Gaining access to Financing facility

 

Different Types of Loans Available to SMEs in Nigeria

1.     Introduction

Running a small or medium-sized enterprise (SME) in Nigeria comes with its own set of challenges. One of the biggest hurdles is accessing finance. Many SMEs struggle to secure funds to grow, manage cash flow, or expand operations.

Fortunately, SME loans in Nigeria are available through banks, microfinance institutions, fintech platforms, cooperatives, and government programs. Understanding your options is key to finding the right type of business funding.

In this article, we’ll break down the different types of loans available to SMEs in Nigeria, so business owners can make informed financial decisions.

2.     Why Access to Credit Matters for SMEs

Access to credit is essential for SME growth. Loans provide the capital needed for: - Buying equipment or inventory - Hiring staff - Expanding operations - Managing short-term cash flow challenges

Without proper funding, even profitable SMEs can struggle to scale. That’s why understanding SME loan options in Nigeria is critical for every entrepreneur.

3.     Types of Loans Available to SMEs in Nigeria

3.1 Commercial Bank Loans

Commercial banks such as Zenith Bank, GTBank, and Access Bank provide business loans to SMEs. These include: - Term loans – repaid over a set period. - Working capital loans – short-term funding for daily operations. - Overdrafts – allowing withdrawals beyond account balance.

Pros: Reliable, larger sums available. Cons: Requires collateral; interest rates may be high.

Keywords: commercial bank loans for SMEs, business loans Nigeria

 

 

3.2 Microfinance Bank Loans

Microfinance banks like LAPO, AB Microfinance, and Addosser specialize in lending to small businesses that may not qualify for commercial bank loans. They offer: - Individual loans - Group loans - Asset financing

Pros: Easier access, minimal documentation. Cons: Loan amounts are smaller; interest rates can be higher than commercial banks.

Keywords: microfinance loans for SMEs, small business funding Nigeria

3.3 Government Intervention Loans

The Nigerian government supports SMEs through initiatives such as: - CBN Targeted Credit Facility (TCF) – for businesses affected by economic challenges. - Bank of Industry (BOI) SME loans – for expansion and equipment purchase. - NIRSAL loans – targeting agriculture, trade, and small-scale manufacturing.

Pros: Lower interest rates, longer repayment periods. Cons: Stringent eligibility and longer processing times.

Keywords: CBN SME loans, government SME funding Nigeria

3.4 Cooperative Society Loans

Many SMEs belong to cooperatives that provide loans to members at low interest.

Pros: Flexible repayment, community support. Cons: Limited loan amounts based on cooperative funds.

Keywords: cooperative loans for SMEs, small business cooperative funding

3.5 Fintech and Digital Lending Platforms

Platforms like FairMoney, Carbon, Branch, and Moniepoint provide instant loans using online and mobile platforms. They analyze transaction history to approve loans quickly.

Pros: Fast approval, minimal paperwork. Cons: Higher interest rates, shorter repayment periods.

Keywords: digital SME loans Nigeria, fintech loans for SMEs

3.6 Trade Credit and Supplier Financing

Some suppliers allow businesses to buy now and pay later, providing informal credit for inventory.

Pros: No interest; strengthens supplier relationships. Cons: Only available with trusted suppliers; limited amounts.

Keywords: trade credit for SMEs, supplier financing Nigeria

3.7 Equipment and Asset Financing

Loans for acquiring machinery, vehicles, or technology. The asset itself serves as collateral.

Pros: Reduces upfront capital pressure. Cons: Risk of repossession if payments default.

Keywords: equipment financing for SMEs, asset financing Nigeria

3.8 Overdrafts and Credit Lines

Banks offer overdrafts and revolving credit lines to cover urgent payments or short-term cash flow gaps.

Pros: Flexible, reusable. Cons: Requires good banking history and steady cash flow.

Keywords: SME overdraft Nigeria, revolving credit for SMEs

4.     Tips for Accessing SME Loans Successfully

·        Prepare a clear business plan – show how funds will be used and repaid.

·        Maintain accurate financial records – lenders prefer organized data.

·        Build a good credit history – timely repayment of previous loans matters.

·        Register your business – formal businesses have better chances.

·        Compare loan terms – check interest rates, repayment schedules, and collateral requirements.

Keywords: tips for getting SME loans, successful SME funding Nigeria

5.     Conclusion

Access to SME loans in Nigeria is growing, with options ranging from commercial banks and government programs to microfinance institutions and fintech platforms.

The key to successful borrowing is understanding your business needs, comparing loan options carefully, and borrowing responsibly. With the right funding, Nigerian SMEs can overcome financial challenges, expand operations, and thrive in a competitive market.

Keywords: SME financing Nigeria, business growth loans, Nigerian SME funding

PRODUCT OR SOLUTION

"A solution oriented business would win over a product focused business any day, anywhere".

