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|How You Can Get Loans For Your Online Business by i2know2(m): 11:13am On Jan 28, 2019|
Across the country, smart online entrepreneurs with brilliant business models find it hard, and often impossible, to get small business loans. In fact, many do not even know they can get loans. This may be because they are not taking their businesses serious. or the banks are just not lending.
Have the banks run out of money? Of course not! In fact, the volume of bank loans to large companies, multinationals, and big businesses are increasing every year.
So, what are the secrets of getting your small online business loan application approved?
What kind of small business loan should you apply for?
An overdraft is a type of loan that allows you to withdraw money from your bank account even if you have little or no money in it. So, if your bank approves an overdraft of N1,000,000 for your business, it means you will have access to this money even if your account balance is zero.
Unlike overdrafts, a term loan is a sum of money released to you by the bank and starts to accrue interest from the moment you receive it; whether you use it or not (unless the bank agrees to a delay, usually known as a ‘moratarium’).
This type of loan is best for long-term projects and can last from two to ten years, depending on your needs and terms of the loan. Just know that the longer the loan lasts, the more interest you will have to pay over time.
The reason why banks don’t like to give loans to small online businesses…
Why do banks not like to give loans to small businesses and startup entrepreneurs?
They call it ‘high risk.’
This simply means there is a high likelihood that something may go wrong with a small online business and make it unable to pay back the bank loan (plus interest).
If your bank believes that giving you a loan is a ‘high risk,’ your loan application will surely be denied! Unless you can do, show or prove something that reduces the risk to a low level, very few banks will want to give a loan to a high-risk business.
Let’s look at some effective ways to reduce the risk in your loan application and ensure that it gets the approval that you need to secure that small business loan.
Ways to improve the chances of getting your loan application approved…
Fortunately, it’s not an entirely sad situation; risks can be reduced.
Entrepreneurs who can successfully apply any of the ‘open secrets’ I’m about to reveal will significantly increase the chances of getting the loans they want from their banks.
Get a supply contract (or purchase order) from a credit-worthy customer
One of the big risks that worry your bank about your loan application is the ability of your small business to sell enough products or services that will make money to repay a loan.
A supply contract from a creditworthy customer (usually a company or organization with good business performance) proves to the bank that somebody is interested in your products and is willing to pay (and can pay).
With a contract in hand and a credible large company behind you, you would have significantly reduced the high risk that would make your loan application difficult to approve.
Do you have a good credit history?
If you have taken out a loan before and paid it back with all the interest and no delays, it often signals good behaviour and creditworthiness to banks.
Banks and other lending institutions can verify your credit history and gauge the ‘riskiness’ of giving you a loan. If you have been coming up short on a loan you took out previously with another bank, this may show up in your credit history and reduce your chances of getting your loan application approved.
If you have a poor credit history, the banks may insist on collateral or other forms of security for the loan.
This process was not common but now that almost everyone has a BVN, it is easier for them.
A detailed business plan always helps!
To convince the banks that lending you money will not be a gamble, it helps to present a detailed and well thought-out business plan.
What will your business be about?
Is there a market for your products and services?
What is your plan for marketing and selling your products?
What background and experience do you have to make the business work?
What will the loan amount be used for?
The more of these questions you can answer, the more comfortable and convinced the bank becomes.
Your business plan should be a road map that shows the bank that a lot of thinking and planning has gone into your business idea. Most small businesses and startup entrepreneurs do not do a good work of presenting detailed information about their business to the bank.
Writing a business plan can be a simple or complex affair depending on the type of business and who the business plan is meant for (you, banks, investors, business partners etc).
Get a guarantor to cover you
A guarantor is a person who guarantees to pay the bank in the event that you are unable to repay the loan and any interest it accrues. A guarantor is often someone who is wealthy or has valuable assets that can be used as collateral (or security) for the loan.
Having a guarantor to back up your loan application reduces the likelihood that you will not be able to pay back the loan. This usually gives banks the assurance they need to classify your loan application as a ‘low risk’.
