We can all agree that an important part of starting and running a business in Nigeria today is funding. Young entrepreneurs are saddled with the heavy burden of generating funds for working capital as most of them don’t have assets for the heavy collateral requirements. The importance of bank loans without collateral in Nigeria.
Banks are not ready to take up the huge risk of lending to a growing business because of the high risk. Don’t even mention the documentation requirements. The brutal truth is that many good businesses and bright ideas have died because banks are unwilling to take a risk on them. Understandably so, as these banks have had their fingers burnt in the past when they were more lenient in lending to small businesses.
Anyway, that money needed to start out, run publicity campaigns, handle logistics, rent apartments, pay staff, and so on can be extremely difficult to come by. Does this mean average or low-income earners shouldn’t go into business? NO.
Many banks claim that they have affordable and accessible loan products for MSMEs but only a few are actually accessible. This article will highlight 5 Nigerian banks’ startup/small business (SME) loans that are accessible, affordable, and given without anybody asking you to bring documents of your mother’s house. So, where can small business get bank loan in Nigeria?
Best Bank Zero Collateral Loans for Start-ups and Small Businesses in Nigeria
Zenith Bank has always been seen to care about upcoming and emerging businesses. This is evident in the structure of their offerings to small and medium enterprises. Zero collateral requirements, yet the tenor and repayments are so flexible.
Below is a quick snapshot of the offerings of this package:
Tenor
365 days
Interest rate
16% – 22% per annum
Collateral required
No
Maximum limit
N2 million
Covenants
Personal guarantee of the obligor, minimum deposit covenants
Turnaround time
1-5 business day
Sector specific
Beauty/Style, Confectionery and Fitness
Documentation required
Company bio, request letter, evidence of previous jobs done (if any)
The Commercial Support Overdraft (CSO) is a working capital finance overdraft. Its purpose is to assist small and medium-scale enterprises to meet their temporary financing needs by relying on their proven track record of account activity with the bank. You don’t need any collateral to get a CSO in Fidelity Bank.
Below is a quick snapshot of the Commercial Service Overdraft features:
Tenor
30-90 days
Interest rate
28.5% per annum
Collateral required
No
Maximum limit
N10 million
Covenants
Personal guarantee of the obligor, minimum deposit covenants
WEMA BANK/ALAT: BUSINESS SUPPORT FACILITY (MC-001)
Wema Bank, especially with the advent of ALAT, have increased their appetite for taking on new risk and credit facilities. To access Wema’s Business Support Facility, it is important for the bank to see regular credit and debit transactions in your bank account. BSF is available to both old and fresh customers, only that fresh customers must provide the statements of accounts from their former bankers. Both registered and unregistered businesses can subscribe to the facility.
Here are the terms of this facility:
Tenor
365 days
Interest rate
25% per annum
Collateral required
No
Maximum limit
N5 million or 50% of av. 6 months turnover (whichever is lower)
Covenants
Undated other banks’ cheques, personal guarantee of the obligor, insurance
Turnaround time
1-5 business days
Sector specific
No
Documentation required
Company bio, request letter
Loan structure
Term loan
POLARIS BANK: MARKET LOAN
Polaris Bank believes that businesses that trade in Fast Moving Consumer Goods are very important to the economy, hence the decision to restrict their business/SME loan to them only. The competitive interest rate of the facility makes it stand out from others. To be eligible, you must have been in that business for at least 2 years, and belong to your market association. The loan purpose should be ‘Stock purchase and replenishment’ – never forget.
However, don’t be surprised if the bank asks you for a little collateral – they decide this on a case-by-case basis due to the customer’s circumstances.
See what Market Loan offers:
Tenor
180 days (with 30 days clean up cycle)
Interest rate
17 – 22% per annum
Collateral required
No
Maximum limit
N5 million
Covenants
Undated other banks’ cheques, personal guarantee of the obligor, minimum deposit covenants
Standard Chartered, or StanChart, provides the business owners in its books with access to Smart Business Loan. You can get up to N20 million without collateral. The flexibility, long tenor, and automation of the repayment make the facility a very good one.
Available to both old and new customers, you can also top-up your Smart Business Loan. The first step is to fill the Smart Business Loan Application Form and submit it at the nearest branch to proceed.
Here are the full details:
Tenor
2 years
Interest rate
22% per annum
Collateral required
No
Maximum limit
N20 million
Covenants
Personal guarantee of the obligor, minimum deposit covenants
Today, we don’t need to ask where can small business get bank loan in Nigeria? That’s because banks are gradually coming back in, partly due to the influence of the new Fintechs who are willing to take more risk on new businesses.
These bank loans without collateral in Nigeria are set to boost the small business sector in Nigeria. These special products are packaged for the small and medium scale enterprises that they can trust.
