You are a business owner in Nigeria, and you are considering getting a business loan to finance your business growth, stock inventory or cover operational expenses, odds are, you are currently researching loan options and offers (we discuss loan options available to you in Nigeria here), and wondering what the general requirement could be for a getting a business loan in Nigeria, we got you covered.
Here’s a list of common requirements from lenders in Nigeria
- Bank Statements
- Personal and Business Credit Score
- Valid means of identification
- Certificate of Business Registration
- Time in Business
- Bank Statements
In order to determine your eligibility for a business loan in Nigeria, every lender would need to evaluate your business finances. This evaluation is required to ascertain whether your business can afford the loan and will be able to pay back as at when due. In order to evaluate your finances however, lenders will request your bank statement. Your statement will show your cash flow and give lenders and insight into how you manage money coming into your business. While, most small businesses in Nigeria primarily run cash transactions, it is important to transact with your business account as this improves your chances of getting a loan or higher loan amounts.
- Personal and Business Credit Scores
When a small-business owner requests funding, lenders almost always check the owner’s personal and business credit score. This is to show your creditworthiness and that of your business. Most lenders will not ask you for this during the application, but instead, while checking to see if you are eligible for a loan, check with a credit bureau for your credit score. Examples of some credit bureau’s in Nigeria are CRC, First Central etc. It is important you have a good personal credit score. Also, building great credit for the business itself is also very useful when trying to get a good business loan. If you need clarification on how to build your credit score, you can check this article by CRC. If for some reason, your credit score is not so great and you need to fix, this article on how to fix your credit score by CRC might be helpful
- Valid Means of Identification
When applying for a business loan in Nigeria, most lenders require business owners to provide valid means of identification. This is to ascertain that you are who you say you are. Any government-issued ID would pass as a valid means of identification, examples are International passport, driver’s license, voters card, national ID, etc.
- Certificate of Business Registration
To prove that you have a legitimate business, legally operating in Nigeria, you will be required to provide proof of business registration. For a Nigeria-based business, this proof is your business registration certificate (BN or RC). Some lenders may require you to provide the accompanying forms (forms 2 and 7). If your business is not registered, you might want to consider getting a personal loan for your business or getting it registered.
- Time in Business
When you want to apply for a business loan, almost every lender will want to know how long you’ve been in business. The longer you have been in business, the better your chances of getting a loan for your business as time in business can be seen as a measure of your business success. New businesses often have difficulty getting funding because most lenders only lend to businesses that have been in operation for at least two years. Online lenders may accept businesses that have been operating for at least one year, but banks and other larger lenders will want to see at least two years in business before considering you for a loan.
If you are wondering why collateral is not on this list, well it is not a general requirement and most online lenders don’t require collateral, including us.
There is no one-size-fits-all for business loan requirements, this list is just to give you a general idea of common business loan requirements in Nigeria. Before you apply for a loan with a lender, make sure you understand their complete requirements. Is there a common requirement you feel we omitted? share in the comments below. See you in the next one