If you have a GOOD BUSINESS IDEA and need some money to run the business, this information will help you out. It does not mater whether the amount you need is as little as N50,000 or as much as N50 million, if you take your time to read this post and follow the simple instructions in it, you will definitely get the amount you need for that business of your choice.

“My people perish for lack of knowledge” so says the holy book. People that take loans to start small businesses of their own are not better than you. They only know certain things that you don’t know. I now want to share with you all those hidden secrets behind small business loans.

Don't allow the creative business idea in your brain to die prematurely just because you have no money to start the business. The era of creative financing is now here. There is enough money in Nigeria now for anyone that wants to use it to start his or her own small business. The two questions you need to ask are...WHERE can you get the money? ...and HOW can you get the money?

There are many sources where you can raise money for your own small business. At a mention of business finance, many minds would go straight to commercial banks. Yes, this is supposed to be so. But you must stop making the mistake of thinking that the only place you can raise the money you need for your own small business is through commercial banks alone. Of course, commercial banks are there to solve all your financial problems; but it seems they have targeted there financial assistance to the big corporations alone. Not withstanding, there are other places where you can look out for funds to run your own small business.

I want you to disregard the stories you hear about “tight money”. Free your mind now and follow the simple instructions. This is truly the age of creative financing. There is more money now than there’s ever been to run small businesses in Nigeria. Your ability to attract the funds depends on your determination and dedication to run your own business.

Now let’s start the journey…

Your starting point for raising the required amount for your business is to make a reasonable and realistic estimate of the amount of take-off capital you will need for your chosen business. Of course you must know at this stage that one of the major criteria that should guide you in the choice of your business is the amount of capital you can raise. It is only after making the estimate for the business of your choice and find out you cannot personally supply all the amount of money necessary that you turn to the option of borrowing.

Having done that, you move to the next stage, that is, look out for a lender that will borrow you the amount you need, and then present your request to them. There are 3 steps you must do if you must succeed at this stage, the steps are:
1. You must know who these lenders are, and where they are located.
2. You must know how the lenders operate, and the information they will require from you.
3. You must package your business and yourself perfectly to qualify you for the loan

Now, let me take you through the 3 steps one after the other.

STEP 1: Know Who These Lenders Are, And Where They Are Located

There are several sources within this country (Nigeria) where you can borrow substantial amount of money to start or expand a small business of your own, depending on the amount of financial capital you require. As I earlier stated, commercial banks are not the only sources where these business financial opportunities can come from; though they still form a very strong pillar in business financing that can not be easily pushed aside. There are several other lenders, both private and government agencies, that are willing to render financial assistance to up-coming entrepreneurs in the small scale sector like you.

How I wish I can roll out the names, contact addresses and website addresses of the agencies in this post, but you must remember, this is a public forum, so my putting the agencies’ names and addresses in the post might be construed to mean I am advertising in the post. This might be going against the rules of Nairaland which I will not want to do. More so, the agencies have not asked me to publicize their services on their behalf. If you therefore want to know the names, contact addresses and website addresses of the agencies that can help you with small business financing, send a blank email to my auto-reply mailbox: mosmal2020@gmail.com, and I will instantly give you a reply that will reveal to you how to get the full information. (Please note that the spelling is MOSMAL 2020, and not MOSMA 12020). All you need to do is to type these seven words “Details on how to get business loan” as the subject of the email. This will let my auto-response reply you instantly.

Because the auto response is a very sensitive tool, any slight error in the tying may refuse the auto response to trigger. So instead of typing the words in the subject line of your blank email, you can just copy the seven words in the paragraph above and paste them as the subject of the blank email. If you do this correctly, you will definitely get my reply in your inbox or spambox within 5 minutes of your sending the blank email. Alternatively, you can send the blank email to my personal mailbox: mosmalint@gmail.com (spelling MOSMAL INT) and I will make sure I personally reply you within 48 hours of your sending the email.

Knowing the names of the lenders and where you can locate them is just one thing. Knowing how to transact with them is another. You must know how the lenders operate and the information they will expect from you ever before you approach them, and this is the reason for STEP 2 below.

STEP 2: Know How The Lenders Operate, And The Information They Will Need From You.

