“Nigerian business is booming”, “Nigerian business is growing”, these are comments you will see daily in international news, or in any Nigerian news portal. How to Successfully Finance Your Business But then, on the other hand, I get asked by a lot of Nigerian entrepreneurs – “Why won’t banks finance my business idea?” or “How can I get funding from Nigerian banks for my business?” And “Is the banking business culture in Nigeria different?” It’s simple – your business must be attractive, secure and demonstrating growth. The only way to show this is by keeping accurate and auditable records of your expenditure, operational activity and sales. One myth that I’d like to dismiss is that banks fund new businesses. Banks very rarely invest in, or loan money to, start-up businesses. But they do fund small businesses with operating history. Would you want your bank putting your money at risk, by investing your savings in new risky business ventures with no track record?

This humorous comment is harsh, but true:

“A bank is a place that will lend you money if you can prove that you don’t need It.” – Bob Hope

Why then did I say that banks do fund small business? If you’re business has been around for a few years it has enough history, projected business, stability and assets that can all serve as collateral. Once you have this structure in place a bank is more likely to award you a loan against your business, or personal collateral, such as home, car or savings.

Like you, a bank is a business, and they will ensure that they are protected from potential risk when lending to customers. Your personal savings should be the primary source of funding for your business. If you haven’t started already, start saving, launch your business, and demonstrate that it is secure. Then you can approach banks for a loan Nigerian banking is no different to other banking services around the world. The Nigerian industry approves loans based on statistics or information available to them as required by the Central Bank of Nigeria (CBN). These statistics determine your risk to the bank, therefore calculating how much you can borrow, for how long and the interest rates you will be charged.



How Much Money Do You Need?
Be accurate in your estimation of what you need. What you want, what you need, and what you expect to receive are three separate values. How to Successfully Finance Your BusinessThis is not your opportunity to ask for ₦1,000,000 when you only need ₦70,000. The exact amount needed should be be clearly evidenced in your business plan. Refer back to your business plan, and answer the following question, which the bank will definitely ask you:

What will the money be spent on?
• Buying supplies and inventory
• Paying staff and suppliers
• Equipment and machinery
• Office equipment
• Marketing your business
OR
• Purchasing/acquiring the business from it’s current owner

Limit the amount of huge payments you make when purchasing such items, or services. A business needs moving cash, and cash reserves to survive. If you pay big lump sums you are leaving your business vulnerable. Observe the suppliers payment terms. If the invoice states that payment is expected 30 days after invoice, then pay as late as possible. Don’t pay cash upfront if it is not necessary, and don’t be afraid to rent or lease certain items. This is common practice in today’s business environment

Next, identify what you own that can be used as collateral for your loans, because your bank will ask this question. The assets of your business or your personal assets, or both, can act as collateral, and secure most small business loans.

Some credit, such as credit cards can be granted on an unsecured basis. Unsecured means a loan not backed by any underlying asset or collateral. Examples of unsecured are:
• Credit cards
• Personal lines of credit
• Charge card
• Friends or relatives
• Utility bill
• Medical bills

Secured loan means that underlying assets or collateral back the loan. This protects the lender if you are unable to keep up with payments. Examples of secured loans are:
• Computer loan
• Home mortgage
• Car loan or lease
• Construction loan
• Business loan

The amount you will receive, and terms of your loan will be determined by:
• Number of years in business – This is your track record and is very important. The amount of years required can very in each bank. The industry standard is usually between two to three years.
• Size of your company and the amount requested

How to Get the Money
Know what your lender wants. Ask them if you are unsure. For a business loan, the most common things a lender needs to see are:
• Business financial statements
• Business tax returns
• Business Plan with budget or projection
• Personal financial statements
• Personal tax returns

Be prepared to answer difficult questions about your business. Remember, this is an interview, and like any other interview be ready to highlight your performance both in the past and in the future. You are there to impress, and convince them that you are a safe investment.

Fully understand why you need the money, and be confident in explaining why, because you will be asked. “Because I need the money,” does not demonstrate the characteristics of a trustworthy businessperson.

