1. Banks & Financial Institutions
Individuals who wish to start their own businesses but do not have the required Startup funds to commence operations can approach banks to meet their financial needs.
Banks and financial institutions provide financial assistance for businesses of all stages. Banks will lend even to a start, if they are satisfied with the business model, projected returns from the business, the ability to pay back the loan (through business or otherwise), management experience and expertise and other security provided
Though most bank loans come with a high-interest rate, it is important that you do your homework by comparing various business loan options available for small business by major banks in Nigeria. Before making your mind about which option to go for, make sure you fully understand the terms of the loan agreement with an assurance that you can pay back within the window period.
Below are Nigerian Banks that will give you loan without collateral
1. First Bank Nigeria Plc
The First Bank of Nigeria has made plans to provide non-collateral loans for Small and Medium Enterprises in Nigeria.
This initiative of the bank is aimed to empower economic growth in the Nigeria SME sector through their loan schemes.
The great thing about First Bank’s unsecured loans is that it is easily accessible to entrepreneurs irrespective of the business type, location or size.
As an interested entrepreneur, the only thing you need to do is to go through a psychometric test, pass the test and then provide the bank with your business plan and your business financial projections.
And soon you will get your disbursement alert!
2. Heritage Bank
Heritage Bank has also increased the accessibility to SMEs business funds in Nigeria.
The bank has also built initiatives around promoting access to the market for SMEs.
One of their major programs is the Youth Innovative Entrepreneurship Program (YIEDP) backed by the Central Bank of Nigeria – in recognition of its commitment to SME and Youth development.
The programme is aimed at harnessing the latent entrepreneurial spirit among the teeming youths by providing timely and affordable loans to help implement their business ideas.
The fund is to support youth corps members, market women and whoever desires to access business finances through short –term borrowing from the bank.
3. Diamond Bank Plc
Diamond Bank Plc also offers entrepreneurs an opportunity to obtain loans without collateral.
The bank’s non-collateral loans are designed to stimulate growth for Micro, Small and Medium Enterprises (MSME) in Nigeria.
Diamond Bank Plc has about 5 SME friendly accounts that you can open and start with.
If you want a loan without collaterals, you’ll have to look at the bank’s SME loan packages and choose the one that is best to you kind of business.
Diamond Bank’s SME loans can be accessed in the form of: Revolving Credit, Installment Loan, Local Purchase Order (LPO) Finance and Contract Finance.
Thus, Diamond Bank gives you access to short and medium term financing for working capital, as well as assets purchase needs with reduced collateral requirements.
4. Wema Bank
Before you approach any of these banks for a non-collateral loan, it would be in your best interests to first open, run and maintain an account (corporate preferred) with such a bank for a period of 3 to 6 months.
You should also be armed with a sound Business Plan and a solid Repayment Plan for the loan.
Unlike other Nigerian banks, WEMA has more dealings with retail businesses.
The bank has built its structure around retail banking, conducting transactions with market women and real SMEs.
It is worthy to note that Wema Bank gives business loans from ₦100,000 to ₦1 million without any collateral.
All you need to do is to have steady transactions for 6 months in your corporate account to qualify for their loan offers.
To show their eagerness to give out these loans, the bank even has a loan calculator on its website – which helps interested loan applicants to calculate how much the bank would be expecting from your loan request.
5. Stanbic IBTC Bank
The Stanbic IBTC Bank offers Nigerian entrepreneurs a great opportunity to obtain business loans without providing collateral.
The loans are designed to help SMEs buy their business assets.
However the assets only become your own when you make the last payment on the received loan.
To apply for Stanbic IBTC non-collateral loan, you should be prepared to provide the bank with the following information:
Stanbic IBTC Loan Application Requirements
- The full names and capacities of those who will sign;
- CV of each member of the management team;
- The reason why you need the business finance;
- Your business’ financial statements, including an income statement, balance sheet and cash flow statements;
- Personal statements of assets and liabilities of all the partners, members or directors;
- A 12-month cash flow forecast or financial projections;
- The amount of your own contribution and the source of the funds.
2. Government Loan Schemes
Government-sponsored loans are always a preferred choice for smaller and growing businesses as they are more affordable.
Government business loans can help MSMEs manage their day-to-day operational expenses, growth and expansion costs and to ramp up their infrastructure. Several banks and financial institutions in Nigeria are working with the government to provide business loans under government-aided funding programs such as YouWin, BOI, NPower and so on.
Most times, these government-sponsored funds come in form of a grant or loan with little or no interest rate. This makes getting one very difficult because you’ve to compete with various other business entrepreneurs.
3. Loan Service Providers
We have all at one point in time been in a situation where we needed some cash to sort out something urgently. A bank loan takes time to come through, so what do you do? This is where online loan service providers come in to save you.
FINTECH has opened the door to quick and easy short-term loans for small businesses and individuals in Nigeria. With major private organisations like Paylater (a subsidiary of OneFi), KiaKia, & Quickloans taking the lead in providing short-term credit facilities. You can now apply for quick loans online and get paid within 24 hours.
This kind of loan is only provided for a very short period of time (mostly 3 — 6 months) and is very limited in terms of how much funding that can be accessed but it could be your safest option in cases where you need quick cash to fulfill a client order or stock your inventory.
Note – Once you’ve compared your options and finalized which of the listed loan service providers you want to go with, it’s time to apply for the loans that fit your financing needs and that you qualify for. Hope the article was helpful, for questions and comments on how to get loans in Nigeria, use the comments box below.