Now you know how to get contact information about the lenders. That is good, but you must know that the lenders will definitely need a couple of information from you before they part there money to you. Before I begin to show you what these information entails, I will like you to know whom the lenders are, how they operate, why they operate that way, and why the information you render will help then in the process of your business loan application.

By the way, who are these lenders? What sort of people are they? What is the meaning of the word “Lender?”

One online dictionary defines the word “Lender” as “someone who grants the use of a thing on the understanding that it or its equivalent shall be returned at an agreed time.” In the case of money, it shall be returned with interest.

In agreement with the above definition and for the sake of this post, I want us to consider the word “Lender” as companies, organizations or agencies that grants financial assistance for the sole purpose of running a business on the understanding that the money shall be returned when due, and with the agreed interest. Such organizations may include small business financial supporting agencies, development banks, or even commercial banks which we can now refer to as “Corporate Lenders”. These companies, organizations or agencies may be represented by one person or by a group of people.

Most people you will meet as you seek for business financial assistance from these corporate lenders will either be bankers or other officers operating like them. Yet, at the mention of a title like “Banker” or “Bank Manager”, many people would develop cold feet and tend to relate them to “mini-gods” that decides their financial condition. But who really are the bankers and the other corporate lenders generally? What makes them behave the way they do? What makes them different from other professionals? Why do people develop cold feet when dealing with them?

You must know that people get into the banking job just the way other people get into any other professions. Some planned it as a career by studying courses like banking and finance, accountancy and other related courses. Others wondered into it because they needed a job, and luckily, banking job is available as at that time.

Whichever way they get there, I wish to let you know that bankers and other corporate lenders generally are also human beings like you. They have family and friends. They get into troubles occasionally, drive cars, find themselves in hold-ups, watch television and do many other things like you, including eating the same kind of food as you.

So, why do people feel uptight when it comes to discussing money with bankers or lenders generally? Why do some entrepreneurs feel that bankers and lenders generally are not approachable? Why are they not friendly and easy to talk to when the issue of loans is being discussed?

There are several reasons that can be attributed to this, but one main reason may be because bankers usually dress formally. Most people are always hesitant to ask anyone for money, much less a complete stranger who is dressed in a black suit, or sometimes, their week-end traditional attire.

Another reason can be linked to the fact that majority of borrowers already have the unhelpful impression about the corporate lenders. These borrowers normally come up with statements like “…even if you ask them for loans, their reply will always be negative”. Because of this pre-conception, many potential borrowers find it difficult to approach bankers and other corporate lenders to negotiate for financial assistance.

But most importantly, I believe the real reason for the hesitation is the fact that every banker or lender will want to be sure that the money they want to give you as loan is not going to be lost. They ask questions on questions and demand for explanations and evidences, just to be sure the money will be safe. Because many entrepreneurs are not fully prepared for such interrogation, they tend to pull back. I guess this is the main reason why many borrowers find it difficult to approach lenders for financial assistance.

Of course you ought to know that before any money gets to you, for any purpose at all, in form of loan, you need to prove to the lender that you are capable of judiciously using the money and repay back the borrowed amount as at when due. The issue of raising money for your business is not different. You must provide enough proof and evidences to the loan officers (the lenders) at the agencies or even banks (development or commercial) that the money you wish to borrow will not go down a waste basket. Remember, we are not talking of gift or donation here, but loan for your business.

Every lender you approach for money for business will want to know if you can effectively and efficiently manage the business, and manage their money, and successfully push the business profitably so as to pay back what you will be given, of course, with the accrue interest.

The more the banker or lender know about you and your business, the more like a friend you become, and, as you know, people have a hard time turning down a friend. I have an uncle who has a terrible business idea, but because he was open with his lender and furnished him with all the information he needed, the lender advised him on what to do and he got the business loan he wanted. It is this kind of information that the l corporate lenders will want you to provide, to give enough prove that the money to be given to you will not be wasted.

You may not know this, but the fact is that the main job of bankers and the other lenders generally are to loan out money. They don’t just keep their money in the vault but need to loan them out to generate interests. This is because they can not make money unless you borrow the money and repay the loan with the accrue interest. It is out of the interest generated that the banker’s salary will be paid. In fact, the more money you loan from them, the happier they become, because the amount you borrow determine the amount of interest you pay. The lenders’ job is therefore to loan you money, and not to turn you down for your loan. All you need to do is to provide then with necessary information.

