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How to Access Small Business Loans In Nigeria



One of the biggest obstacles to young entrepreneurs in Nigeria is raising startup financing, especially from banks. Developed countries like USA, have well structured financing options for small businesses, with single digit interest and long term financing.

Unfortunately in Nigeria, the opposite is the case. Almost all bank loans have double digit interest and most are short term. This severely constricts the growth of small businesses, and consequently the economy of the nation. This is because small businesses are the backbone of strong economies. In developed countries, small businesses account for a large percentage of the GDP and provides the bulk of employment opportunities.

In recognition of this fact, the federal government through the CBN and other institutions like the Bank Of Industry and the Bank of Agriculture, continues to bring out financial packages tailored to meet the requirements of small businesses. The CBN has also directed banks to create packages meant solely for SMEs and fund such packages.

The benefits of these packages include lower interest rates, even single digit interest rate in the case of Bank of industry , value-added business training or follow-up, little or no collateral etc.

It is most unfortunate that most of these funds meant for SMEs are lying dormant in banks and majority of small businesses are still unable to access them.

In this article, I will identify financial institutions in Nigeria that genuinely have funds set out for entrepreneurs and small businesses, I will also list the top reasons why most entrepreneurs are unable to access these funds, and finally, I will show you how to be able to access these funds.


Almost all the banks claim to have one package or the other for small businesses and entrepreneurs, but the truth is that most of these packages are nothing but a marketing campaign. They simply want you to open account with them. But this shouldn’t deter you, because there are still few banks that genuinely have packages set out for small businesses. However, remember that every bank is in the business of making money, so they will not just give away money without due diligence. Let us start by identifying these genuine institutions.

Bank of Industry:

bank-of-industryBOI is an institution that genuinely designs packages to help small businesses and entrepreneurs. If you are sincere in your desire to obtain funds for your business, you will likely get help from BOI. The bank of industry keeps creating packages for entrepreneurs and youths, with the lowest interest rate of any financial institution in Nigeria. Currently, BOI has a soft loan for NYSC members, with no collateral (except their discharge certificate), another program termed YES-P is currently running for young entrepreneurs at an interest rate of 9% with no collateral ( Although the applicant has to provide 2 guarantors which has been a source of frustration for most applicants ). BOI remains the most sincere financial organization with a genuine interest in assisting young entrepreneurs to access funds with no collateral.

Bank of Agriculture:

This is another financial institution in Nigeria that are assisting farmers and people in Agribusiness with soft loans. This is how Bank of Agriculture explains their function: “We are a federal government owned development bank with a mandate to provide low cost credit to small holder and commercial farmers, and small and medium rural enterprises. We also provide micro financing to small and medium scale non-agricultural enterprises. Our aim is to ensure effective delivery of agricultural and rural finance services on a sustainable basis to support the national economic development agenda, including food security, poverty reduction, employment generation, reduction in rural to urban migration, less dependency on imported food items, and increase in foreign exchange earnings. “

First Bank:

Many entrepreneurs has identified first bank as the commercial bank with the most friendly package for SME’s. As a commercial bank, first bank is in the business of making money, but they have truly lowered the threshold for accessing small business loans and have assisted many small businesses with soft loans. Quoting Mr. Oluwafemi Akinfolarin, First Bank’s Head of SME Banking “Getting loans without collateral is part of our contribution towards boosting the growth of the SME segment.” Most SMEs don’t have collateral to secure loans. The great thing about First Bank’s unsecured loans is that it is designed to be easily accessible to entrepreneurs irrespective of the type or size of your business.

Diamond Bank Plc


Diamond Bank Plc offers entrepreneurs an opportunity to obtain loans without securing the loan against collateral. The non-collateral loans are designed to stimulate growth for Micro Small and Medium Enterprises (MSME).

Diamond Bank has about 5 SME friendly accounts but if you want a loan without collaterals, you’ll most likely to looking at the bank’s SME loans. Diamond Bank’s SME loans can be accessed in the form of; Revolving Credit, Installment Loan, Local Purchase Order (LPO) Finance and Contract Finance.

According to Mr. Chima Nnadozie, Head, MSME Propositions, “presentation of a collateral security is no longer a bid deal for it to consider applications for, and grant loans to prospective and existing entrepreneurs in Nigeria’s micro, small and medium scale enterprises (MSME) sector.”

Stanbic IBTC Bank


Stanbic IBTC Bank offers Nigerian entrepreneurs a great opportunity to obtain business loans without providing collateral. The loans are designed to help SMEs buy assets, but the asset only become yours when you make the last payment on the loan.

To apply for a non-collateral loan with Stanbic IBTC, you should be prepared to provide the bank with the following information:

The full names and capacities of those who will sign
CV of each member of the management team.
The reason why you need the finance.
Your business’ financial statements, including an income statement, balance sheet and cash flow statements.
Personal statements of assets and liabilities of all the partners, members or directors.
A 12-month cash flow forecast.
The amount of your own contribution and the source of the funds.
If you do not have a business account with Stanbic IBTC Bank, you must provide the business’ bank statements for the past six months.



This is the no 1 reason why most entrepreneurs don’t access funds meant for them. They don’t even know where the funds are! Many young people today don’t listen to genuine news, they are fond of getting information from rumor and hear say. What everyone will tell you is that you can never get money for business in Nigeria. But some people are busy accessing soft loans and building their business. It is true that conditions may be stringent at first, but if you don’t try at all, you will get absolutely nothing! Following blogs, such as and other blogs designed for entrepreneurs, will expose you to options available to you.

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