Considering the harsh realities facing Nigerians amidst the global lockdown and the projection of the world economy slipping into depression, access to loans is an excellent way to jump-start the moratorium on most businesses.
People seek different ways to access to loans, usually with minor success, but few know about how accessible loans are through financial cooperatives.
What is a Financial Cooperative?
A financial cooperative is a financial body that is owned and operated by its members. A financial cooperative aims to act on behalf of a unified group of people while offering traditional banking services.
These bodies are more concerned about the financial stability of its members rather than focusing on profits as banks would.
It is basically a peer to peer social lending platform, and they vary in sizes and form.
The structure of Financial Cooperative.
These cooperatives have open membership. The members of the cooperative are the owners and as well the customers. The size of the cooperative depends on the number of members who take part. The more members a cooperative has, the more resources it offers in financial products.
Financial cooperatives are usually known for its low-interest loans and sometimes zero-interest loans and high-interest savings. This comes in very handy when you’re trying to manage your debt. Some financial cooperative have retirement plans in place for its members. Credit unions are an excellent example of a financial cooperative.
Types of cooperative in Nigeria
Primary Cooperative– Operations of primary societies permits its members who live in the same locality and share the same goals and aspirations to go into synergy to achieve their goals collectively.
Secondary cooperative. These cover a more extensive range of operation. It’s formed by the combination of two or more primary cooperative societies with its members and shareholders. They are the union and councils.
Tertiary Cooperative – These consist of both primary and secondary cooperatives.
Industrial Cooperative – This is created by people who have the same craft or employment in common.
How to get a loan from a cooperative society
- First, join a cooperative of your choice, preferably one that’s focused on uplifting its members financially.
- After you join the cooperative of your choice, you must inquire about the loan services.
- Be a member of the cooperative for a specified period before you can be eligible for a loan. This period may vary depending on the bye-laws of the cooperative.
- The requirements of cooperatives will differ depending on different unions, but unlike banks that deal majorly with asset-based lending, the processes required for loans in a cooperative society are less strenuous.
- Loans are granted at a very low-interest rate to ease repayment for their members.
Cooperative lending is also being protected by the state and federal laws of Nigeria. This is to ensure that it treats its members equally and settle disputes among members. It is a brilliant approach to consumer lending, really. Also, know that the cooperative loans could also come in different forms other than cash – it could come in the form of asset acquisition, land, mortgage, etc.
In most cases, membership is open to everyone. As long as you belong to the organization or locality, the cooperative society is created for.