Building Credit

Human needs are unlimited. Therefore, even when you receive a monthly income as a federal worker, it might just not be sufficient to achieve the plans on ground. This is where the loan idea comes in. It’s a chance for you to get sufficient capital, as at the time you need it with a relaxed or assured income to pay back subsequently. This article provides you with all the information you need to access a loan as a federal worker and you can further explore federal loan for SMEs here.

How do I get a loan as a Federal Worker in Nigeria?

Several private and public institutions offer loan services to federal workers. You can make inquiries about them on or through physical and technological means. 

However, you can find suitable loan options from banks, online lenders, government institutions and so on. 

What is the maximum or minimum amount you can borrow?

The loan amount you are eligible to borrow depends on certain factors. This includes the type of loan you are applying for, either personal, auto or mortgage; the loan tenor-  whether long or short term among others.

From a general overview, however, loans for Federal government staff in Nigeria are usually between  ₦50,000  and N6, 000, 000.                                                         

 Interest rates

Although the interest rates vary, depending on certain factors. Interest rates for federal workers are always convenient and affordable. 

What are the minimum requirements for taking up a loan as a federal worker?

These requirements are determined by the terms of your loan agreements. However, the following are some basic requirements that might apply to most lenders:

•  Personal details- full name, residential address, email address, phone number etc

• You must have a bank account, either Current or Savings, with a commercial bank in Nigeria.
• Your Staff Identification card is also an important requirement as well as your Pension statement
• You must be a salary earner under the federal government with a verifiable monthly income.

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Also, some lenders may require your general employment information and documentation. This may include your Letter of Employment, Confirmation, Promotion, Redeployment, Salary Increase. 

Some may also require an Introduction Letter from your Employer’s HR.

Additionally, some lenders might require that, to qualify for a loan, you should be between the age of 22 and 58 years old.

Where can I get loans as a federal worker?

As a federal worker you can get loans from different financial institutions in Nigeria. Some of them include:

• FCMB – Fast Cash
• Startscredit- Creditville
• ArvoFinance Web -This is powered by Arvo finance to cater for the needs of Federal government workers in Nigeria.
• Nextpayday loan – They offer loans to validly employed workers in Nigeria 
• Fast Credit Nigeria Limited 
• Petty Cash
• Provest Limited – Public Sector loan
• Primera MFB -Easy Money federal 

How fast are funds released?

The system for the disbursement of funds equally differs from lender to lender. Although, more often than not, once your loan application is approved, the money is sent to your registered account.

 Repayment terms

The repayment plans for loans available to federal workers are usually very easy and convenient. This is usually subject to your agreement with a potential lender. Most times,  a certain percentage of your salary may be deducted monthly or weekly for a particular period until the loan amount is fully settled. 

Conclusion

It’s not enough to dream, neither is it enough to wish for more when you can achieve a dream come true and bring your wishes to life. Secure a loan today and enjoy the bliss of fulfilment.

In desperate situations, people do desperate things to get money at any cost. Most of the times, it is done illegally because they do not have the requirements to get a legal loan. The high demand of people who sort out loans this way is matched by a high number of loan sharks. The question becomes, who is a loan shark? And how do they operate? Well, you would find out by reading this article.

Who is a loan shark?

A loan shark is simply an organization or individual that loans money to people at extremely high rates. Their rates are usually far above the established legal boundaries. Loan sharks mostly employ violent means to collect debts and hold on to high stakes in case you cannot pay up. Generally, an organized crime group or single individual from the group are the loan sharks.

How does loan shark work?

Loans sharks are usually people in the shadows. We often find them in areas with a high poverty rate, or on the internet. They also offer cash from unidentified sources from their criminal network with unregistered entities or personal businesses.  Loan sharks operate completely off the books unlike regular financial institutions and do not carry out background checks or credits of borrowers.

The process is simple; they give out a large sum of money and expect the principal with an outrageous previously agreed interest within a time frame. The time frame is usually very short. Most times, the demand can span up to 200% interest with as 30 days time frame. Loan sharks are dangerous and illegal for most clean businesses, which is why it is really best you seek other ways.

Why is a loan shark illegal?

