Building Credit

Debt is a term that describes the amount of money that a party owes to another party. In other words, it is money borrowed by a person or legal entity from another. 

Generally, a loan is one of the most common types of liquidated debts. Loans could be in the form of a home loan, car loan or even student loan. 

This article covers all you need to know about the meaning of Loan liquidation and how to liquidate your loan.

What is loan liquidation? 

Liquidation often refers to the process whereby a business folds up and I sell its free or unpledged assets out. 

The proceeds of this sale are afterwards used to pay the business’ debts. Usually, in finance, liquidation occurs when a company becomes bankrupt and it cannot settle its debts and obligations. 

From another point of view, liquidation could mean the transfer of valuables or potential assets into monetary form. However, this definition is not particularly applicable here, as the subject loan is usually already in monetary form.

Accordingly, a Liquidated Loan means a Loan which has been liquidated or paid back. The liquidation of a loan can be either by way of payment in full, a disposition, a refinance or  a compromise. In addition it can also be a sale to a charged Off Loan Purchaser or any other means of liquidation of such Loan.

How can you liquidate your loan?

Before opting for any loan agreement, it is important that you have a repayment source and plan in mind. In other words, your liquidation plan ought to begin with your loan plan. That way, you do not get stranded along the line. 

There are certain tips you must keep in mind to experience a successful loan liquidation process:

1. Make your repayment or liquidation plan a priority: when your repayment plan is your priority, you get to make a conscious effort towards it. These efforts include saving ahead to cover your EMI even before it becomes due.

2. Focus on repaying your high-interest loans first: Most people often focus on paying the smaller debts first and gradually move up to the bigger ones. However, research has shown that this would only prolong your repayment period and increases the interest you get to pay. Therefore, try to direct the maximum amount you can afford to pay to your high rate loans while securing necessary payments on the smaller ones.

3. The higher your income gets, the higher your repayment percentage: this is another factor that can help you go through a successful liquidation process. Make a conscious effort to increase your repayment percentage each time you obtain an income increase. This would cut short the time that your repayment plan would have lasted and put your mind at ease.

4. Use bonuses and windfall gains to pay larger debts:

 Rather than spend your bonuses on the latest gadgets and explore your desires, settle your costly debts.

5.  You can also use existing investments to repay debt: 

While it may seem unwise to use your investment for loan liquidation, it goes beyond that in reality. Not only does your indebtedness reduce your total credit worth, but it also ends up making the top of your expenditure list. Therefore, to avoid being clogged by debts, it is better to clear them off when you have what it takes.

Conclusion

There are several entities, corporations or private investors that issue out loans. Most of which also provides liquidation or pre-liquidation options for their customers. An example of these is banks. Liquidating your loans can come easily, especially when you fuel it by your willingness, discipline and determination.

Except you begin your business from an unlimited wealth of financial resources, you would require a loan at some point. This could be because you need to expand or get the business out of a ditch. For whatever reason it is, business loans in Nigeria are available for you to take advantage of.  With the right plans to utilize the loan and strategy to pay back, you can successfully navigate the waters of business loans without drowning. See some top business ideas in Nigeria you can explore.

How can I get a business loan in Nigeria?

You can get a business loan from different sources. This includes unofficial outlets like individuals or family and friends. However, in this article, we would only focus on financial organizations that provide loans for businesses. Follow the procedures below to get a business loan:

1. To obtain a loan, the first step is to determine the amount of loan that you require. This would determine the organization to consider. For example, you cannot require a N200 million loan, and approach a microfinance bank. Most of them do not offer amounts up to that extent if there is any at all. In such a situation, you would need to approach a commercial bank.
2. Second, get their terms and conditions for giving out a loan. You can find this on their official website or can visit their physical branch. Before they give a loan, you must meet all the requirements as stated by the institution.
3. Lastly, fill up the loan application form, and provide all other requested documents, then submit. On doing this, the loan institution would inform you about the success or failure of your loan application.

What is the easiest way to get a business loan in Nigeria?

