How to get bank loans in Nigeria is sometimes challenging. However there are many traditional, non-traditional ways to obtain loans. We have four major platforms to collect them. Loan providers are money lenders, traditional commercial banks, online loans and micro-finance banks.
Traditional Banks in Nigeria
The first place entrepreneurs seek loans are commercial banks. They provide the facility for private individuals, registered companies, cooperatives and government institutions. However loans are difficult to obtain and require serious documentation to access them.
What are the Functions of a Commercial Bank?
The functions are accept deposits, transfer funds, credit creation. Others include agency functions, provision of loans and other statutory functions. Anyone can open a current account, domiciliary accounts, fixed account or savings account.
Savings account owners enjoy small interests and are payable on demand. Current account owners are charge interest for keeping such facility.
Agency functions are purchase of sales security, payment of interest, providing drafts, cheques collection. They also provide short term or long term loans, overdrafts, discounting bills, demand loan and cash credit.
Functions of Commercial Banks
- current account
- domiciliary accounts
- fixed account
- savings account
- purchase of sales security
- payment of interest
- providing drafts
- cheques collection
- long-term loans
- discounting bills
- demand loan
- cash credit
List of Commercial Banks in Nigeria 2019
Part of the core facilities of commercial banks is to provide loans for their customers. Here are a list of financial institutions in Nigeria.
|1||Access Bank Plc|
|2||Citibank Nigeria Limited|
|3||Diamond Bank Plc|
|4||Ecobank Nigeria Plc|
|5||Fidelity Bank Plc|
|6||FIRST BANK NIGERIA LIMITED|
|7||First City Monument Bank Plc|
|8||Guaranty Trust Bank Plc|
|9||Heritage Banking Company Ltd.|
|10||Key Stone Bank|
|13||Stanbic IBTC Bank Ltd.|
|14||Standard Chartered Bank Nigeria Ltd.|
|15||Sterling Bank Plc|
|16||SunTrust Bank Nigeria Limited|
|17||Union Bank of Nigeria Plc|
|18||United Bank For Africa Plc|
|19||Unity Bank Plc|
|20||Wema Bank Plc|
|21||Zenith Bank Plc|
Types of Bank Loans
Two types of credit are open or closed credit. A good example of open credit are credit cards while closed credit have specific time periods with monthly payment schedules.
Types to consider are student loans, mortgage, payday loans and small business loans. Others are home equity, cash advance, personal, automobile loans, retirement insurance, debit consolidation loans.
- student loans- cover cost of higher education
- mortgage- purchase homes
- payday – hedge gap between payday
- small business- startup or expand
- home equity- for projects
- cash advance- short loan credit
- personal- personal expenses
- automobile loans-purchase vehicles
- retirement insurance-retirement fund borrowing
- debit consolidation-pay outstanding debits
Secured Term Bank Loans
Secured loans are used for capital projects asset replacement, acquiring new technology and more. The loans offer competitive interest rate, funds for capital projects, convenient repayment aid cash flow.
How to Obtain Secured Loan
Maximum amount of loans offered by commercial banks is N40 million. They cover a tenor not exceeding 36 months, 50% of last six months turnover. Collateral include fixed deposit accounts, treasury bill or property mortgage.
The company is required to open a corporate account with the bank. Documentation are company profile, latest audited account, current utility bills. Others are fill an application letter, profoma invoice, 6 months bank statement, completed retail loan application form.
- open a corporate account
- company profile
- latest audited account
- current utility bills
- fill an application letter
- profoma invoice
- 6 months bank statement
- completed retail loan application form
This facility is open to SMEs annual turnover up to N3billion naira. Contract finance offers funds for contract execution from approved listed companies. The company should be a primary contractor of the approved principle.
Tenor is 6 months with option of 3 months renewal. Estimated cost of loan amount 70% with customer evidence of equity participation at 30%.
Documents are awarded contract papers, bill of quantity, evidence of previous contract successfully executed. Evidence of government agency contract approval.