Firstly, loan sharks offer loans at outrageously illegal interest rates. If you cannot meet the repayment date, loan sharks often result to violence to force repayment. Their mode of operation includes threats of violence and blackmails to obtain the repayment. Historically, loan sharks have been known to flaunt illegal and criminal activities in a bid to obtain repayment.

What is the difference between loan shark and payday loans?

Although similar in some ways, loan sharks are not the same with payday loans. Although payday loaners often offer loans at outrageous interest rates within a short time, they do it completely legally. Payday loans are done by the books. They do not adhere to standard usury laws that state the maximum interest rate a lender can charge to be 45% (depending on the state), because they are granted exceptions specially.

In simpler terms, payday loaners can charge that ridiculously high legally, due to government regulations. However, loan sharks’ interest rates are still usually higher than that of payday loans. Also, payday loans are obtained through the standard legal procedures between a lender and a borrower.  They run background credit checks and require certain documents like proof of employment and income. This information determines the sum they offer to borrowers.

Unlike loan sharks. Payday loaners do not employ violent means in obtaining repayments, although they offer very short terms. In obtaining repayment, standard procedures are followed, and defaulters are reported to the credit bureau.

Are loan sharks dangerous?

Loan sharks often threaten defaulters with legal prosecutions and jail terms when short of payment. Due to their mostly illegal operations and crime connection, we can safely say they are dangerous. However, certain individuals pose as loan sharks to take advantage of the high interest rate benefits, but aren’t really dangerous. In all, it is best to abstain from loan sharks completely.

Conclusion

Loan shark business thrives in rural areas where loans are generally inaccessible due to most citizens not meeting the minimum requirement. They are dangerous and result to violent means to recover repayments, asides the problem of demanding outrageous interests. 

Money loaning and repayment system is a complication that comes in different forms, especially when borrowing large sums. This led to the development of loan amortization, which provides a clear set payment amount at stipulated times. These set payments cover both the principal and interests on the loan and help create a clear picture of things. In this article, we have simplified loan amortization for your understanding, as well as including every other thing you should know.

What is loan amortization?

Loan amortization is a type of loan that is designed with a scheduled repayment structure. This structure includes periodic payments in which the borrower is to meet, and it applies to both the loan interest accrued and principal amount. The focus of an amortized loan is to pay off accrued interest for a set period, after which it focuses on the principal or pay off both at the same time.

In simpler terms, it amortizes any loan you take that follows a repayment schedule of the interest and principal itself. Some examples of these are car or auto loans, personal bank loans, home loans, etc.

How does loan amortization work?

The loan amortization system is pretty tricky but easy to understand if you follow closely.

To calculate the interest rate on an amortized loan, they use the most recent ending balance of the loan. This way, the interest payment varies and depends on your ability to meet the periodic payments. At the expected periods, any excess payments made reduces the principal by the excess on the payment. This reduces the balance left, which is used in calculating subsequent interest.

This system encourages you to make excess payments, which would reduce the principal after covering the interest incurred. This way, you get a lesser interest since the interest is determined periodically based on the most recent ending balance of the loan. The interest and principal have an inverse relationship over the lifespan of an amortized loan.

Why amortize a loan?

The goal of loan amortization is to create a clear picture for the borrower to work with. They design it so you can pay off the loan over an extended period with equal amounts for each payment period. However, you can speed things up by paying more, hence reducing the principal owed. This way, you are both paying off the interest and principal at a go. Should you decide to focus solely on the interest payment, the principal portion increases, and vice versa. This system encourages you to pay off both sides at the same time.

 

What are the types of loan amortization?

Loan amortization can fall into any of the four categories. They are:

1. Full amortization: 

in this loan, paying the full amortization would result in your outstanding balance being reduced to zero at the end of the loan term. This is the most common loan amortization type.  

2. Partial amortization: 

this entails you paying a portion of your amortization amount. For every payment made, it would reduce your outstanding principal on the loan for each month. If you only pay partial amounts, you would have an outstanding balance at the end of the loan term.

3. Interest only: 

for interest only, you would not include any amortization payments during the loan term. It rather focuses on paying only interest, and the principal remains the same as it was initially at the end of the term.

