Getting capital is a major problem for SMEs, particularly in Nigeria, the poverty capital of the world. However, the bank may still be the best bet to access quick and easy loans for the segment which play a major role in economic development..
The National Bureau of Statistics puts the total number of Micro, Small and Medium Enterprises at 37 million while further statistics show that the number of persons employed by the MSME sector as at 2013 stood at 59.7 million, representing 84.02% of the total labour force with MSMEs contribution to the Nation’s Gross Domestic Product in nominal terms at 48.47% and contribution to export at 7.27%.
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In spite of the significant contribution of the SMEs to the economy, challenges facing its operations in Nigeria are usually tied to inconsistency in government policies, poor infrastructure and support, access to market, multiple taxation and obsolete technology and importantly, access to finance.
In a bid to ensure adequate financing, a number of Nigerian banks offer loans up to N500 million to help small businesses thrive. In addition to offering relatively low rates of interest, these loans are designed to suit varieties of businesses and some require no collateral.
Nairametrics highlights some of the Nigerian banks offering loans in the country as follows:
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Standard Chartered – Smart Business Loan offers up to N20 million
The Standard Chartered smart business loan provides SMEs access to loans of up to N20 million for business expansion with no collateral. According to a statement on the bank’s website, the loan allows for a flexible repayment plan which can be structured to suit businesses and flexible for up to 2 years.
Standard Chartered loan which can be accessed through the bank’s digital application forms automates repayment process and also allows for additional financing during loan tenor. This means that business owners can top up after 12 months if regular repayments are made.
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First Bank – SME Product Financing offers N20 million – N500 million
The SME product financing is targeted at the overall growth of small and medium scale enterprises which are key drivers of the economy. According to the bank on its website offers varieties of options for featured SME products at competitive rate and flexible collateral and products.
The product depends on the nature of business and the business type determined the amount that can be made available to improve businesses. For instance, the cement distributor finance offers up to N120 million for 12 months to aid working capital of the distributors for business expansion while the Commercial Mortgage provides maximum loan of N100 million and requires a property purchased collateral as the product is designed to meet the funding needs of established small and medium scale enterprises in viable businesses with respect to acquiring business premises under the outright purchase or construction scheme.
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Similar to these, offices seeking fund to increase their assets could be granted the Office Equipment loan which allows businesses to access up to N20 million and above and is designed to finance SMEs that require vehicles for operational use for day to day running of their businesses and the maximum loan is offered to fast moving consumer goods at N500 million for a period of 12 months to finance distributors FMCG companies in the bank approved list of principal for business expansion.
Access Bank – Business loan offers up to N3 million
Access bank business loan allows for the expansion of businesses and are available in different category such as the micro loan, loan for small businesses, ALDA Loans, and over draft.
Micro loan: this is targeted at helping small businesses to expand by offering N100,000 up to 60 months for 12% while loans for small and medium businesses allows for implementation of development plans and solution of financial problems. It offers up to N3 million up to 60 months.
Similarly, ALDA loans is considered a special privileges for the development of agriculture with up to N200,000 for 36 months starting from 7% and Overdraft offers up to N200,000 to 12 months with monthly interest rate up to 1-1.5% with no deposit required.
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Union Bank – Union Biz Account offers 50 million
Union bank offers banking services for SMES in the different category with varying loans bucket having specific requirement for different loan facility.
The free cash flow lending which allows businesses to borrow a maximum of N10 million for up to 12 months to finance any short-term working capital requirements while school finance is targeted at school owner, offering N5 million with no collateral required for payment of reoccurring/operating expenses such as school uniform, stationery and others for private schools in nurseries, primary and secondary schools.
Other loan facilities are local purchase order, distributor finance assets finance, term loans, over draft and others. Notably, Union bank local purchase order and invoice discounting gives the highest amount at N50 million for maximum of 90 days.
GTBank – SME Banking offers N50 million
GTBank offers loan to help small businesses grow and connect businesses to the resources needed. The bank offers loan for business account and SME invoice discounting finance.
Business loan facility allows business owners to funds for transactions and cash management services. It consists of the GT Business Account targeted at small medium enterprise with a monthly turnover of N50 million. With minimum balance of N20,000, the domiciliary account allows customers to maintain accounts in foreign currencies, GT Max account, which offers maximum interest payments on daily account balances and minimum charges on transactions, call account as well as fixed and tenured deposits.
The SME invoice discounting finance (SME IDF) is a short term borrowing facility which provides a quick cash flow solution to business needs. Businesses can draw money against invoices (receivables) issued before their clients pay for products supplied or services rendered. This facility offers a maximum of ₦50Million (subject to 70% of invoice value) with competitive interest rate with tenor of 60 days.
Loan requirement:
- Duly completed SME Invoice Discounting application form.
- Invoice from reputable blue chip company duly stamped b Principal (name included in the approved list).
- Copy of Certificate of Incorporation of the business/Operating license for Service Providers [Contractors and professional firms (first time only)].
- Submission of evidence of prior successfully executed contracts [Contractors and professional firms (first time only)].
- Confirmed certificate of project completion/delivery.
