Do you have your personal business firm and wishes to get financial help from a trusted and reliable banking/non-banking institution? As an Entrepreneur, are you finding it hard to access loans? If ‘yes’, ensure you read this post till the end to get a broader knowledge on the loans entrepreneurs can consider for business growth and how to easily get the loan from reliable financial institutions. Also check how to apply for CBN AGSMEIS loan in Nigeria.
Most of the loan givers (banks, and other financial institutions) do have stipulated requirements attached to their various loan schemes, which must be met before an entrepreneur/business owner can be funded with the cash requested for. Some financial institutions even go extra miles to give borrowers a debit card, depending on the loan option.
Loans entrepreneurs can consider for business growth
The various Loan Schemes Designed for Entrepreneurs are shown below;
This is a package design basically for entrepreneurs who own a business with limited resources. It is readily available, as bankers see it as a necessary option for business owners.
The Line-of-Credit scheme allows an entrepreneur to withdraw any amount of money needed, as long as it’s for an emergency or crunch expenses.
It is most suitable when one needs to meet up with his/her working capital demands, purchasing of important items, employee’s salary, and clearing of supplies’ fee.
Aside the above reasons, the cash gotten from this scheme can’t be used for equipment purchase, machinery purchase, buying of real estate, and other related properties/assets.
The duration of this loan is mostly one year.
2. Instalment Loans
Professionals and experts in the business world has concluded that Instalment Loans can meet up with any kind of business need, an entrepreneur will come across.
Once an entrepreneur/business owner reach agreed terms with the banker, the total amount of money needed will be given to you after which the interest to be paid will be calculated, then the date to remit (pay in full) will be stipulated.
Failure to clear the loan when due will incur extra interest, or penalty. The duration of this loan is between 1 – 7 years. Entrepreneur can use it for purchasing of assets, with a maximum duration of twenty one (21) years.
3. Letter of Credit
An entrepreneur whose business activities are being carried out outside the country (Oversees), is expected to go for Letter of Credit once interested in a loan scheme.
This facility allows easy and secure payments to suppliers in other countries. Likewise, payments from foreign debtors are secure, as they easily get to the owner through this scheme. For one to gain access to the ‘Letter of Credit’ from any financial institution, there are some compulsory documents that need to be tendered. They include;
- Insurance policy.
- Commercial invoice.
- Bill of lading identifying the merchandise.
- Title documents of the type of goods the business deals on.
4. Unsecured Loans
This is a type of loan that does not necessarily need collateral (assets) before one accesses it, as it attracts a high interest rate. This type of loan is not new to business owners, as their bankers also sanction them to proprietors once they are sure of the financial viability the business imposes to the market.
There is also scrutinization of entrepreneurs, which is to find out if they can repay the money borrowed on time.
Examples of financial institutions/companies that gives out this very type of loan are Renmoney Nigeria, Palmcredit, Carbon, Branch Loan, Aella Credit, FairMoney, etc.
5. Secured Loans
The difference between Unsecured and Secured Loans isn’t that much as they work in similar line.
The most obvious difference is that in the ‘Secured Loans’ the entrepreneur is expected to mortgage an asset (collateral) that is equivalent to the amount of money needed, which in return brings about reduction in the interest rate compared to the ‘Unsecured Loans’.
Whenever a borrower defaulted, such asset (s) that was mortgaged (used as collateral) will be forfeited.
Conclusively, an entrepreneur can easily access any of the above mentioned Loan, but should know their terms and conditions before opting in. Whenever an entrepreneur is confused on which to go for, he/she should consult professionals (bankers) to give them advice based on the amount of money needed, and the time frame by which the borrower can pay back.
It is never advisable to request for a loan when you don’t have necessary need for such loan. Hence, Financial experts gave a quote “It’s always prudent on your part as a borrower to determine what type of loan you need”.