The easiest way to get a business loan in Nigeria is through online lenders or microfinance institutions. Although they offer minimal amounts, their loan process is quick and not as stressful as commercial banks or other loan institutions. Many of these Fintech companies exist in Nigeria, and you can easily source them. Visit the List of organizations that provide business loans in Nigeria sub-topic below to find out more.

What are the typical terms for a business loan?

The terms for a business loan in Nigeria differ from one loan institution to another. However, they generally fall in this range:

1. Small businesses administration (SAB): around 5 to 25 years
2. Short term loans: from 3 to 18 months
3. Term loans: from 1 to 10 years
4. Equipment loans: from 1 to 5 years
5. Business line of credit: 6 months to 5 years
6. Invoice financing: around 1 to 3 months
7. Microloans: between 1 to 6 years

Can I get a business loan in Nigeria without collateral?

Yes, you can. Many Fintech institutions provide such loans. This includes online lenders and microfinance banks. It, however, varies from one institution to another and also depends on the amount you want to borrow. There are some amounts that you require collateral. No banks or Fintech institution would give out extremely large loans without one.

What is the average interest rate on a business loan in Nigeria?

The average interest rate on a business loan in Nigeria could vary from 2.5% to 71%. This depends on the amount and loan term. The higher the amount, the more likely you are to get a higher interest rate. Also, a longer-term also means a higher interest rate too. They take these factors into consideration and the potential inflation within the term of the loan.

List of organizations that provides business loans in Nigeria

1. Commercial banks: these include all commercial banks in Nigeria. Examples are First bank, Polaris Bank, Wema Bank, etc.  
2. Microfinance banks: this also includes all microfinance banks in Nigeria. Some examples are Lapo microfinance bank, Accion microfinance bank, and many more.
3. Fintech/ online lenders: examples are Renmoney, Carbon, Branch, Allea credit, etc.

Conclusion

Business loans are important in a country like Nigeria, especially as the economy does not favour startups. If you can, obtain a business loan to expand and grow your business. As long as you have a comprehensive structure for repayment, you will not have any problems.

For years and years to come, real estate business will continue to thrive in Nigeria. This is because the population of citizens spurn daily. Regarding this, there is an increase in the demand for affordable houses.

Therefore, it is one of the best investment plans you can opt for. However, considering the downtrodden economic condition and the need to maintain a moral standard of living, funding might be difficult. 

Alas, you can still achieve your dreams with adequate funds simply by going for an investment loan.

What is an investment loan for Real Estate?

Investment loans for Real Estate are the types of loan you take when looking to secure another home apart from your primary home for investment purposes.

The primary purpose of taking this loan is to purchase a real estate property with the expectation of earning a return on investment(ROI) over time. In other words, this means you purchase a real estate property, renovate the property, and either resell or rent it out.

What are the types of investment loans for Real Estate? 

1. Commercial loans:

A commercial loan is a debt-based cash agreement between an individual and a commercial bank. These are loans available to lenders for purchase, refinance and cash out reasons. Investors use this loan to purchase different types of real estate properties worth millions of Naira.

2. Fix and Flip Loans:

We categorise a fix and flip loan is hard money loans. This means that the real estate property is used as security for acquiring the loan.

This loan type is a short-term loan which allows lenders to borrow to complete the renovation of their property so that it can be put back in the market for rent.

3. Home Equity Loans:

A home equity loan is a consumer loan type, which allows a real estate property owner to borrow against the equity of their home. This type of loan financing is an excellent way for real estate owners to purchase another property. This loan type is very advantageous because it allows you to borrow up to 80% of the equity value of your home.

4. Private Money Loans

Also known as owner financing. This loan type is neither from financial institutions nor from your home equity. Instead, they are given out by people in the society who are well to do and have extra cash. They aim to have a good return on investment in the loan.

What are the minimum requirements for investment real estate loans? 

Although the requirements for granting an investment real estate loan varies from lender to lender. Here are some basic lending requirements: 

1. Your Credit score must be above average 
2. You must have an excellent credit history 
3. A stable source of income 
4. You must have 5%-10%  in savings 
5. Employment History

What are the benefits of investing in real estate?

