Across the country, smart online entrepreneurs with brilliant business models find it hard, and often impossible, to get small business loans. In fact, many do not even know they can get loans. This may be because they are not taking their businesses serious. or the banks are just not lending.

Have the banks run out of money? Of course not! In fact, the volume of bank loans to large companies, multinationals, and big businesses are increasing every year.
So, what are the secrets of getting your small online business loan application approved?


What kind of small business loan should you apply for?
An overdraft is a type of loan that allows you to withdraw money from your bank account even if you have little or no money in it. So, if your bank approves an overdraft of N1,000,000 for your business, it means you will have access to this money even if your account balance is zero.

Unlike overdrafts, a term loan is a sum of money released to you by the bank and starts to accrue interest from the moment you receive it; whether you use it or not (unless the bank agrees to a delay, usually known as a ‘moratarium’).

This type of loan is best for long-term projects and can last from two to ten years, depending on your needs and terms of the loan. Just know that the longer the loan lasts, the more interest you will have to pay over time.


The reason why banks don’t like to give loans to small online businesses…
Why do banks not like to give loans to small businesses and startup entrepreneurs?
They call it ‘high risk.’

This simply means there is a high likelihood that something may go wrong with a small online business and make it unable to pay back the bank loan (plus interest).

If your bank believes that giving you a loan is a ‘high risk,’ your loan application will surely be denied! Unless you can do, show or prove something that reduces the risk to a low level, very few banks will want to give a loan to a high-risk business.
Let’s look at some effective ways to reduce the risk in your loan application and ensure that it gets the approval that you need to secure that small business loan.


Ways to improve the chances of getting your loan application approved…
Fortunately, it’s not an entirely sad situation; risks can be reduced.
Entrepreneurs who can successfully apply any of the ‘open secrets’ I’m about to reveal will significantly increase the chances of getting the loans they want from their banks.


Get a supply contract (or purchase order) from a credit-worthy customer
One of the big risks that worry your bank about your loan application is the ability of your small business to sell enough products or services that will make money to repay a loan.

A supply contract from a creditworthy customer (usually a company or organization with good business performance) proves to the bank that somebody is interested in your products and is willing to pay (and can pay).

With a contract in hand and a credible large company behind you, you would have significantly reduced the high risk that would make your loan application difficult to approve.


Do you have a good credit history?
If you have taken out a loan before and paid it back with all the interest and no delays, it often signals good behaviour and creditworthiness to banks.

Banks and other lending institutions can verify your credit history and gauge the ‘riskiness’ of giving you a loan. If you have been coming up short on a loan you took out previously with another bank, this may show up in your credit history and reduce your chances of getting your loan application approved.

If you have a poor credit history, the banks may insist on collateral or other forms of security for the loan.
This process was not common but now that almost everyone has a BVN, it is easier for them.


A detailed business plan always helps!
To convince the banks that lending you money will not be a gamble, it helps to present a detailed and well thought-out business plan.

What will your business be about?
Is there a market for your products and services?
What is your plan for marketing and selling your products?
What background and experience do you have to make the business work?
What will the loan amount be used for?

The more of these questions you can answer, the more comfortable and convinced the bank becomes.

Your business plan should be a road map that shows the bank that a lot of thinking and planning has gone into your business idea. Most small businesses and startup entrepreneurs do not do a good work of presenting detailed information about their business to the bank.


Writing a business plan can be a simple or complex affair depending on the type of business and who the business plan is meant for (you, banks, investors, business partners etc).


Get a guarantor to cover you
A guarantor is a person who guarantees to pay the bank in the event that you are unable to repay the loan and any interest it accrues. A guarantor is often someone who is wealthy or has valuable assets that can be used as collateral (or security) for the loan.

Having a guarantor to back up your loan application reduces the likelihood that you will not be able to pay back the loan. This usually gives banks the assurance they need to classify your loan application as a ‘low risk’.

And depending on the policies of the bank, your loan application would be approved.
Now you know how to get a small business loan from your bank: have you had any problems?

If you’re like many Nigerian startup entrepreneurs and small businesses, you may have been unlucky with your small business loan application.
What were the problems you faced?
Have you used any of the methods discussed in this article to help you secure a business loan?
We would love to hear from you.


