In Nigeria today, many great
business ideas die because of funding. Not because the business
idea is trash, or because the business owner did not do their best but simply because of the necessary funding needed to expand.
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On the other hand, there are financial institutions whose main function is to fund business ideas. They also face the challenges of finding businesses that meet their requirements. This article would provide you with the necessary
tips needed to apply for an SME loan in Nigeria.
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Register Your Business
This is a no-brainer but apparently, a lot of young Nigerians are caught up in the internet bubble and would rather buy a domain name than register their businesses. Unfortunately, banks and financial institutions do not regard those as legal tenders in the application of a loan from their institution. To provide loans, they would favour an individual that has gone through due process to verify their identity in case of any liability.
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Get Financial Statements
One-man businesses do not tickle the fancy of loan agencies. They want to be sure that your financial books are up to date and that whatever loan they provide would be well utilized. That is why the services of a bookkeeper/accountant are needed and useful. A financial statement can be gotten with a small (usually affordable) fee from the bank that the business does transactions with or any other body that covers such transactions.
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Prepare A Clear Business Plan
Your idea can save the world; the banks know but they need to see how you intend to achieve that idea. There should be a clear plan both on paper and on a slide that shows how the idea with the loan can become a sustainable source of income that is stable enough to offset the loans and leave the business profitable.
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Choose A Financial Institution Or Government Loan Agency
It is pertinent to note that there are various financial institutions that provide loans for SME’s. However, it is not every opportunity you should jump at as some opportunities are a noose waiting to happen. Factors to consider when choosing a loan agency is their interest rates and time frames for payments. The interest rate should be reasonable enough so that you do not spend your entire life doing a business only trying to pay off a loan.
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Pitch Your Business
You and a thousand more people are reaching for that same loan. When you get to the sites of institutions where you want a loan from, be ready to pitch the life off your business. Your pitch should tell a story that is backed by facts and is covered by results. Not the other way round. There should be a story that tells the investors that you are passionate and then facts to prove that your passion is profitable, covered by the results your business has produced in the past one year or six months.
These tips are simple yet powerful. They can be applied not only to receive SME’s loans but also for other grants or financial requests. It is simple because it focuses on the core requirements that loan agencies usually worry about. Therefore, when all these are covered, it becomes very easy for loan agencies to pick your SME above the rest that applied for a similar loan.
Featured Image Source: Loan Spot
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