1. Competitive Returns:

 The real estate business offers mouth-watering returns to other forms of investments such as bonds and stocks

2. Portfolio diversification:

The diversification potential of real estate is one major reason you should choose to invest in real estate. The addition of your real estate to various portfolio helps reduce higher return per unit risk.

3. Inflation Hedge:

Investing in real estate gives you a hedge against inflation. This is because as the inflation figures surge high, so also will the rental of real estate property. 

4. Tax benefits :

One pro of investing in real estate is the exemption you receive as an investor from paying tax. This is because the major source of income is through which is not liable to self-employment tax.

Conclusion

Investment loans are the best way to eradicate the limitation of insufficient funds. It is a solid bedrock upon which you can lay your foundation of the unlimited flow of income through real estate investment. Get this instrument and you will never regret you did.

In purchasing a stock, which is more or less like borrowing the institution a sum of money, how are you guaranteed that they can payback? Why do some companies have an excellent rating for paying shareholders and others don’t? Who even determines the ratings anyway? Many people do not have an answer to this because the body that provides them isn’t. Credit rating agencies in Nigeria are responsible for this act and operate to provide information about borrowing companies and keep a credit score.

What are credit rating agencies in Nigeria?

Credit rating agencies in Nigeria are private companies who solely exist to analyze and access the capacity of borrowers to repay their debt. This includes government bodies and private enterprises. Credit rating agencies do this by issuing credit ratings based on the performance of the organization. They call this borrower’s solvency.

The Securities and Exchange Commission (SEC) regulates the Credit rating agencies in Nigeria. So far, only three organizations have the license from SEC to operate. We would discuss the three organizations in the latter part of this article.

What are the roles of credit rating agencies?

In simple terms, the job of a credit rating is to rate a debtor’s ability to repay a debt on time. They usually assign the rating to a specific instrument rather than the whole company. In the words of SEC, credit rating agencies are “institutions which, as a business, professionally evaluate the invest qualities of debt issues.” In rating, the agencies look at the following:

1. Strength of the issuer’s balance sheet
2. The ability of the issuer to repay its debt with the sum left after subtracting expenses from revenue
3. Conditions of the issuer; these include current business conditions, earnings, growth, and profit margin
4. The potential economic development for the issuer; these include their ability to withstand economic adversity, tax burden, industry   
5. What are the requirements for registering as a credit rating agency in Nigeria?
6. There are some essential requirements for you to meet in order to qualify as a credit rating agency in Nigeria, according to the SEC. Some of them are  
7. You are required to pay a sum of N1.3 million. This money covers the filing of application, processing fee, registration fee etc.
8. Your organization must have a minimum paid-up capital of N150 million and a fidelity insurance bond of about 25% of the minimum paid-up capital
9. A copy of your CAC certificate, memorandum and articles of association, and other forms as requested

To see the full details of requirements, you can visit the SEC official website at https://sec.gov.ng/check-lists/requirements-for-registration-as-a-rating-agency/

Who are the top credit rating agencies?

Currently, there are only three licensed credit rating agencies in Nigeria. They are:

1. Augosto and Co Limited: 

The organization was established in 1992 and initially began as a business information firm. Their job was to provide information and insight into businesses and economies. However, they grew into a credit rating agency and got licensed by the SEC in 2001. The services offered by Augosto and Co limited include:

• Research into various industries including banking, construction, oil, and gas, etc.
• Credit risk management services to Fintechs and banks  
• Policy and process review
• Customized research
• Rating validation and portfolio analysis

2. Datapro Limited:

Datapro limited began in 1995, and its decades of operation have enabled it to become a specialist in different areas. Services offered by the company include:

• Credit rating
• Debt recovery
• Business information services
• Compliance solution
• Data protection compliance

3. Global Credit Ratings Co Limited: 

Global credit rating is the youngest of the three, only established in 1996. It is a subsidiary of Duff and Phelps and provides ratings, subscriptions, and support services in Africa. Some area that it focuses on are:

• Financial institutions
• Insurance
• Structured finance and securitization
• Corporate and public sector debt

Conclusion

Credit rating agencies in Nigeria exist to profile the debt repayment capacity of issuers. Their information is reliable, trustworthy, and necessary for investors in making decisions. Although other credit rating agencies give reports about Nigeria, there are not Nigerian-based.  