Other things to consider:
• Dress smart when attending meetings at the bank. I can’t stress this point hard enough. This is an interview, so arrive as if you are attending an interview.
• Make sure your business plan is up to date, and looking presentable.
• Communication is key, if at any point you run in to difficulty and cannot make a payment. Make sure you contact the bank to let them know. Offer them a solution or plan for immediate payment.
• Be prepared to discuss any prior credit issues/problems.
• Be realistic when discussing your business plan and vision. Banks deal with facts, and figures. They don’t want to hear how you plan to take over the world. They just want to know when they will receive their money

After You Get the Money
How to Successfully Finance Your BusinessOnce you have been approved for a loan you might think that you are home and dry, well think again, this is the just the beginning. For me this is the most important part.

Make sure that you are a good customer, and stick to what has been agreed. This will ensure that the lender is flexible if you have any difficulties, and if you need to borrow again in the future it will be granted. More importantly, you are contractually obliged to stick to what has been agreed, so any breaches of contract could lead to legal proceeding.

Source:- http://marvejohndaily.com/how-to-successfully-get-loan-for-your-business/
Cc: seun, lalasticlala, obinoscopy

Nigerian banks can only grant you that loan,if your business has gotten to a certain stage,with some harsh conditions & one of the highest interest rate,when compared around the world.

. have a collateral.

Sure the OP does not live in Nigeria..

No bank will give you a dime if u don't ve collateral in prime areas of the city..

No bank will give u loan if u don't ve an account that must ve smelled money for a duration of six month..

If u come make mistake enta Microfinance bank, the fear of collecting 500k to pay back 900k within a duration of 9month will send u running like a deer...

K

Quite informative. But our current loan terms and conditions seem not encouraging for entrants entrepreneurs especially in the Agricultural sector. We see a lot of lip service to be honest. Paper works and plans differs from the realities you come across on Development Finance Institutions. #experience

In Nigeria?

No collateral no loan in Nigeria. I know.

In nigeria?

when you borrow money from bank and they give it to you please let us know

Hmmmm

free2ryhme:
when you borrow money from bank and they give it to you please let us know

LOL

how many of these did you do

If u need loan in Nigeria, pls make sure u re so wealthy.
Have noticed it's only the wealthy that enjoys loan in nigeria..

most of them just collect loan nd set aside 10% for litigation knowing they won't pay..

Good one

Very useful article. Cynics should read again with an open mind. It might not work as perfectly as the OP writes, but his advice works surely in many cases.
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Just an observation: Very few comments till now. I'm sure if it was an article that provided opportunity to either abuse GEJ/PDP or PMB/APC, we would be on page 3 comments by now.

Go

What's the interest rates of nigerian banks l

T

Just look for LAPO. Dats all.

This is Nigeria, not obodo oyibo. Your article don miss road oh.

I have an International Group that can grant you credit facility for up to N10bn. Of course, the only thing they need is a good business plan and repayment plan. All they require is a Bank Guarantee. Further details can be obtained by sending me a mail to SAINTKINGSLEY@GMAIL.COM. Note also that their interest is a single digit.

really nice

and we also help people write business plans and feasibility study report. We also build cooking gas businesses and we provide you with all necessary document you need to access a Loan from any financial house. check out more about us from the link below

For more information please visit/click: www.nairaland.com/2807449/turn-small-land-very-profitable

vascable:

Source:- http://marvejohndaily.com/how-to-successfully-get-loan-for-your-business/
Cc: seun, lalasticlala, obinoscopy

. Please when you borrow money from Nigerian bank and they give it to you please let us know

Stkingsley:
I have an International Group that can grant you credit facility for up to N10bn. Of course, the only thing they need is a good business plan and repayment plan. All they require is a Bank Guarantee. Further details can be obtained by sending me a mail to SAINTKINGSLEY@GMAIL.COM. Note also that their interest is a single digit.

Very interested ooo. I emailed u. Ps reply

ozome15:
. Please when you borrow money from Nigerian bank and they give it to you please let us know

i dont write about anything i havant tried..

Nice point OP ..but i dont think even 200k could do much in any business that u excepting much profit from not talkless of d 70k u illustrated above

NICE 1 OP, anybody looking for equipment finance/loan should explore the Bank of Industry

OP is 100% correct, banks give out loans but you have to be eligible and if you demand for asset finance, is easier for them to advance,but also your type of business matters a lot.

And I can offer u upto 1M at 13% per month interest; with option of part liquidating; for upto 12 mon ths tenor. That is if u r given 700k, u pay 91k monthly n if u pay back 200k by 2nd , 3rd or whatever month, the interest is now calculated at 13% of 700k (of the remainder). Want more info, pm