5 Nigerian Banks That Will Give You Business Loan Without CollateralAbbakin
So you’re thinking about how to get a business loan in Nigeria without collateral? In this article, you are going to find out the 5 Nigerian Banks that will give you business loan without collateral.
Yes! It’s true that most Nigerian Small and Medium sized Enterprises (SMEs) are having a hard time starting and growing up their businesses due to their inability to access business funding.
In fact, the major reason that often kills great business ideas and perhaps the dreams of most Nigerian entrepreneurs is their inability to meet the requirements of obtaining a bank loan.
“Cash is cow and now business can run without it.”
An Entrepreneur Could Raise Business Funds through:
- Personal Savings
- Contributions from Friends & Families
- Government Grants
- Venture Capital vs. Angle Investors
- Using Crowdfunding Sites
- Through Banks Loans
- Corporate Societies and Associations
Banks – whether commercial, industry or development banks; online or micro finance banks naturally offer the least interests funding for SMEs. Banks generally charge between 5-25% interest rate (and more), for 1-5 years short-to-long term business loans.
In Nigeria, you can obtain bank loans as small as ₦50, 000 and as big as ₦100 Million Naira depending on the scope of your business.
If you are thinking of raising business capital through the banks, you should note that bank loans are usually secured; hence, you’ll need to provide collateral before you can be considered for a loan approval.
Interestingly, some Nigerian banks have awakened to the reality that most start-up entrepreneurs in Nigerian have only solid business ideas behind their heads, and no collateral to show for their loans.
Some of them are now willing to offer startups, business owner and entrepreneurs certain amount of money in the form of business loans without collateral.
This effort may be as part of these banks’ initiatives to empower growth in the Nigeria SME subsectors, by giving out small to long time loans to businesses owners or organisations that need them.
The great thing about these SME business loans is that they are designed to be easily accessible to entrepreneurs, irrespective of the type or size of their businesses.
According to our research, we have put together a list of 5 Nigerian Banks that will give you business loan without collateral, but take the time to find out more about the loan options that suit your financing needs.
5 Nigerian Banks that Will Give you Business 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 their 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 winning 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 talents and entrepreneurial spirits among the teeming Nigerian youths – by providing timely and affordable loans to help they 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. Guarantee Trust Bank Plc
GTBank Plc also offers entrepreneurs opportunities 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.
They provide smart financing options for your business that allows your organization to build on its success and plan for growth through quick cash flow solution to finance your business needs; withdrawing money with no funds in your account, and SME friendly accounts that you can open and start with.
If you want a loan without collateral, you’ll have to look at the bank’s SME loan packages and choose the one that is best to you kind of business.
GTBank’s SME loans can be accessed in the form of: Revolving Credit, Installment Loan, Local Purchase Order (LPO) Finance and Contract Finance.
Thus, the 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
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 just like Fidelity Bank.
It is worthy to note that Wema Bank gives business loans from ₦100,000 to ₦1 million without any collateral.
Yes! 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 you 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.
These loans are designed to help SMEs buy their business assets, products supplies and other facilities.
However the assets only become your own when you make the last payment on the received loans.
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;
- CVs of each members 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 equity contribution and the source of the funds.
Today, there are so many money lenders and lending platforms in Nigeria that can promise you quick and easy agriculture investment or business loan without collateral; education, mortgage loan, salary advance, rent or personal loans within 48hours to pay later with interest.
But if you are really interested in starting or growing your own business, it is most likely that you will have to start with your own savings; or raise some money from your rich friends and families.
One thing about getting a loan in Nigeria with a low interest is this; commercial banks do ask for collateral and give interest at 25% per annum. Micro finance banks and other lending houses will ask for guarantors and give minimum interest at 5% per month or more.
While the online loan lenders do not collect collateral and guarantors, they give interest at 12.5% with access to your account details like BVN which may put you at risk in the fututre.
These are the interest rates charged by the banks on loans in Nigeria; which may include all levies, processing fees, and commissions where applicable. According to the CBN guideline, each bank is entitled to charge a rate they choose; provided this can compensates their risk.
We believe however, that the high interest rates charged by financial lenders in Nigeria are to help cushion the effect of the high default cases they experience.
So before you approach any of these banking institutions for a non-collateral loan or so, it would be in your best interests to first know more about their services; and to 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 loan repayment plan for the loan.
Please note that the success of any business venture is not dependent on bank loans; what matters most is the business administrative styles, cash flows management and marketing strategies.
Experience, knowledge about the market, and understanding of the target customers are required if you want to run a successful business. Find out how you can benefit from our Business Development Services for Startup Entrepreneurs.
If you need loan for business startup, personal or car loan opportunities in Nigeria, you need to fill out the form on our Contact page and make request; we may match you with funding sources that are right for you.
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