Financing is a basic pillar for most businesses and individuals, and the best way to obtain Nigerian loans is through banks and financial entities. Here you can consult all the updated information and compare among the various business loans in Nigeria, both for SMEs and for self-employed and large companies.
Our Nigerian loan calculator helps you can find information and compare the Nigerian business loans offered by banks and financial entities. This will help you to make informed decisions when you need loans for your company or as a self-employed person.
Why Does Your Nigerian Business Need financing?
A business may need a loan or a line of credit for various reasons, such as starting an activity, increasing its volume of business or maintaining its activity in times of difficulty or low turnover. Our Nigerian loans comparison calculator helps you with making the best loan decisions in Nigeria.
Loans To Grow Your Business
There comes a time in the life of every company that must decide between growing or staying stuck in its line of zero growth.
Many SMEs and companies choose to continue to maintain neutral expectations because growth means, among other things, making a payment of money that they do not have or do not want to spend.
But others do decide to grow and to do so request a loan to help them finance the operation, whether it be for the purchase of material, machinery, increased personnel, etc.
The Nigerian loans for businesses and SMEs differ materially from personal loans to individuals, conditions are different, and the amounts that can be provided and even repayment periods.
Nigerian Loans In Times Of Need
Throughout the life of a company, there are many moments of difficulty in which income suffers from various causes, such as an economic crisis, a change in the consumption of people or a strong client who fails or changes suppliers.
There is also the case of companies that during the year have periods of high and low income, such as all those related to tourism or products that are sold more at one time of the year than at another.
It is for these cases that obtaining loans and lines of credit can be very useful to obtain funds as needed and thus be able to continue paying payrolls, buying material and equipment and, ultimately, maintaining the activity so that the business does not close down.
Types Of Business Loans in Nigeria
Within the wide catalogue of financial products for business, we can find various modalities that can be more or less useful depending on the needs:
These are products with which the full capital is obtained when contracting the loan, being able to have all the money from the beginning to use it as appropriate.
Once the money is obtained, it will be paid back, usually in monthly installments, which includes a part of the capital and another part of interest. They may have study commissions, opening commissions and for total or partial early cancellation.
The conditions are usually very personalized for each business, so they can vary greatly from one company to another, both in the amount of money to be obtained and in terms, in commissions and interest rates.
Lines Or Credit Policies
In this case, all the money is not obtained from the beginning. Instead, a maximum limit is established that the borrower can use whenever he wants and as he needs, always having it available to obtain it immediately when the time comes.
Interest is only applied to the amount due and not yet returned, which will also be returned in monthly installments. Money that has already been returned can be reused as long as the contract remains in effect.
In this case, in addition to the study and opening fees, the financial institution that offers you the line of credit may also apply an annual fee for having the active policy, even if you do not use the money available.
The lines of credit are very useful to be able to have quick financing when expenses and unforeseen events arise. Also, to tackle small day-to-day expenses without having to use the company’s treasury.
How To Compare Between Various Nigerian Loans?
As we always do at Arialaba, we recommend comparing several options before deciding on a bank product, especially those that are going to cost us money, since most of the time it is possible to get better conditions.
To compare different Nigerian loans like business loans or personal loans, whether, from the same bank or different companies, there are several main factors that you can use. However, others may also be important to you, and we explain below:
Know The Business Loan Conditions
Unlike personal loans, business loans usually do not publicly announce the conditions that apply. This is because banks make very personalized offers for each client since companies can be very different from each other and have very different needs.
Therefore, most likely, to know what conditions each financial institution offers you, you must go to an office to contact a manager who will do a simulation for you.
You also have the option of resorting to online banks, which will surely offer you very interesting conditions in exchange for partnership with them with the hiring of other products and services.
What Is The Cost Of a Business Loan?
The main factor to take into account is how much money we will have to disburse to access the business loan or line of credit. In this sense, we can find them with different commissions that we have already commented previously:
Study Cost: It is the one that the bank charges you for analyzing your case, and that can charge you even if you do not finally contract your loan. Though not all banks offering Nigerian loans charge this cost, it will be great to expect it.
Opening Commission: This expense is charged at the beginning, once the contract is formalized, and its justification is to cover the administrative and bureaucratic expenses that the entire process entails for the bank.
Amortization Commission: It can be total or partial, and it is applied when you return in advance all or part of the remaining amount.
Annual Fee: This expense is applied to some lines of credit simply by keeping them active. Of course, the fewer commissions the bank charges us, the better.
It is possible to ensure that the entity does not charge us any of these expenses for our Nigerian loans application, although some requirement or the contracting of other products is normally required.
Everything is to study the financial institution because it can compensate us or not, according to what the bank asks us.
Also, it is important to take into account the interest rate that the entity will apply, since, even if you do not have commissions, if the interest percentage is high it can be more expensive for us.
To be able to compare costs between different loans, the best option is to use the Annual Equivalent Rate (APR), an indicator that includes both interest and commissions, for a fixed period of 12 months.
What Requirements Or Conditions Does The Loan Meet
Another important factor to take into account when comparing various Nigerian loans and lines of credit for companies and the self-employed are the requirements that the bank imposes on us to access the financing it offers us.
Sometimes we can find conditions suitable to obtain needed Nigerian loans that suits our requirement, such as the absence of commissions or a lower interest rate.