I hope this has given you an insight to who the bankers and other corporate lenders are, what they want from you and how they think about the loans. This is very important. If you are aware of what is expected of you and you are ready to open up, you have a much better chance of getting your business loan and having a good business financial relationship.

That is not to say all lenders behave the same way. In fact, how loan officials operate at their various financial institutions differ from one to another, but in general, they will all expect certain characteristics from you. Lenders are generally very conservative. They don’t like lending money unless they are very confident that they will get the money back when due. Their jobs are to lend money out and be sure of getting it back, and of course, with interest. They will not just keep their money in the vault but need to loan them out to generate interests, out of which their salaries will be paid.

As I stated earlier, every lender you approach for business loan will need certain information on which to base your loan decision. Part of the information will come from you and your Business Plan. The rest will come from the lender’s own experience, knowledge and several other factors.

Nevertheless, all the required information that the lenders want from you can be obtained by considering certain factors which I’ll refer to as the “Seven Cs of Lending”. Once all this 7Cs are gathered and are arranged in order, the lender will be convinced and therefore have the confident that they will get their money back from you when due. Their jobs are to lend money out and be sure of getting it back, The processing of your loan request will not be delayed or denied once you arrange these 7Cs in order. Failure to provide these information has resulted in many requests been turned down.

Find below the Seven Cs of Lending, and how the lenders view them.

In an alphabetical order, the “Seven Cs of lending” are as follows:
1) Cash flow
2) Character
3) Collateral
4) Commitment
5) Conditions
6) Coverage
7) Credit History
Let’s look at each one of them.

1. Cash flow: For a lender to lend you any money for your business, your Business Plan must project a business that is convincing enough to generate enough money to make your monthly, quarterly or any other agreed installment loan repayments. Where the projected financial statements do not provide a good cash flow (such as weak profit and loss account), the lender may be hesitant about giving out their money to you. My reply to your blank email will reveal to you how to prepare a Business plan that projects good financial statements.

2. Character: Lenders will want you to prove to them that you are a man (or woman) of your words. When you say you’ll repay the loan promptly, you really mean it. Even if you do not keep to the promise, at least, you’ll make positive efforts. That is, you will show enough proof in your Business Plan that you’ll make every possible effort to conserve the business assets and manage the business to the best of your ability. In other words, you will not squander the borrowed funds. They will also want to confirm that you do not have a negative reputation in the society.

3. Collateral: The lender will want to see if you have any property or assets to pledge against the loan that they can seize and sell to recover the loan in case you are unable to pay up. This is common to new businesses requesting for loans. The collateral does not have to be a landed property alone. Other assets such as marketable securities or life insurance policies with good cash surrender value can also be tendered as collateral security for business loans.

Not all loans require collateral security though. There are some agencies that run Collateral-Free Loan Programmes where you may not necessarily need to pledge landed property or other tangibles before a loan is approved. My reply to the blank email will explain this more to you.

4. Commitment: This is your input, in monetary term, you’ve contributed (or wish to contribute) into the business you are requesting financial assistance for. Some lenders will refer to this commitment as equity contribution.

There is a saying in this part of the world that the owner of a load must be the first to lift it before others join in the lifting. This means that without any financial commitment of your own into the business, either in cash or physical assets, it might be difficult to get financial assistance from any source. Lenders generally consider the issue of commitment as very important.

With your Business Plan, you can estimate how much you need to put up as your commitment. This is very important, because no lender will render you a loan of one hundred percent of the total investment in your business. The lender will want to know how much you, as the owner of the business, are ready to commit into the business before they can decide on the level of assistance they will render. If you are not ready to help yourself, you must not expect anyone to help you out.

Some lenders have a minimum level of commitment that a borrower must meet before any loan assistance is rendered. For instance, there is a development finance institution that often require for a minimum of twenty five percent (25%) of total investment. This is because the highest contribution the institution can put into any business cannot be more than seventy five percent (75%) of the total investment.

This simply mean that if the total investment in a business, for example, is one million Naira (N1,000,000), your commitment must be at least two hundred and fifty thousand naira (N250,000). The development finance institution can then assist with the balance amounting to a maximum of seven hundred and fifty thousand naira (N750,000) only.

A commitment on your part will show your seriousness in the business. In effect, as you will be working hard not to loose your own N250,000 investment, you will at the same time be safe-guarding the N750,000 the lender has borrowed (or will be borrowing) you.