Although not exactly the opposite, we can say microfinance banks to be the flip side of commercial banks. In industry terms, they provide banking services to the “unbankable”. Microfinance banks like Nirsal Microfinance Bank are the answer to the cry and complaints of many paper works and protocols used by commercial banks. Their processes are much easier and straightforward, which is why medium to low-income earners prefer them.

What is a microfinance bank in Nigeria?

Microfinance banks or microcredit is a financial institution that provides banking to the low-income to middle-class citizens. Without microfinance banks, such individuals would not normally have access to the benefits of a bank. Asides the obvious help it renders, the goal of a microfinance bank is to offer an opportunity to its customer to become self-sufficient. We have the National Microfinance bank that caters for the needs of Nigerians.

On the other hand, the total functions offered by a microfinance bank may vary from one institution to another. However, their primary goal remains the same. The general functions of microfinance banks include deposits, payment services, loans, insurance, and money transfers.

What are the benefits of microfinance banks in Nigeria?

Some of the benefits of using a microfinance bank in Nigeria are:

1. Microfinance banks allow you to provide for your family through opportunities that may yield more income
2. It serves the unbankable in the society
3. Microfinance banks create jobs
4. It helps the country’s economy grow
5. The bank offers loan to the poor as well as a better repayment rate

How do I set up a microfinance bank in Nigeria?

There are certain financial and structural requirements that you must meet before getting approval from the CBN to start up a microfinance bank in Nigeria. These requirements vary depending on the focus region that your bank intends to cover.

The three categories available for microfinance banks in Nigeria are:

1. Unity microfinance bank (only one main office, and a paid capital of N20,000,000)
2. State microfinance banks (can have branches within a state and capital of N100,000,000)
3. National microfinance banks (allowed to have branches all over Nigeria and must have a capital of N2,000,000,000).

After sorting out your category, you would need to write an application to the governor of the Central Bank of Nigeria. Along with this list, you are required to submit the following:

1. Application fee of N50,000 for unit, N100,000 for state, and N250,000 for national
2. A capital deposit to your microfinance bank share capital escrow account with the Central Bank of Nigeria
3. Evidence that your capital was acquired through lawful means
4. Detailed feasibility report
5. A copy of the memorandum of association and articles of association
6. Capital importation certificate if your capital was imported
7. The details of your proposed board of directors
8. Your list of proposed shareholders along with their addresses and the name of their banker’s addresses
9. An intent letter which states that the bank’s subscribers are going to pay for their subscribed shares of your bank.

List of CBN approved microfinance banks in Nigeria

There are currently close to 1000 CBN approved microfinance banks in Nigeria. To browse through their full list, you can visit the CBN official website at www.cbn.gov.ng/supervision/Inst-MF.asp.

However, some popular microfinance banks in Nigeria are:

1. Hasal Microfinance Bank
2. Capstone Microfinance Bank
3. Lapo Microfinance Bank
4. AB Microfinance Bank
5. Richway Microfinance Bank
6. Accion Microfinance Bank

(Could include the names of all the previous microfinance banks that we have written on)

Conclusion

Microfinance banks are a very important block for building the country’s economy. Their services and appeal to the unbankable, ensures that a majority of the citizens are covered, and afforded investment opportunities. In general, Microfinance banks help the country grow on a micro-scale which is why it is largely encouraged by the government today.

Banks are amazing financial institutions, and offer banking solutions to make our individual and business life easier. On the other hand, they do not offer the best of savings interest rates, neither do they give considerable interest on the borrowed sum. This is because the major purpose of a bank is to make money and therefore they don’t exactly put you first. A Credit union is members oriented and nonprofit.

Many have turned to credit unions due to its many benefits, which is what we explore in this article.

What is a credit union?

Credit unions replicate the operation and services of financial institutions like banks, with the exception that they are owners oriented. The members of the union own the institution. The goal of a credit union is to serve the members first rather than maximizing profits as seen in banks. Most times, a credit union offers better savings and loan interest rates, but also suffer from reduced maximum disbursal amount as a result.

