Business Loans

Introduction

The value of real estate is always on the rise and you can take advantage of the soaring prices of your houses without selling it. If you own a home especially up to a decade, you might want to tap into the opportunities of a home equity loan.

What Does Home Equity Loans Mean?

Simply put – a Home Equity Loan is a type of loan in which the borrower uses his home as collateral. The loan amount is often determined by the value of the property which is about 80 – 90% of the home’s value. It can also be referred to as Home Equity Line Of Credit (HELOC)

Few Things To Consider Before Taking A Home Equity Loan

• Find out what your credit score is
• How much debt are you currently servicing
• Calculate your equity; This is mostly 80-90% of the value of your home
• Have a thorough understanding of your plan for the money
• Consider the risk

Conclusion

No financial transaction is without its own inherent risk. Taking out a loan especially when you are putting your house on the line is really a big deal. In view of this, there are other types of loans that don’t require any collateral, that you might want to consider.

However, here are one of the few things you can use a home equity loan for

1. Take advantage of loans at lower rates
2. Renovate your home
3. Refinance an existing mortgage
4. Down payment for another home.

Introduction

Are you an entrepreneur looking to finance your business? Banks and other financial institutions are always willing to lend you the funds you need. However, you have got to fulfil the requirements these institutions lay down for obtaining such loans. Some of these lenders even as far as offering you credit cards.

We examine some loans you can secure as an entrepreneur or business owner to facilitate the growth of your business.

Line-of-Credit

If you own a business with limited resources, this loan is for you. Actually, experts are of the opinion that you request your banker to make this facility available to you.

The scheme allows you to withdraw as much cash as you need. This can be in cash crunches or other emergency expenses you would need. Entrepreneurs generally open a line of credit in order to meet their working capital demands. The facility is suitable for buying necessary items, paying employees and clearing suppliers’ dues.

However, entrepreneurs cannot use it for buying the necessary machinery, real estate, equipment and other similar assets. This duration is generally for one year. 

Instalment Loans

Here, you need to repay the interest and principal in monthly instalments. Experts are of the opinion that you can use this to meet any kind of business needs.

In the process of finalizing the contract with your banker, you obtain the total amount of money you require. The lender will also calculate the interest payable and determine the date on which you have to clear this loan.

If you are able to do this, you do not incur any penalties or additional interest charges. The duration is dependent on what you intend to use the money for. Generally, it ranges from 1 to 7 years. However, if you plan on using funds to buy real estate, the facility may extend to 21 years.

Letter of Credit

If your business conducts its activities in the overseas, you need this lending facility. It allows you to make secure payments to your suppliers in different countries. You also do not encounter problems in getting payments from your foreign debtors. To obtain the letter of credit from your financial institution, you must submit some important documents.
These documents comprise your commercial invoice, the bill of lading identifying the merchandise, and the insurance policy. Most times, you may have to give a copy of the title documents of the goods you are dealing in.

Unsecured Loans

Most business owners are familiar with these loans. Bankers normal sanction them to proprietors when they are sure of the financial viability of their market establishment.

They also scrutinize the ability of these borrowers to repay the sums they lend to them. Generally, entrepreneurs may use the money for their business purpose. Moreover, they do not have to pledge any asset to obtain such modes of finance at a high rate of interest.

Secured Loans

These are similar to unsecured loans. However, entrepreneurs would need to mortgage one of their own assets. This is the reason the scheme has a low rate of interest. In the case of a default on the part of such borrowers, the bankers can forfeit this asset.

Entrepreneurs can access any of the seven loans to finance their business. However, such modes of debt financing are not cheap. They need to know what their requirements are and how much money they need.

Only then can they select the right one. However, when they face doubts, they consult their banks. Such professionals can assist them in taking the right course of action.

Conclusion

Financial experts say it is always prudent on your part to determine what type of loan you need. This makes it easier for the lender to up the lending scheme you seek. Subsequently, you can consult professionals to explain what you need to be aware of the type of loans you need as an entrepreneur.

Loans can be accessed from practically everywhere and anywhere in Nigeria. Other than financial technology institutions and traditional banks, small businesses can secure loans from other sources.

The Development Bank of Nigeria is one of those trusted and secure places to obtain a loan. We answer questions pertaining to the operations of the Development Bank of Nigeria, her interest rate, as well as how to obtain a loan. Subsequently, we discuss some FAQs that may stem from securing a loan from the Development Bank of Nigeria.

About The Development Bank of Nigeria

The Development Bank of Nigeria is a Federal Government-initiated scheme in collaboration with global development partners. It exists to tackle the challenges facing small and medium-scale enterprises.

Its core objective is to alleviate financial constraints experienced by these business owners.

