Online Loans in Nigeria: Tips for SMEs
One of the major obstacle to the growth of Small, Medium Enterprises (SMEs) in Nigeria is the lack of access to funds despite the significant role of small business economic activities in Nigeria.
According to statistics as at 2023, SME account for over 96% of business in the country with contribution to GDP of about 48%. The SME contribution could have performed much more if not for one of this major issues of inadequate funding. This has prevented many SMEs from surviving and if they do survive, to scale up.
Why do commercial banks shy away from SME financing?
In most economies, commercial banks are the financial sector that are championing the provision of finance for SME but in Nigeria, this is not the case due to the inherent risks and uncertainties. The stringent requirements and terms have virtually made it almost impossible for SMEs to secure finances from the banks.
A review of financials of some of the banks show a very low percentage of loans granted to SMEs compared to the total loans and advances. For example GTB in it’s 2022 Financials shows that SME loans was only a meagre 1.8% of the total loan and advances of N1.833b granted by the bank during the period.
This has left a big financing gap in the economy which online money lenders in Nigeria are filling.
Online Lenders are stepping in
Online lenders are making it easier for SMEs to secure finances due to the accessible nature of the digital platform. The requirements for securing a loan from online lenders in Nigeria are less stringent and approval for loan requests are faster.
All you need as a business is to download the mobile app, register and request for a loan.
This is ideal for businesses that are looking for quick loan in an emergency or for working capital. The target market for loan apps vary from small businesses including artisans that may require loans from N50k to 100k, to other SME businesses that require finance up to N5million naira.
Most of the online lenders offer collateral free loans. These loans are meant to assist SMEs on a daily basis in terms of working capital, acquire equipment or additional resources to expand their businesses.
Common requirements and eligibility
Here are some of the major requirements to access SME business loan from Online Lenders such as KwikPay Credit.
- Completion of Online Loan application including provision of BVN for validation
- Provision of valid ID of Business owners /director(s)
- Last 6months Bank Statement of Business activities
- Business registration documents
- Mostly unsecured loans are offered.
- Must be 18 years or over to apply.
Check the website of the digital money lender you are planning to borrow from, for specific requirements about the business loan. It is important that the location of your business or yourself as a business owner, can be easily located as physical verification may be carried out by the loan company before approval, especially if the loan amount is large.
Trafalgar Associates (Kwikpay Credit is passionate about financing SME. For more information about our business loan, check our various blog post on this platform. Further details are also available on our website, www.kwikpaycredit.com with personal and business loans ranging from 5000 Naira to N5m.