How does a credit union work?

The members of a union are its owners. When you open an account with a credit union and deposit money, you become a member of the union. This gives you the position of both an owner and a customer. They use your money in meeting the loan needs of other members and the cycle continues. A credit union operates just like a bank.  

What are the pros and cons of a credit union?

There are several pros and cons that come with using a credit union. They are:

Pros

1. You are a member of the union and therefore receive benefits like dividends and voting rights
2.  Credit union offers lower fees than traditional banks, which makes them a cheaper option
3. They also offer lower rates to members on taking a loan.
4. Credit unions are community and members oriented
5. Since they are smaller, they have better customer service and can cater to the needs of the customers effectively  

Cons:

1.  Although a relatively low sum, you have to pay to become a member of a credit union. Credit unions also have a minimum opening account balance
2. Not all credit unions are insured, therefore poses a risk with your money
3. Credit unions are limited in branches and ATMs because they are location-based and operate in a small area
4. The services offered by credit unions are limited compared to commercial banks. For example, their maximum loan amount  
5. Credit unions most times do not have enough profit to implement the best technology compared to banks. You might not have the leisure of mobile or online banking.

Are credit unions better than banks?

This depends on your needs. Credit unions are not better than banks, but they may be beneficial to you since they offer lower interest rates on a loan and higher rates on savings. However, credit unions cannot match the financial capacity of a bank.

Banks owe their allegiance to shareholders, while credit unions are more members oriented. We cannot say one is better than the other because it depends on your needs. For example, if you need a loan running into hundreds of millions, a credit union cannot help you. They do not have such financial capacity, therefore you have to turn to a bank.

Conclusion

Although very beneficial, credit unions remain a nonprofit institution, and cannot match the financial capacity of a bank. However, if you would not need a huge loan sum, and prefer a place where you would be valued and your voice count, then a credit union is for you. see here to learn about Credit Bureau.

Before the emergence and advancement of the internet, individuals who needed to raise money had engaged others to do so. As time advanced, banks became more digitized, therefore raising money involved a few phone calls and bank transfers without leaving your home. 

However, with the emergence of crowdfunding platforms like NaijaFund, you can now raise capital from all around the world without even getting to know your sponsors.

NaijaFund is one of the most popular crowdfunding platforms in Nigeria. It removes the physical barriers associated with receiving financial support from people all around the world.

How does NaijaFund work?

You start by logging on to the official website (www.naijafund.com) and take the following steps

1. Create your funding campaign.
2. Link your bank account to NaijaFund’s payment processor (Paystack). This is done by imputing your account details in the “My Account” section.
3. You can also describe the campaign to inform the public of its nature and also spur them to contribute. Share campaigns with the public through social media, the press, and also through emails. 
4. They deposit payments into your registered bank account.

All campaigns must have a fund goal and bound by time limits set by you.

Does setting up a Campaign on NaijaFund cost me money?

Setting up a campaign on NaijaFund is FREE, and the payment made by all contributors is also free. However, after your campaign raises its target fund, NaijaFund charges a 10% fee on the funds raised as a maintenance fee for managing the platform. 

Also, paystack, who is their third party payment processor, charges a further 1.5% + N100 on payments from local banks cards in Nigeria, and 3.9% + N100 for payments from foreign cards.

The charges are deducted per transaction. All donations to your campaign are processed within 24 hours, after which it is sent to your bank account on the next working day.

Can I raise money for anything with NaijaFund?

Yes, you can. As far as people see the need and purpose of your campaign, they would not hesitate to donate. Although you can set up just about any campaign for any purpose, non-purposeful campaigns are sure to see you have no donor. 

You can browse the categories of successful campaigns to see how to set up one successfully.

Do I have to be a non-profit to use NaijaFund?

No, you do not. NaijaFund crowdfunding is available to anyone, for any type of campaign, not only non-profit purposes. Many non-profit use NaijaFund, because of its simplicity and is a great way to raise money, this does not mean that it is strictly non-profit.

Can I run more than one campaign on Naijafunds?

Yes, you can. The platform allows you to raise up to 5 campaigns at a time.