- One year account statement with GTBank or other bank.
- Copy of valid contract with Principal.
- Personal guarantee of the Sponsor/cross-guarantee from another professional firm.
- The Letter of irrevocable domiciliation of invoice proceeds by the customer and acknowledged by the principal.
UBA – SME loans and advances offers up to N50 million
UBA has a range of suitable financing options to help business grow. The bank grants up to N50 million for working capital loan, assets financing and health loan which requires large funding for business growth as well as for medium to lopng term loan such as the school loans to meet working capital assets and mortgage need of registered private owned schools
Also, its Young Entrepreneur Finance Scheme (YEF) allows credit facilities to young entrepreneurs across Africa with vibrant and bankable business ideas who require capital to finance and grow their small and medium scale businesses.
Zenith Bank – MSME loan offers up to N500 million
Zenith Bank’s MSME offers a suite of customized value propositions that provides support to small businesses for sustainable growth with the operation of befitting accounts.
The MSME loan is designed to finance small and medium enterprise for these businesses to meet certain financial goals and offers N500,000 to N2 million while loans channeled towards education avails more at N5 million and loan for women (Z-Woman) get up to N10 million and others differs
The bank gives the highest maximum loan to the creative industry financing initiative which offers up to N500 million depending on projects in the creative industry such as fashion, movie production and distribution, music and others.
Fidelity Bank – SME loans and advances offers up to N720 million
The bank loan products for MSMEs is tailored to help ease the poor-access-to-finance burden confronting MSMEs in Nigeria as well as for funding and allied support for MSMEs powering the growth and development of the Nigerian economy.
The loan for MSME segment are Fidelity EduLoan designed to provide working capital and asset/expansion finance (between N30 million to N250 million) to standardized and structured private schools registered with relevant state Ministries of Education, Fidelity Private Medical Support Scheme; loan product designed to provide financing support to eligible private hospitals for the purposes of procuring required drugs and equipment, as well as Fidelity Pharmacy Support Scheme; an MSME focused loan product designed to provide working capital finance support (between N5 million to N10 million) to eligible community pharmacy businesses for the purposes of procuring/stocking up drugs for sale.
Other MSME loans focused loans are Clustered based quick loan with single obligor limit of N5 million for MSMEs, development finance loan product alternative funding window that avails loans from N5 million to N720 million to eligible MSMEs playing in any sector of the Nigerian economy, at less-than commercial rates while other quick loans are targeted towards working capital finance facility usually availed as a 30-day overdraft to trading MSMEs to assist them meet their temporary financing needs by relying on their proven track record of account activity with our bank that
FCMB Business loan offers competitive prices
First City Monumental Bank offers up to N5 million loan to expand business with variety of business loan offering. These SME development facility gives a minimum of N500,000 and a negotiable Maximum at competitive prices.
Theses loans are targeted at SME development finance facility, SME asset finance facility, SME working capital facility, SME Invoice discounting finance facility, SME local purchase order and Quick loan
Ecobank lending solution up to N5 million
Ecobank commercial banking provides lending solutions that allows businesses meet various needs. Some of its flexible lending products are in the form of Business Overdraft, Business Revolving Credit Plan, Debtor Finance, Distributor Finance Scheme and Vehicle and Asset Finance.
Polaris bank – SME loan offers up to N10 million
Polaris bank offers facilities which is targeted at nurturing businesses for growth means bridging identified gaps in client’s business. Some of the specifics are: Polaris education which offers Maximum loan amount is N10 million per obligor, Polaris market loan which allows traders who deal in FMCGs to get finance up to N5 Million Naira, Polaris Health Loan which provides short to medium term finance to professionals in the Health Sector.
Also, the CBN health sectors support facility is a N100 billion credit support intervention fund for the health sector from Central Bank of Nigeria
Stanbic IBTC – SME Loan up to N10 million
The SME Loan is a tailored made lending facility that is available to businesses for meeting working capital needs and to achieve business goals.
Agribusiness finance: this is a short to long short term business loan for crop, livestock production, farm equipment purposes while distributor finance provides solutions for flexible loans to help maintain cashflow for large manufacturer, or a distributor of wholesale goods and invoice discounting is targeted at helping business to draw money against invoices issued for completed contracts before payment is received from your creditors.
Good morning and thank you for this article which just came in time. I am a daily reader of this site.
For undergraduates like me, please how do we source for funds(small amount) to start up a business? The business type is a food business (bread,akara e.t.c in the school environment?
Hello Nairametrics,
This is an interesting article but I found some grey areas in it on which I have dome questions. I will appreciate you burst me via email for more enlightenment on the matter. See my detail contact below
Hi Zainab, good stuff you guys are doing. I’m proud to see how far Nairametrics has come since the early days.
However, you failed to mention the institution which has championed financial inclusion for all types of small businesses for about 30 years and following their rebranding efforts, have been named the best Microfinance Banking Institution 8 consecutive times in the last decade. I’m talking about LAPO Microfinance Bank.
Their interest rates are second to none, and their savings and loan products are the most specifically tailored to meet different needs of different strata of the society without the requirement for collateral.