ARTICLE SOURCE

This will likely not solve the fundamental problem. There is no credit score in Nigeria like in the US, and even the federal government or the states do not pay salaries regularly and timely. So banks are afraid. Who go accept be your guarantor in this Buhari economy?

The real solution would be that the government truly implements a micro / high risk focused loan giving bank for low level investment up to 5 millions.

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Goldenventures:

You enl

rubbish

Good one

Seen

All these aren't applicable to Nigerians


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Who exactly is giving out the loans cos I am more than qualified.

N20m above loan, lets talk biz

Brb

Kwickcash.ng can do it

i2know2:

Get a guarantor to cover you
A guarantor is a person who guarantees to pay the bank in the event that you are unable to repay the loan and any interest it accrues. A guarantor is often someone who is wealthy or has valuable assets that can be used as collateral (or security) for the loan.

Having a guarantor to back up your loan application reduces the likelihood that you will not be able to pay back the loan. This usually gives banks the assurance they need to classify your loan application as a ‘low risk’.

And depending on the policies of the bank, your loan application would be approved.
Now you know how to get a small business loan from your bank: have you had any problems?

If you’re like many Nigerian startup entrepreneurs and small businesses, you may have been unlucky with your small business loan application.
What were the problems you faced?
Have you used any of the methods discussed in this article to help you secure a business loan?
We would love to hear from you.

Abeg I am looking for a wealthy guarantor to borrow me money... oh you think say I want make the wealthy guarantor come help me collect loan?

.

I do not even advise people to take loans from banks. That is if I keep professionalism aside and advise them like a buddy

Don't take a loan for a start-up business. Source for soft loans from family and friends. If you take from banks, the interest payable would eat deep into your income.

To get an OD, your bank statement has to show you have seen that kind of money before. Your statement would determine what you need, not you. ODs are best for working capital. So, if your business doesn't yield daily income, do not attempt OD.

Op no be you be babaonpoint

New month new moniker

Your articles are getting better sha

Meanwhile, why would Buhari suspend the CJN on a petition because of undeclared assets, while the author of the petition also has a pending case with Efcc?

Wake up Nigerians

Never borrow a loan to start a business, u can borrow money to scale your already working business but never borrow to start , you don't know if the business will work or not don't go and put urself inside one stupid debt....... Use ur money to start small and when you see that everything is going well you can borrow money to scale

pocohantas:
I do not even advise people to take loans from banks. That is if I keep professionalism aside and advise them like a buddy

Y?

Copied from an American blog... Werin concern Nigeria concern credit score

hahn:
Op no be you be babaonpoint

New month new moniker

Your articles are getting better sha

why you wan spoil the "desperado" biz

This renMoney won't stop with their unsolicited SMSs. Anyway, is there any loan facility that offer Collateral-free loan for maybe students or Small scale businesses?

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specter:


Y?

Because your business needs to take her baby steps without undue pressure and expenses. To collect loan sweet o, na to pay back be the wahala.

They don't gv high loan

this article is not relevant to nigerians internet entrepreneurs because only few lenders believe and know there is legitimate online businesses

Come and learn how to earn when you buy airtime, buy data, subscribe dstv/ gotv, etc

is it possible for one to get a loan of N550,000 to secure job offer and then pay back when salaries pop in?

ok

pocohantas:


Because your business needs to take her baby steps without undue pressure and expenses. To collect loan sweet o, na to pay back be the wahala.

I understand your point. But I depends on the kinda business and if you have a solid plan.

If you plan to take a loan for business as a graduate, my advise is first sell yourself by getting a job in another man's company.

Work at least 3-6months, then get a loan. Put the loan pressure on your salary while the business takes some pressure off your daily expenses. Do this for another six months before asking your side biz/coy to give you a full time job as CEO.

If you can't sell and keep selling your self in the employ of another, chances are high that you can't sell yourself in your own employ.

Which inversely means that the chances of you selling your business to the public is slim

toptipz.com.ng can do it for you

Just get urself a strong 4G network, hack a FB account, edit it, add one old oyibo woman of about 65-70, chat with her till she falls in love with your greedy ass (2 weeks), ask her to send u itune card to the tone of the amount u need for biz capital. Thank me later. Don't forget to meet prophet n pay tithe