Is NaijaFund Legit?

Your Naijafund page is secure and safe. Payments are made through encryption technology, and all the money donated would be transferred to you after the deduction of charges.

Conclusion

If you have a desperate financial need or want to raise money for non-profit purposes, NaijaFund offers a very secure platform to do that. If your campaign is purposeful, people would contribute to it.

Make sure you get your message out there to family, friends and other people on social media, you just might find out how far people are willing to go for you.

IMF Loans, also known as International Monetary Fund Loan, has answered the prayers of many nations, and it continues to do so. What exactly makes the loan important? Read on to find out more.

About the IMF

The International Monetary Fund, established in 1944 after World War II, is an intergovernmental organization that performs the role of fostering the stability of the international monetary system. It also facilitates international trade, promoting sustainable growth, and reducing global poverty. 

The IMF comprises 189 countries.

Over the years, the IMF has experienced rapid growth, and now, it offers loans to member nations to help them fight crises and payment problems. 

But just like everything else in this world we occupy, the International Monetary Fund Loan (IMF Loan) has its critics, supporters, and even economists have a thing to say about it. 

What experts are saying about the IMF? 

Supporters of the IMF say they love the concept behind IMF because it offers help when a crisis arises in member nations and help to heal or reform backward economies. However, critics have said the IMF Loan is complete rubbish as it replaces national autonomy and aggravates economic problems. Economists say the loan creates a moral hazard on national scales, which we would get to in the disadvantages down below. 

What loans do they give?

The IMF, unlike other development banks, does not lend money for specific projects. Its loans are to help countries tackle their shortage of foreign exchange problems and stabilize their economies. 

IMF gives two types of loans to its member countries – non-concessional loans and concessional loans. 

The concessional loans attract very low and, in some cases, zero interest rates; they are for low-income countries. The non-concessional loans attract market-based interest rates.

There are several mechanisms used for IMF Loans. However, the two commonly used are the Extended Fund Facility and Standby Arrangements. For the Standby Arrangements, they only allow member countries to borrow money over one or two years, and repayments made between three to five years. For the former, the Extended Fund Facility, countries can borrow for three to four years and make repayments in about five to ten years. 

What are the conditions for getting a loan?

Before the IMF can grant its loan, the interested government has to agree to adjust its economic policies to solve the problem that caused it to seek financial help. 

They also serve as safeguards to ensure the country pay back the IMF loans. Conditions vary, mostly dependent on the economic policies of the lending country. Some common terms include:

1. Elimination of price controls

2. Budget consistency with the fiscal framework

3. A minimum level of federal government primary balance

4. A ceiling on government borrowing

5. A minimum level of international reserves

6. Minimum domestic revenue collection

7. A minimum level of social assistance spending such as subsidies

8. Improve financial sector operations

9. Build up social safety nets

10. Strengthen public financial management

How do countries get loans from IMF?

Countries that are member states of the IMF can access IMF loans for its balance of payment needs upon request. On request, the IMF will discuss with the country’s government to access the financial situation and needs. 

The country seeking the loan and the IMF have to agree on economic policies before the IMF approves the lending. Depending on the policy conditionality of the IMF, the country will have to meet some pre-conditions, send a letter of intent, and a detailed Memorandum of Understanding to The Fund’s Executive Board.

Once an understanding has been reached on policies and financing the package, the Fund’s Executive Board grants the country access to IMF resources.

Merits of the IMF

 1. Fills Deficit Gaps: An IMF loan is often beneficial to countries with a balance of payments deficit, to fill in the gap. 

 2. Offers Loans to its Member Nations: Perhaps its most beloved function is the loan’s ability to bail out member nations at crucial times. The IMF may decide to attach conditions such as specific economic policies that governments have no choice but to follow to access its loans. 

 3. Technical Assistance and Support: The loan providers counsel and advise countries trying out a new economic policy. 

4. Global Financial Stability and International Monetary Co-Operation: The loans help maintain financial balance in the global market.

5. Economic Growth: It does not only rescue the economies of countries and dills deficit gaps, but it also helps to stimulate economic growth.

