips for a Successful Application

Patience and diligence are key when seeking short-term business financing. Don't rush into the first loan offer you receive. Shop around and compare multiple lenders to ensure you're securing the best terms and rates for your specific needs. Leverage our online comparison tools to streamline your research process.

Compile all necessary documentation beforehand to expedite the application process. This includes financial statements (income statements, balance sheets, cash flow statements), business licenses, registration documents, tax returns, and any collateral information if required. Having these readily available not only speeds up the process but also demonstrates your organizational skills and commitment to the lender.

Clearly understand your financing needs and avoid the temptation to overborrow. While a larger loan amount may seem appealing, failure to repay can jeopardize your business and creditworthiness. Borrow only what you need and have a concrete plan for using and repaying the funds. Lenders will be more inclined to approve loan amounts that align with your revenue projections and repayment capacity.

Consider diversifying your funding sources by applying for multiple short-term loans or lines of credit from different lenders. This can provide a cushion and flexibility in managing cash flow but be cautious not to overextend yourself financially.

Finally, be prepared to negotiate terms if you have a strong bargaining position. Lenders may be willing to adjust interest rates, fees, or repayment schedules for borrowers with exceptional credit profiles, longstanding businesses, or substantial collateral.

Conclusion

Looking to apply for a short-term business loan? Compare the details of these 5 Short Term Business Loans below before making a decision!

Loan Type	Amount Range	Interest Rate/Fees	Repayment Terms	Unique Benefits/Drawbacks	Qualification Highlights
Renmoney Business Loan	₦100,000 - ₦5,000,000	6.3% flat monthly interest rate, 1% processing fee.	3 - 9 months	High loan limits but stricter requirements. Allows borrowers to top-up existing loans.	Minimum 1 year in business, ₦50,000 monthly revenue, collateral may be required for larger loans.
Fairmoney Business Loan	₦50,000 - ₦5,000,000	3% flat monthly interest rate, no processing fees.	3 - 12 months	One of the fastest online application and disbursement processes. However, loan amounts are limited compared to some competitors.	Business must be at least 6 months old, provide valid ID, 3 months of bank statements, business registration documents.
Lapo Microfinance Bank -SME Loan	₦10,000 - ₦5,000,000	10% flat monthly interest rate.	1 - 12 months	Lower rates than most MFBs, but only available to existing LAPO customers.	Active LAPO account for 6+ months, valid ID, business registration
Letshego Retail Unsecured MSE Loan	₦200,000 - ₦5,000,000	5.6% flat monthly interest rate.	1 - 24 months	Longer repayment terms available, but higher interest rates.	At least 6 months in business, valid ID, bank statements, business registration documents.
QuickCheck Business Loan	₦50,000 - ₦2,000,000	Factor rates ranging from 1.2 - 1.5, processing fees apply	Automatic daily or weekly deductions based on sales volume	Convenient repayment tied to sales.	At least 6 months in business, minimum ₦100,000 monthly revenue, valid ID, business registration.

Short-term business loans can be powerful tools for small businesses in Nigeria, enabling them to seize opportunities, bridge cash flow gaps, and fuel growth. However, responsible borrowing practices and a thorough understanding of loan terms are crucial to avoid potential pitfalls.

When considering a short-term loan, evaluate your unique business goals, financial situation, and growth plans. The options highlighted in this post offer a diverse range of loan types, amounts, and eligibility criteria, catering to various business needs. By conducting diligent research and preparation, you can increase your chances of securing favourable loan terms and leveraging short-term financing to propel your business forward.

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