- Awarded contract papers
- Bill of quantity
- Evidence of previous contract successfully executed
- Evidence of government agency contract approval
Benefits for SMEs are support for expansion, growth, working capital. Good for cash flow management with convenient payment plan and competitive rates.
Amount obtainable for secured overdrafts is N20 million, maximum tenor 12 months. Collateral needed are either treasury bills, fix term deposit, legal mortgage.
The company has to open a corporate account in the bank. Accompanying documentation are company profile, 6 months bank statement, current utility bills. Others are proforma invoice from approved vendor, completed application, last audited account.
Personal Bank Loans
Personal loans are structured to address your personal needs. They cover a wide range of offers from salary advance to school fees advance. Others are quick credit, computer advance travel advance, mortgage, vehicle insurance premium financing.
School Fees Advance
Designed to finance payment of student’s school fees. This facility is for staff members of private or public organization.
The salaries of the parents seeking student advance for their child needs to have a salary account domiciled in the bank. The advantage is immediate access to funds, competitive interest rate up to N5 million fees advance.
How to apply for student loan
Complete employer undertaking, application form, obtain corporate guarantee. Provide staff benefit domicile in bank, credit insurance and school fees bill.
- Complete employer undertaking
- application form
- obtain corporate guarantee
- provide staff benefit domicile in bank
- credit insurance
- school fees bill
Bank of Industry
Bank of industry limited is a financial institution incorporated in 1964. The industrial development bank was restructured in 2001 with a share capital of N250 billion naira. It provides long term financing for Nigerians industrial sector.
Mandated to modernize, aid expansion, diversification of small medium or large establishments. Envelopment orientation of the bank includes project selection, job creation impact and poverty alleviation.
They have offices in each geographical zones including the federal capital territory Abuja.
Bank of Industry Partners
BOI partners are federal ministry of finance, central bank of Nigeria. Others are Dangote foundation, federal ministry of industry and investment
Target Market and Product Offering
BOIs target are micro enterprises, large enterprises, small and medium enterprises. Product offering is for youth, women in business, asset finance and working capital.
Youths Programs are youth ignite, youth entrepreneurship support (Yes), and graduate entrepreneurship fund.
- Youth programme
- women in business
- asset finance
- working capital
Target industries are Agro-processing, creative industry, information technology, solid minerals, oil and gas.
Complete list of Target Businesses
2. Adire-Tie and Dye
3. Animal Feeds
6. Ceramics and Tiles
7. Bottled Water
9. Chemicals and Paints
10. Digital Printing
13. Window frames
14.Fish Smoking and Drying
17. Food Processing
19. Fruit Juice
22. Dry Cleaning
25. Meat Processing
26. Leather Footwear
27. Health Care (Medical Diagnostics)
28. Movies Production
31. Quick Service Restaurants
34. Solar (of grid)
35. Soaps and Detergents
36. Roofing Sheets
37. Water Transportation Riverine
38. Grocery packaging Theme Parks
39. Theme Parks
40. Light Manufacturing
41. Technical or Vocational School
Bank of Industry Loan Criteria
There are things to know before applying for a loan. They do not finance groups of persons or individuals only duly registered companies or enterprises.
Startup businesses are considered at the discretion of the bank. Finance is offered to purchase of industrial equipment, provide working capital. They do not finance building or land acquisition.
Mode of Disbursement
Mode of disbursement of funds is to suppliers or vendors, cash is not given to the borrower. Loans start at N5 million while smaller sums are disbursed through microfinance bank partners.
Provide business name, registration number for Limited Liability Company. Collateral requirements are bank guarantee, debenture on assets of the company. Others are legal mortgage on landed property with (C of O). For loans bellow N10 million provide notarized statement from external guarantee.
- Business name
- registration number for Limited Liability Company
- bank guarantee
- debenture on assets of the company
- legal mortgage on landed property with (C of O)
- notarized statement from external guarantee
Bank of Agriculture
Bank of agriculture is a government sectioned financial institution for the agricultural sector. Loans provided by them are on-lending, micro, non-agricultural micro loans. Others are collaborative funding, small, medium enterprise loans, group, and cooperative loans. It is accessible to artisans, traders, livestock producers, fisheries.