What are the shortcomings of IMF Loans?

The IMF loans have undeniably been helpful to many, but it does still suffer criticism because it:

 1. Creates Moral Hazard: Many nations make the mistake of drawing up unsustainable budgets because they believe they would be able to get an IMF loan. Skeptics say it is no different from the moral hazard created by government bailouts of major banks.

 2. Barely any Intervention or Too Much of it: IMF sometimes does too much or too little time, and most people dislike it for that. Critics accuse the IMF of only help free-market countries. Free-market supporters blame the IMF and say it is too much of an interventionist.

3. Rich Countries Control The Organization: The rich countries decide in the IMF. They determine which country can borrow and the conditions attached to the loans. Developing countries are merely onlookers in the scheme.

4. Unfavorable IMF Conditionalities: Countries can only access IMF loans if they agree to meet IMF conditions. These conditions increase poverty in borrowing countries and are damaging to the masses, such as the removal of subsidy.

5. Unlevel Playing Field: One of the conditions for IMF loans is for countries to remove trade barriers and quotas, which gives room for foreign goods and services. Local businesses cannot cope with international companies in a free market economy.

Conclusion

The IMF, tasked with promoting sustainable growth and reducing global poverty, has generated mixed results, recording both successes and failures. The IMF loan has succeeded in some countries (the Asian financial crisis of 1997-1998) and failed in others (mostly the low-income countries).

Critics point out to its unfavorable conditionalities, such as fiscal austerity, privatization, trade liberation, open capital markets, and high-interest rates, which have failed massively in developing countries.

The IMF, in recent years, has reformed their loan conditionalities and developed several loan initiatives targeted at supporting low-income countries.

Meaning and Types of Loans

Every single day there is the need to carry out business transactions. It is a fundamental element of everyday living. Having the means to complete these financial activities usually means having sufficient funds. That is, however, a different matter.

Half the time, a lot of the things you need to do cannot be done because of a lack of finances at the time.

What happens then? You get a loan then. The technicalities on loans seem to be straight forward.

In this article, we will be breaking it all down; what loans are, what types of loans there are in Nigeria, and how you can get them. 

What is a loan? 

A loan is simply money (in some cases, it could include other financial assets) given to another individual with a promise of repayment either on principal (the actual amount borrowed/lent) alone or with interest (an additional amount added to the principal usually calculated throughout the loan). They could be for personal use or business. 

What are the types of loans?

There are various types of loans in Nigeria meant for multiple purposes. As there are many reasons to carry out transactions, there are many types of loans to meet these reasons as well. The types of loans are;

• Secured loan: a secured loan is a loan that requires you to provide collateral when applying for the loan. This collateral is a form of safeguard for the loan provider, and so if you don’t pay the loan back, the loan provider gets to collect the collateral to settle the loan. Secured loans usually have lower interest rates, and you can borrow more. 

• Unsecured loan: with unsecured loans, it requires no collateral in the application of the loan. Unsecured loans are usually personal, instant loans in Nigeria and come with higher interest rates because of the payback. There is less money available to borrow with unsecured loans, however. 

• Single payment loans: as the name implies, these loans involve a borrower taking out a loan from a loan provider and agreeing to pay back the full amount of the loan plus interest in one payment.  

• Monthly payment loans: unlike single payment loans where you pay back the loan once, you repay monthly payment loans over a spread period. Each month, you pay a prefixed amount, until the loan and interest are settled.

• Salary advance loans: Salary Advance loans involve people who collect their paycheck ahead of time. Most paychecks are paid towards the end of the month, but with a salary advance, you could get it earlier than that. The amount is then deducted from the actual salary when it is paid. Salary advance loans usually don’t charge high-interest rates.

• Mortgage: these are loans taken out for the purchase of a house or landed property. At a fixed period, an amount is deducted to settle the mortgage. However, if the payments on the mortgage stop or if it isn’t paid, the mortgage loan provider gets to collect the property from the borrower. 

• Fixed-rate loans: fixed-rate loans are loans with one fixed interest rate throughout the loan. 

• Variable-rate loans: with variable rate loans, the interest rates on the loan change over time.  The change is determined by the general interest rates fluctuating. 