And depending on the policies of the bank, your loan application would be approved.
Now you know how to get a small business loan from your bank: have you had any problems?
If you’re like many Nigerian startup entrepreneurs and small businesses, you may have been unlucky with your small business loan application.
What were the problems you faced?
Have you used any of the methods discussed in this article to help you secure a business loan?
We would love to hear from you.
6 Likes 4 Shares
|Re: How You Can Get Loans For Your Online Business by Nobody: 6:59pm On Jan 28, 2019|
This will likely not solve the fundamental problem. There is no credit score in Nigeria like in the US, and even the federal government or the states do not pay salaries regularly and timely. So banks are afraid. Who go accept be your guarantor in this Buhari economy?
The real solution would be that the government truly implements a micro / high risk focused loan giving bank for low level investment up to 5 millions.
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4 Likes 1 Share
|Re: How You Can Get Loans For Your Online Business by Buharimustgo16F: 7:00pm On Jan 28, 2019|
|Re: How You Can Get Loans For Your Online Business by Buharimustgo16F: 7:00pm On Jan 28, 2019|
|Re: How You Can Get Loans For Your Online Business by COdeGenesis: 7:01pm On Jan 28, 2019|
|Re: How You Can Get Loans For Your Online Business by propsvila: 7:01pm On Jan 28, 2019|
|Re: How You Can Get Loans For Your Online Business by bamasite(m): 7:01pm On Jan 28, 2019|
|Re: How You Can Get Loans For Your Online Business by itiswellandwell: 7:01pm On Jan 28, 2019|
All these aren't applicable to Nigerians
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|Re: How You Can Get Loans For Your Online Business by helinues: 7:01pm On Jan 28, 2019|
Who exactly is giving out the loans cos I am more than qualified.
N20m above loan, lets talk biz
|Re: How You Can Get Loans For Your Online Business by abc115: 7:02pm On Jan 28, 2019|
|Re: How You Can Get Loans For Your Online Business by Num07033711115(m): 7:03pm On Jan 28, 2019|
Kwickcash.ng can do it
|Re: How You Can Get Loans For Your Online Business by stanliwise(m): 7:03pm On Jan 28, 2019|
i2know2:Abeg I am looking for a wealthy guarantor to borrow me money... oh you think say I want make the wealthy guarantor come help me collect loan?
|Re: How You Can Get Loans For Your Online Business by Nobody: 7:04pm On Jan 28, 2019|
|Re: How You Can Get Loans For Your Online Business by pocohantas(f): 7:04pm On Jan 28, 2019|
I do not even advise people to take loans from banks. That is if I keep professionalism aside and advise them like a buddy
Don't take a loan for a start-up business. Source for soft loans from family and friends. If you take from banks, the interest payable would eat deep into your income.
To get an OD, your bank statement has to show you have seen that kind of money before. Your statement would determine what you need, not you. ODs are best for working capital. So, if your business doesn't yield daily income, do not attempt OD.
2 Likes 1 Share
|Re: How You Can Get Loans For Your Online Business by hahn(m): 7:05pm On Jan 28, 2019|
Op no be you be babaonpoint
New month new moniker
Your articles are getting better sha
1 Like 1 Share
|Re: How You Can Get Loans For Your Online Business by Nobody: 7:09pm On Jan 28, 2019|
Meanwhile, why would Buhari suspend the CJN on a petition because of undeclared assets, while the author of the petition also has a pending case with Efcc?
