As every small business owner knows, loans can be essential for starting and sustaining your operations. Even large profitable businesses sometimes need some extra funds to attend to urgent needs or to finance an expansion. Whatever your reasons for wanting a business loan, this article will explore some of the best ways to get one if you’re in Nigeria.
How to Get a Loan to Start a Business in Nigeria
There are numerous potential sources of loans. For most people, the first place to turn to would be their family and friends. But often, you may have a need for more funds or for more flexible repayment terms than your family or friends can afford to give you.
This is when you may want to turn to some of the options we’ll discuss below. These include banks, microfinance institutions, the government, and fintech apps.
Here’s the breakdown:
1. Banks
Banks are among the most common sources of business loans in Nigeria. Unfortunately, bank loans tend to come at very high interest rates and charges, which makes them usually unsuitable for most small business owners.
Additionally, to get a bank loan, you’ll need to have some collateral–collateral means an asset of value that you can offer the bank as a guarantee that you will repay your loan.
Usually, most banks prefer land or other forms of landed property like houses as collateral. Few small business owners have these, which makes getting a bank loan nearly impossible.
Advantages of Taking Loans from Banks
– Trustworthiness: Unlike informal lenders called loan sharks, banks can be trusted to maintain some degree of ethics in their business transactions.
– Building Credit: When you successfully repay bank loans, you build up credit with the bank, which can lead to more flexible conditions for future loans.
Disadvantages of Taking Loans from Banks
– High-Interest Rates: Bank loans are typically issued at exorbitant interest rates.
– Strict Collateral Requirements: Most banks require some collateral to issue loans.
– Lengthy Processing: Because most banks have several layers of bureaucracy, it usually takes quite a bit of time for them to approve loans.
2. Microfinance Banks
Microfinance banks are smaller banks that generally cater to the needs of customers who have lower incomes.
They typically offer smaller loans with more flexible repayment terms, which makes them more attractive for smaller businesses. However, this also means that there are limits to the amounts you can borrow from microfinance banks.
Advantages of Taking Loans from Microfinance Banks
– No Collateral Needed: Microfinance banks typically do not ask their users to provide collateral to secure loans. Instead, they typically rely on a positive credit history in assessing loan applications.
Disadvantages of Taking Loans from Microfinance Banks
– Low loan amounts: Microfinance banks will not typically give out very large loans, which can be limiting if you have big plans.
3. Government Loan Schemes
Often, the federal or State governments may offer loan or grant schemes for low-income earners. These loans are usually quite attractive as they may come at very low or zero interest rates.
Advantages of Taking Loans From Government Loans
– Low-Cost: loans and grants from the government are usually either completely free or come with extremely low interest rates.
Disadvantages of Taking Government Loans
– High Competition: Securing loans through government schemes can be challenging due to high demand.
– Uncertainty: Government grant and loan schemes are discretionary, which means they can be started or stopped whenever the government pleases. Since they’re not always available, small business owners may be better off seeking other sources of funding until government schemes become available.
4. Online Loan Apps
In Nigeria, there are dozens of fintech apps that offer affordable and quick loans both for personal and business use. These digital finance apps typically do not require any collateral and can offer loans that range from very small to quite large.
Advantages of Taking Loans from Online Apps
– Speedy approval process: Loan apps usually have a speedy approval process that can sometimes take just a few minutes.
– Flexible loan requirements: Loan apps don’t typically require much collateral. Instead, they’ll typically require you to prove your creditworthiness by taking repaying small loans over time.
Disadvantages of Taking Loans From Online Apps
– Unethical behaviour from some loan apps: Not all loan apps can be trusted. Many loan apps breach your data privacy and employ unethical means of coercion in order to ensure repayment. This can be avoided, however, by simply using a trusted service provider like Bold.
The Best Online Apps For Small Business Loans
There are numerous apps that offer small business loans. However, these are the top online apps for small business loans that we recommend:
- Bold
- FairMoney
- Branch
- Kuda
- RenMoney
- Carbon
While each of these apps has its pros and cons, we would strongly recommend that you go with Bold. In the next section, we’ll explain why Bold is our first choice.
Why Bold is The Best App for Small Business Loans
Bold is an online payment platform that offers a suite of creative fintech services including affordable loans. So why Bold?
1. Easy Access to Loans
With bold, you do not need to have any collateral whatsoever. Instead, you’ll simply need to build up a strong credit profile by demonstrating responsible financial behaviour over time. This includes building up your savings and repaying your loans on time.
2. Low Interest Rates
Interest rates vary depending on how much you are seeking to borrow and your credit profile. However, these rates are always lower than the market average, making loans from Bold very affordable for your business.
3. Excellent Customer Service
Bold offers 24/7 customer service, so you can be sure that whatever help you need is just a few clicks away.
4. An Excellent Suite of Additional Services
Bold is a comprehensive online payments app. This means that it offers users so much more than just loans. For instance, Bold provides a super quick and easy way to pay your utilities. You can also save on the app and earn interest as high as 15% per annum. To learn more about Bold and its features, read our complete Bold review here.
How to Get a Small Business Loan From Bold
Taking a loan from Bold is a straightforward process. Simply follow the steps below to get funding for your business:
Step 1: Download Bold
Download Bold from the Google Play Store or IOS store to get started.
Step 2: Get Verified
Once you have Bold downloaded on your phone, the next step is to create an account and get verified. This can be done in a few seconds.
Step 3: Start Building Your Credit Profile
Take out your first loan and ensure you repay it in accordance with the terms of the loan. The more loans you take and repay over time, the higher the amount you’ll subsequently be cleared to borrow from the app.
Step 4: Apply For Your Business Loan
With a good credit profile to stand on, you can then apply for more sizeable loans for your business.
And that’s it! Getting a business loan from Bold is easy, reliable, and affordable.