This is not to say that your commitment must always be in cash. You may contribute in various forms, so long as it is an input to the business. Moreover, some lenders do prefer to have the commitment to cover certain items that they can not have full control over.

Take the case of an entrepreneur who wants to convert a rented apartment of five-bedroom into a guest/rest house. His Business Plan has a projected start-up estimate that read as follows: (Round figures are used here for easy calculation so you can understand)
>>> Land & Building (Rented Premises)> N300,000
>>> Furniture & Fittings > N250,000
>>> Utilities (Generator, water, etc) > N300,000
>>> Working Capital > N150,000
>>> TOTAL > N1,000,000 (One Million Naira only)

Once the entrepreneur pays up the rents of the property and decides to put the rented property into the business, he already has a contribution of three hundred thousand naira (N300,000) out of the one million Naira investment. That is thirty percent (30%) commitment in the investment. The case will even be better if the entrepreneur is the owner of the building. The cost of the building can be considered as his commitment.

Lenders generally prefer a high percentage of commitment from borrowers. In fact, the higher the commitment, the better for the lender. Whenever you then think of borrowing for a business, you must also consider how much you can contribute (either in cash or in physical assets) as your commitment.

Let us continue with the “Seven Cs of lending”.

5. Conditions: This is the general economic conditions at the time the loan request is made. For example, how will you feel if someone approaches you to borrow money to distribute or sell pure (sachet) water during the raining season? Because of low pure (sachet) water demand at this period, you may decline giving the loan. If you risk this, it may eventually turn out to be a gift or bad debt as the borrower may not generate enough income to repay the loan.

The situation described above is that of climatic condition. There are several other conditions to be considered by the lenders, depending on the kind of business and the amount involved before an approval is granted on a loan. The lender will want all conditions to be clear to avoid a situation where the loan repayment is delayed or denied.

Another good example is the case of inflation. If the rate of inflation is high, the lender may decline the loan because of their concern that your earnings may not keep pace with the inflation, and so, your capacity to repay the loan might be doubted. There are several other conditions under which the lenders usually reject approval of business loans.

6. Coverage: In some type of businesses, depending on the amount involved, proper coverage, especially the issue of insurance coverage, may be considered very important. Just consider yourself running a transport business. Before any agency offers to loan you money to buy a vehicle for your business, the agency will make sure you make provision for a proper insurance to cover the vehicle should in case accident, theft or fire occur to the vehicle.

Insurance cover is not limited to transport businesses alone. Any business may be subject to possible business losses from any of these causes:
• The death of the owner, partner or principal share holder.
• Physical damage or interruption of operations as a result of fire outbreak, flood, explosion, robbery, riots, unrests or other violent actions.
• Embezzlement, theft or other acts of dishonesty by employees.

Once any of the disasters listed above occur, repaying the loan might prove to be very difficult unless the business has a proper insurance coverage. As a small business, you may not be able to provide adequate insurance cover for your business like the large organizations, but you need to realize the need. The lender may have the fear of loosing his money if anything goes wrong without a good coverage. As said earlier, not all businesses require insurance or other forms of coverage before the loan approval.

7. Credit history: The lender may have to check your credit history. They will want to know if you are indebted to another lender. They will also want to know your credit standing to be sure that, in case the business is unable to pay the loan, you have enough charisma, integrity, honour, honesty and loyalty to repay.

Other factors

In addition to the above listed factors, the lender may have to consider your ability and experience to run the business successfully. Other conditions to be considered are your reputation, personality and sometimes your influence. Where they doubt your competence, the loan might be declined.

In all, the lender will like to know everything about the business and you. They are always very interested in the 7Cs of lending. They may call it different names, but it all boils to the 7 points raised above. All the lenders need the information. You have to supply the information if you want a business loan. This may seem like a drag, but in the real sense, it’s not a wasted effort.

Now that you understand the information that the lender wants, as analyzed in this post, if you are ready to supply all, even before the lender ask for it, your request will be given a speedy attention. Your loan application will be treated with urgency. Your request will not be denied.

Don’t expect any lender to approve your loan request without thoroughly confirming all the conditions listed above. Of course, there are situations where one or more of the conditions may not be necessary or waived. An example is that of “collateral security” in a collateral-free loan programmes. Another is the case of “coverage” in some kinds of businesses. However, other conditions may have to be screened before your loan is approved.