4. Negative amortization: 

negative amortization is more comfortable to pay in the short term but costly in the long term. This type requires lower monthly payments than interest only loans; however, that monthly payment increases the outstanding principal on the loan. Any shortfall of payments to the interest amount gets added to the total payable loan amount at each month’s end.

Loan amortization – practical example

Putting the four categories of loan amortization into a practical example – take, for instance, that you borrowed N300,000 with a 20-year repayment plan.

With full amortization, you would have paid off the loan at the end of 20 years. If partial amortization, then you could still owe some amount but far lesser than N300,000 at the end of the term. With interest only, you would have paid off the interest, but the principal of N300,000 remains. Lastly, negative amortization would see you most likely owe more at the end of the loan term.

Conclusion

Loan amortization is a transparent system that gives you a clear plan on how to pay up. It also rewards your diligence to meeting with the payment schedule through favourable interests and spikes it if you do not pay up. It is recommended that you stay with a full amortization loan as much as you can, as venturing into other types might be risky.

The reality of things is that only a few people go through life without obtaining a loan. At one point or the other, you might have to get a loan to pay for an asset or a new car or even invest in a business. For whatever reason it is, one common factor is that you have to sign a loan agreement. This agreement is between the loan giver, and you the loan receiver. Whichever side you are one, you have to understand the standard clauses in a loan agreement to help you navigate the terrain.

This article would inform you of everything you need to know about these clauses and a bit of extra information too.  

Why is a loan agreement important?

A loan agreement is a binding contract between all the parties involved in a loan, signed to formalize the loan process. These agreements could come in different forms, ranging from simple payback promise notes between friends to more explicit ones, as seen offered by banks. A loan agreement stands as a binding contract of the obligations of all parties in the loan and can stand in court.

Federal and state guidelines govern loan conditions and agreements. This is to prevent extortion due to illegal or excessive interest rates on repayment.

What are the details of a loan agreement?

Loan agreements usually include:

1. Covenants
2. Value of collateral involved
3. Guarantees
4. Interest rate terms
5. Duration of repayment

Also, it clearly states the default terms and conditions in the agreement to avoid confusion or legal implications. They specify the terms of collecting outstanding debts in case of a default, and the specific cost involved in collecting the debt.  

What are the standard clauses in a loan agreement?

We considered the most standard loan agreement contract in selecting the clauses that should appear in a loan agreement. It is a contract between the bank and a borrower. Please note that restrictions to these clauses are not to banks alone, and could be included in other loan contract agreement.  

Interest fluctuation clause: 

This clause gives the bank a right to select an interest according to their base rate fluctuations. This means the bank can alter interest rates when they change their base rates without your approval.

Definition of default: 

The bank (borrower) determines the terms of a default, as it transcends simply missing a predetermined fixed interest payment. You should thoroughly read the terms of default, as defined by your bank.

Clauses regarding disbursement: 

This depends on the nature of the loan. For example, a building loan could include a disbursement clause that states that the money would be disbursed directly to the contractor and not you. In such a case, although you are the borrower, they would not release the money to you.

You could also have a disbursement situation where the loan is released to you directly, and you determine how it is used. The bank would state all these conditions in the contract.

Force majeure clause: 

This is a clause in which most banks include in a loan agreement. It gives the lender (bank) the right to unfix the fixed interest rate in the event of unforeseen economic situations like inflation. Go through your agreement contract to understand this clause and avoid future disputes.

Reset clause: 

This clause applies to fixed-rate loans. In some of these loans, they include a reset clause to allow the bank to reset the rate to a higher level after some years. This happens especially when interest rates seem to show a rising trend.

Debt collection by third parties: 

Most lending banks include a clause in their loan contract that enables them to transfer your details to third party collectors. They can do this without informing you, and from there on, the third party takes charge of recovering the loan. It mostly happens after you default.

Amendment clause: 

This is a very precarious clause that allows the bank to amend the conditions of your loan agreement without prior notice. Always read it in detail to know what it entails if you find one in your loan agreement.

Conclusion

These standard clauses in a loan agreement could vary from one lender to another. Although you could find some missing, or not, they remain the standard applied by most banks.

Always take time to go through each individual clause in order to know what you are getting into. Ignorance has led to so many issues between borrowers and lenders in the past. Do not be caught unaware. You can further read about loan documents here.

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.

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.