How can you access the loans?

Loans are easily accessible from most financial institutions; it all just depends on what type of loan you’re looking for; either it’s for personal use or business. Banks, credit unions, cash advances are valid means of getting loans, and there is a plethora of other loan service providers popping up each day, each with its terms and conditions. 

Conclusion

Now that we have broken down the types of loans, you know which would meet your needs perfectly. Be sure to check out the interest rates on loans before you collect them, as well as the payback period. 

Getting a loan usually involves operating an account with a bank, heading off to the bank, seeing your account officer or the bank’s loan officer, taking out a loan application and filling it, and waiting for your loan to be approved, hopefully. That’s a lot of stress, especially now that you can easily send a USSD code to get loan information from your favourite loan platform.

Now with this many codes, it might be easier to get your loans within a few minutes. However, we strongly advise you don’t rush into making loan decisions without comparing loan offers from different lenders before taking out a loan facility

In this article, we discuss what the USSD platform is, and how you can use it to access a quick loan in Nigeria. 

What is USSD? 

USSD is an acronym that stands for Unstructured Supplementary Service Data. It’s also known as quick code.

As the name implies, they are codes used to access options through your mobile telecommunication network provider. USSD can be used for a range of things – callback service, mobile-money, content, and information, or to provide network configuration services. In this case, we consider how the use of USSD in banking.

What is USSD Banking? 

USSD Banking is a type of banking that allows you to make financial transactions from your phone through the use of short or quick codes. It simply requires a cellular network; no internet connection is required. Through USSD banking you could make almost any kind of financial transaction; from making transfers to buying airtime. More importantly, you can use USSD codes to get loans. 

How to Apply for Loans Using USSD Codes

The steps to applying for a loan via USSD are straightforward. You simply need to:

• Know which loan provider you’re borrowing from. 
• Get the functional USSD code
• Meet all specified requirements
• Dial the code
• Follow the prompt
• Get your loan

Now you can compare interest rates from different lenders with our loan simulator and get the best deal. Making an informed loan decision requires comparing different loan offers before making a commitment. Through our simulator, you can see at a glance, loan offers coming from different lenders in less than 5 minutes, so you can make the right decision regarding your financing. Try it today

USSD Code for Loans in Nigeria 

To apply for a loan via USSD, you simply need to input the code into your phone and follow the prompts that pop up. Some USSD Codes for loans in Nigeria are: 

Platform	USSD Code for Loans
AB Microfinance Bank	*389*755#
Access Bank Payday Loan	*901*11#
Accion Microfinance Bank	*572*6#
Airtel Quick Cash	*561#
ALAT Loan By Wema Bank	*945*100
Aledin Nano	*903#
Carbon Loan	*1303#
Ecobank Xpress	*326#
Etisalat	*561#
Fairmoney Loan	*322*2#
FCMB	*329#
First Bank First Advance	*894*11# or *894#
Glo Cash	*322*1*04225701*Amount#
GTBank Soft Loan (QuickCredit)	*737*51*51#
Interswitch	*322#
Kwikcash	*561#
Migo Loan	*561#
MTN Cash	*606*4#
Trader Moni	*540#
Paga	*242#
Payattitude	*569#
Paylater USSD Code	*1303#
Quickteller Loan (Airtel, MTN & 9mobile)	*322#
Quickteller – Glo Users	*805#
UBA Loan Code	*919#
Unity Bank Loan Code	*7799#
Zenith Bank Loan	*966#

Requirements for Getting Loans Using a USSD Code

As easy as the USSD loans are, so are the requirements. Naturally, you need to be operating an account with most banks to get access to their loans through USSD.

For other instant loan providers, you do not need an account, however. Besides that, you would also need to provide your full name, your bank verification number, account details, and address, and any other information as specified by the loan provider. For a more comprehensive recommendation comparison for the right loan to take within minutes, visit the loanspot Africa platform today.

Conclusion

Using USSD codes to access loans is perfect for when you need quick cash or are looking to avoid the strenuous physical means of getting a loan. They require very little and you should get your loan if you meet all specified requirements in minutes.