By now you know why many borrowers shy away from lenders. They don’t want to go through all these interrogations. All you need do is to know how to defend the 7Cs of lending. If you do this, there is no reason why lenders will not give you the loan you need.

Now that you know all the information that the lenders will like to know from you, you should be ready to approach the lender to get the money you need to finance the business. But how do you package all these information in order to get the attention of the lender? This is why you need to read STEP 3 below.

STEP 3: Package Your Business And Yourself Perfectly To Qualify For The Loan

Common sense will tell us that no one is going to give a loan to any business unless that business will be able to repay the money. The only way to prove that your business can take the money, put it to good use and repay the lender is to package yourself and the business.

The questions now are “How do you package yourself?” and “How do you package your business?” The answer to the questions is very simple. If you want to package yourself and your business, you must know how to:
i. Prepare a feasible and viable Business Plan
ii. Present your request to the lender as a worthy borrower.
iii. Carry out a systematic follow up
If you can prepare a feasible and viable Business Plan for your business, and present your request to the lender in a worthy manner, and also have a systematic follow-up, there is no doubt that your loan will be approved. This is guaranteed.

You need a well prepared business plan. The importance of business plan in getting financial assistance for your business can not be overstretched; Your Business Plan is the "road map" that will guide you and your business to the goal you've set for it. The Business Plan answers all the questions of the what, why, where, how and when, of your business.

The Business Plan will show the corporate lender whether or not your proposed business is feasible or not. With a feasible and viable Business Plan, you will supply all the information the lenders wants from you even before he or she ask for it (I believe you still remember the 7Cs in STEP 2 above), The Business Plan will show if that business of yours is worth going into at all. Therefore, you must carefully prepare it. A feasible and viable Business Plan will reveal the true picture of the business and this will convince the lender that you will be able to repay the money they want to loan you.

I am not asking you to hire consultants to package your Business Plan for you. No. not at all. You are not going to waste your hard earned money on consultants that may do a shoddy job for you. Remember this business is yours. It is your idea. You can prepare your own Business Plan by yourself. The fact is, the most successful Business Plans in small businesses are the ones that are prepared and presented by the owners of the businesses. There are three main reasons for this:

1. As an applicant who had prepared your own Business Plan by yourself, you will fully understand all the implications you have included in the plan. If someone else prepares the plan for you, you may not even know what has been included. therefore, defending the plan before the lenders will definitely be difficult

2. It impresses the lenders with your ability. The lenders would know that you actually know about the business.

3. It’s cheaper. No need to pay the consultants.

Because it's YOUR idea, and a business that YOU do the planning, it is better and advisable that YOU prepare the Business Plan all by YOURSELF. YOU develop it and put it down on paper just the way YOU want it to read.

You may now come up with excuses like: “I don’t know how to prepare a Business Plan”. Never mind, my reply to your blank email will direct you to where you can get full details of how to package a feasible and viable Business Plan for your own business. As I explained earlier, all you need to do is to send a blank email to my mailbox: mosmal2020@gmail.com. (The spelling is MOSMAL 2020, and not MOSMA 12020). Don’t forget to type “Details on how to get business loan” as the subject of the email. This will let my auto-response give you an instant reply. You may even copy the sentence here and paste on the subject line of the blank email. If you spell it or copy it correctly, you will definitely get my reply in your inbox or spambox within 5 minutes of your sending the blank email. Alternatively, you can send the blank email to my personal mailbox: mosmalint@gmail.com (spelling MOSMAL INT) and I will make sure I personally reply you within 48 hours of your sending the email

As I earlier said, this is the age of creative financing. Don't allow the creative business idea in your brain to die prematurely just because you have no money to start the business. There is enough money in Nigeria now for anyone who wants to use it to start his or her own small business. The only thing that can stop you from getting your required loan is if you fail to take action, and the only person who can stop you is YOU.
The two questions you need to ask are...WHERE can you get the money? ...and HOW can you get the money?

Wishing you all the best as you start your search journey to find the money you need to run your own small business.


Source: How To raise money for your business

I think your write up is very good and educative. And it would be very useful for those looking for funding for their business.

I tried sending an email to mosmal2020@gmail.com. , but it told me the recipient info doesn't seem quite right.