Wake up Nigerians
|Re: How You Can Get Loans For Your Online Business by CaptainBUGGY: 7:09pm On Jan 28, 2019|
Never borrow a loan to start a business, u can borrow money to scale your already working business but never borrow to start , you don't know if the business will work or not don't go and put urself inside one stupid debt....... Use ur money to start small and when you see that everything is going well you can borrow money to scale
|Re: How You Can Get Loans For Your Online Business by Nobody: 7:11pm On Jan 28, 2019|
|Re: How You Can Get Loans For Your Online Business by tstx(m): 7:11pm On Jan 28, 2019|
Copied from an American blog... Werin concern Nigeria concern credit score
|Re: How You Can Get Loans For Your Online Business by mhisbliss(f): 7:11pm On Jan 28, 2019|
Borrowing money from banks to finance a small scale business in Nigeria is bad, apart from the fact that the intrest you'll pay back is outrageous and more than half of the interest you'll make? You'll incur alot of debts when the economy finish punishing you with low patronage, debtors, and bad belle people who loves discrediting people and making sure you don't succeed, Nigeria is the worst country to start a business, i imported handbags back in the days, i was so pissed when they were offering ridiculous prices for something they know its way more than that price, Nigerians are bad, they can pay you 2k for a product that cost 15k without conscience, only if you agree, plus you won't have peace of mind because banks are dangerous when it comes to loan recovery, better safe than sorry, they should keep thier loan.
|Re: How You Can Get Loans For Your Online Business by gabazin080(m): 7:12pm On Jan 28, 2019|
hahn:why you wan spoil the "desperado" biz
|Re: How You Can Get Loans For Your Online Business by Omoluabi16(m): 7:16pm On Jan 28, 2019|
This renMoney won't stop with their unsolicited SMSs. Anyway, is there any loan facility that offer Collateral-free loan for maybe students or Small scale businesses?
|Re: How You Can Get Loans For Your Online Business by sucessdriven: 7:20pm On Jan 28, 2019|
I have got a revolutionary failproof business idea. Just need an investor that will bankroll our way to billions
Trillomaniac@gmail.com is where it begins. No Its not bike related
|Re: How You Can Get Loans For Your Online Business by pocohantas(f): 7:23pm On Jan 28, 2019|
Because your business needs to take her baby steps without undue pressure and expenses. To collect loan sweet o, na to pay back be the wahala.
1 Like 1 Share
|Re: How You Can Get Loans For Your Online Business by jerecrown(m): 7:24pm On Jan 28, 2019|
They don't gv high loan
|Re: How You Can Get Loans For Your Online Business by IdeasPro(m): 7:28pm On Jan 28, 2019|
this article is not relevant to nigerians internet entrepreneurs because only few lenders believe and know there is legitimate online businesses
|Re: How You Can Get Loans For Your Online Business by Eberex(m): 7:30pm On Jan 28, 2019|
Come and learn how to earn when you buy airtime, buy data, subscribe dstv/ gotv, etc
|Re: How You Can Get Loans For Your Online Business by Marvis4real(f): 7:34pm On Jan 28, 2019|
is it possible for one to get a loan of N550,000 to secure job offer and then pay back when salaries pop in?
|Re: How You Can Get Loans For Your Online Business by Dollabiz: 7:34pm On Jan 28, 2019|
|Re: How You Can Get Loans For Your Online Business by Nobody: 7:37pm On Jan 28, 2019|
I understand your point. But I depends on the kinda business and if you have a solid plan.
If you plan to take a loan for business as a graduate, my advise is first sell yourself by getting a job in another man's company.
Work at least 3-6months, then get a loan. Put the loan pressure on your salary while the business takes some pressure off your daily expenses. Do this for another six months before asking your side biz/coy to give you a full time job as CEO.
If you can't sell and keep selling your self in the employ of another, chances are high that you can't sell yourself in your own employ.
Which inversely means that the chances of you selling your business to the public is slim
1 Like 1 Share
|Re: How You Can Get Loans For Your Online Business by pre5: 7:54pm On Jan 28, 2019|
toptipz.com.ng can do it for you
|Re: How You Can Get Loans For Your Online Business by paddyofboss(m): 8:00pm On Jan 28, 2019|
Just get urself a strong 4G network, hack a FB account, edit it, add one old oyibo woman of about 65-70, chat with her till she falls in love with your greedy ass (2 weeks), ask her to send u itune card to the tone of the amount u need for biz capital. Thank me later. Don't forget to meet prophet n pay tithe
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