How does the DBN achieve this? Simple – It provides finances and partial credit guarantees to eligible financial intermediaries.

Who is Eligible For The Development Bank of Nigeria Loan?

Like we have established, small and medium-scale enterprises are eligible to get a loan from the DBN. We shall also reiterate that financial institutions remain the channel through which funds and risk-sharing guarantees are provided. 

In securing a loan from DBN, it is mandatory that the prospective borrower patronises any of the eligible financial institutions. Furthermore, the DBN has enlisted 10 commercial banks and 15 microfinance banks to serve as intermediaries.

List of Commercial Banks You Can Get DBN Loans From

• Access Bank PLC
• Ecobank Nigeria PLC
• Fidelity Bank
• FCMB Limited
• First Bank Nigeria Limited
• GTBank Nigeria
• Stanbic IBTC Bank PLC
• Sterling Bank PLC
• Union Bank of Nigeria
• Wema Bank PLC

List of Microfinance Banks You Can Get DBN Loans From

• AB Microfinance Bank Ltd
• Addosser Microfinance Bank
• Baobab Microfinance Bank
• Bosak Microfinance Bank
• HALAL Microfinance Bank
• Infinity Microfinance Bank Ltd
• LAPO Microfinance Bank Ltd
• MainStreet Microfinance Bank Ltd
• NPF Microfinance Bank Ltd
• Parallex Microfinance Bank
• Seedvest Microfinance Bank
• Accion Microfinance Bank Ltd
• La Fayette Microfinance Bank Limited
• Davodani Microfinance Bank
• Trust Microfinance Bank

Getting A Loan From The Development Bank of Nigeria

We have summarised the processes of obtaining a loan from the DBN in three stages:

1. Visit a Bank: Either you decide to drop by at a commercial bank or its microfinance variant, you can simply request a DBN loan. All you have got to do is indicate interest for application; that’s stage 1 of 3. Shall we also mention that other financial institutions apart from traditional banks offer this service?
2. Indicate Interest: Upon indicating the interest in a loan application, the bank assesses the business owner’s purpose and overall motive. If this process is successful, the bank directly applies to DBN for funding. 
3. Get Your Application Approved: The Development Bank of Nigeria will need to approve the loan for disbursement. Once this is completed, commercial banks and other financial institutions serve as the intermediary between DBN and the borrower.

When Am I to Complete The Loan Repayment?

This factor is dependent upon the nature of your business and motive for seeking a loan. However, the Development Bank of Nigeria offers up to 18 months moratorium on principal payment for working capital and investment projects. Subsequently, you have until 10 years to provide the loan.

What Is The Interest For A Development Bank of Nigeria Loan?

The Development Bank of Nigeria offers flexible interest rates that are on tenure and relate to market rates. 

Conclusion

The Development Bank of Nigeria targets a specialized niche. What sets the DBN apart from commercial banks is the longer duration of repayment. For the latter, they are usually short-term. A relationship between them, however, is that commercial banks, as well as other financial institutions, are responsible for the supervision and evaluation of pans that DBN granted.

Introduction

Microfinance banks exist to provide small business owners and entrepreneurs access to capital. Often, these small and individual businesses don’t have access to resources and funds from traditional banks, and only know how to get loans from microfinance banks. This challenge makes it relatively difficult to secure loans, insurance, and investments that will help grow their business.

Essentially, this is why microfinance banks are here to stay – to provide loans, credit, even insurance policies and money transfers to the small business owner and entrepreneur.

Why Are Microfinance Banks Important?

Like we have established, microfinance banks help the financially-marginalised by providing them with the necessary capital to start a business and work toward financial independence. These loans are significant because they are issued even though the borrower has no collateral. However, the interest rates for microloans are normally high because of the risk of default.

Microfinance institutions provide small loans as well as another resources to business owners to help get their businesses running smoothly. Without microfinance banks, these businesses may have to resort to borrowing money from family and friends.

Examples of popular microfinance banks in Nigeria include RenMoney, AB Microfinance Bank, LAPO Microfinance Bank, FBN Microfinance Bank and others.

Do Microfinance Banks Work in Nigeria?

On the one hand, microfinance banks are a means to end the cycle of poverty, decrease unemployment and aid the financially-marginalised. On the other, however, some believe microfinance banks have lost their feel and have therefore gone sour. This notion stems from the argument that microfinance banks plunge business owners into deeper debt. 

Conclusion

Whichever way we examine the space of microfinance in Nigeria, they constitute a part of the financial sector. Some experts believe microfinance banks are capable of contributing to the Nigerian economy by curtailing poverty. Again, this is associated with acknowledging microfinance banks as tools for financial revolution.