Question: Can I access collateral-free business loan from a bank?
Seun Obadan, Ibadan
Answer:  Most Small and Medium Enterprises (SMEs) are having a hard time starting and growing their businesses because of their inability to access funding. They find it difficult to meet the requirements of obtaining bank loans.
However, some Nigerian banks now realise that most Small Business Owner, beyond their business ideas, do not have collaterals to support their loan applications. Hence some of the banks are beginning to create new products and services which include providing some form of business loans without collateral.
These initiatives represent the banks’ drive to support growth in the SME sector, by giving out small loans to businesses that need them. These SME-targeted loans are designed to be easily accessible to SMES. Some of the banks you may wish to approach for collateral-free loans include, but are not limited to, the following:
First Bank Nigeria Plc: To access the First Bank loan, an applicant is required to pass a psychometric test, and provide a business plan, complete with financial projections.
Heritage Bank: Heritage Bank participates in the Youth Innovative Entrepreneurship Programme, which is backed by the Central Bank of Nigeria. The programme aims to harness and support the entrepreneurial drive of Nigerian youths, by providing them with affordable, short-term borrowing to implement their business ideas.
Diamond Bank Plc: The bank’s zero-collateral loans seek to stimulate the growth of Micro, Small and Medium Enterprises. These are provided through the bank’s SME loan packages, which can be accessed in the form of Revolving Credit, Instalment Loan, Local Purchase Order Finance and Contract Finance. The bank also provides short and medium term financing for working capital, and assets finance with reduced collateral requirements.
Stanbic IBTC Bank: StanbicIBTC Bank offers collateral-free business loans to help SMEs acquire business assets and execute products supplies, amongst other facilities.
It is important to note that, before you approach any financial institution for a loan, you must do your due diligence, by familiarising yourself with the requirements of each institution.
It is equally important to note that the current health of your business, especially its financial history, including present and projected cash flows, will greatly influence the outcome of your loan application, with or without collateral.
Best wishes in your search.