Many businesses have crumbled because of lack of financial support. If you need a loan to support your business here, we will show you how to get a loan from Microfinance banks in Nigeria this year.
The Central Bank of Nigeria has introduced a Microfinance Development Fund (MDF) with a grand sum of N220 Billion to encourage the stability of Small and Medium Enterprises (SMEs) in Nigeria.
The CBN is the originator and the body responsible for the disbursement of the fund while it will be managed by CBN approved microfinance banks. See list of federal government free-interest loans.
Apply For: CBN Non-Interest Loan 2023
Microfinance institutions or banks are financial institutions dully approved by the Central Bank of Nigeria to administer or give financial aid to people in whatever capacity to strengthen their businesses or livelihood and to give any other financial related services.
Their services include loan generation, fund deposit, fund transfer, financial documentary and other services related to finance.
Where to get microfinance funds in Nigeria
There are so many microfinance banks in Nigeria. There is no state that doesn’t have a financial institution in the country, they are more than a thousand in the country.
The microfinance institutions are, however, divided into unit, state and national MFBs. The institutions are smaller in financial and structural capacity compared to other major banks in the country.
The total of their lending capacity is up to N53 billion and the CBN has recommended them to lend not less than 80% of their loan portfolio to micro businesses. See list of banks offering student loan in Nigeria
How to Get Loan From Microfinance
Microfinance institutions have a significant impact in agricultural development, poverty extermination and increase in the prosperity of small and medium scale businesses in the country. Therefore, there are essential steps to take in obtaining loan from any of the microfinance institutions.
Below are the steps involved in obtaining loan from microfinance banks;
1. Business plan or project.
Ensure you have a business plan before you approach any micro finance bank for a loan. With a business plan, you will be served better and have a favourable response.
2. Proof of business ownership
Having a proof to show you own the business can help you get the loan. It can be your business bank statement or transaction receipts or Cooperate Affairs Certification.
3. Open an account with the bank
If you need a loan from microfinance bank, ensure you open an account with the bank. This shows how serious you are, and it will help to facilitate the loan. That is why you have to open an account with the bank.
4. Maintenance of the account
The process does not stop at the opening of account with the bank. Make the account active through deposit and withdrawal of money consistently before you can be eligible for loan. Though this is not a general norm for all microfinance bank but some require this before they can consider you.
5. Get a Collateral
Getting a loan from microfinance banks may require you to have a collateral, especially for some purposes like agricultural loan, property acquisition loan and other loans with a huge amount of money.
However, those who need loan to sustain their small businesses may not be required to have a collateral before they can be granted the loan.
Conclusively, it is advisable to compare and contrast the interest rate of the microfinance banks before you apply for it. Some may have a lesser interest rate compared to others. Get to know this before proceeding for the application.
Ensure that you have all necessary information regarding the bank so as to avoid the unexpected because some microfinance are not professional, thereby treat their customers with lack of courtesy and regard. Let the banking or loan terms and conditions be understood by you.
Apply For: CBN Non-Interest Loan 2023