Why are you going into business ?? why have you decided to venture into that space??  You could be doing so many other things but you choose this or you're thinking about it, either ways we are here now. So the question is WHY ?? 

okay let's make this a quick one, primarily everyone goes into business or any from of work for profit generally which isn't a bad thing. Technically,                 profitability = scalability,                                                                                                so it wouldn't really be a good look for a business it it isn't making profit. But if that's al you're focused on then you/your business lacks the creativity, innovation and techniques in providing long lasting "solution" for your customers. 

Generally, whatever product or service anyone is purchasing from you solves a problem for them and that's why they make such purchase, no matter what it is you're selling. so if all you care about is your pocket and not the customers, that venture maybe short-lived. 

A quick example, let's look at VIVA, they don't just sell products they've given us a solution. how?? usually for every little stain on a while or light coloured clothe we we're most likely to use jik, hypo or a non chlorine bleach, which ever the case may be, but i want to believe since they launched their products (detergents and soaps) there's necessary not been a need for the extra power when doing laundries. Their product really works their magic. sometimes just a little soak with the detergent does the trick, and if at all a little rub of the soap and little scrub everything is as good as new.

So how did they do it, they saw there was a problem in the household space when it has to do with laundry and dry-cleaning and they looked to provide a solution hence moving from the position of competitor to the competition. I mean some times before now we know our go products when it comes to laundering, but i know most of their spaces has been replaced in our homes with VIVA. They didn't just give us a product they gave a solution to our laundry needs. 

So when you're trying to sell a solution, you shouldn't be overly concerned about the product but more about the needs of those you want to meet (you can have a very good product that nobody wants) so that way you're working for them and meeting their needs and you would always remain relevant and retain value and as long as you can do that the money will keep rolling in, cause that's the end goal. (i've explained this in another article:// Startups and business models. it's right here on the blog)

so this is valentines' period and you may be wondering how you can create solutions with your products or services, simply make it about giving them memories, one they won't be forgetting anytime soon and you can put it several forms as is particular to your business. 

So at whatever stage you are in your business, you can just do a quick rethink and check if you've got it in the bag, and if not it's not to late to adjust and re-strategize.

THANK YOU FOR READING 

 STARTUPS AND BUSINESS MODELS

(an insightful look: how it works and their benefits)

"A startup is a temporary organization in search of a scalable, repeatable, profitable business model" Steve Blank. 

Just as the name implies a "startup", its just starting out. You are not yet a full business entity, you are still in your formative and developing years, testing and trying out ideas.

Essentially startups are adoptable organizations whose primary goal is to find a business model and not execute one. 

All startups face the risk of not finding customers for their product or service. To mitigate this, Steve Blank introduced the customer development method, a process that help startups to systematically search for a successful business model. It's shown in the figures below;

Fig 1: customer development sequence

Fig 2: steps explained 

But before you begin to  carryout your customer development process, you must first decide on what business model to partake in. 

So what then is a Business Model??

"A business model describes how an organization creates, delivers, and captures value in economic, social, cultural or other contexts" wikipedia. For a business, it describes the specific way in which it conducts itself, spends, and earns money in a way that generates profit.

Simply put, a business model is a representation of how an organization makes (or intends to make) money. its a company's profit making plan. it defines the products and/or services it will sell, it's target market and any expected costs.

So here are some business models you can explore as a startup;

1. PRODUCT: a tangible item of value. to run a successful product-focused business, try to produce the item for as low a cost as possible while maintaining a reasonable level of quality. once this is done, you can ensure to sell as much as you want as high as people are willing to pay for it. 

this is where the majority of people lie, we can just group them as people that provide products that essential for daily living (food, clothing, shelter, transportation e.t.c), and it doesn't necessarily have to be physical product.

2. SERVICE: a service involves offering assistance to someone for a fee. And you make money from this by providing a skill to others that they can't or won't want to do themselves. With that said, all workmen, craftsmen, working professionals, teachers and the list goes on; they all fall under this model. so you use your skill to earn your money, the more lucrative the better.

3. SHARED ASSETS: this is a resource that many people can use. such resources allow the owner to create or purchase the item once and then charge customers for its use. to run a profitable business around this model, you need to balance the tradeoff (charges) of serving as many customers as you can without affecting the overall quality of the experience. 

You can find the fitness centers here that charge membership fees for access to their gyms, also the events planners that give glam and hype to events with their array of equipment. also a fraction of the transportation sector can be inclusive here; car rentals, uber, bolt e.t.c.

4. SUBSCRIPTION: is a type of program in which a user pays a recurring fee for access to certain specified benefits. these benefits often include the recurring provision of products or services.

to have a successful subscription-based offering, build a subscriber base by providing reliable value over time while attracting new customers. some big names that have successfully utilized this model include Multi-Choice (DSTV, GoTV), Netflix, Amazon prime, YouTube, Telegram, online institutions also fall in this category. 

5. LEASE/RENTAL: this involves obtaining an asset and renting it out for an agreed-upon amount of time in exchange for a fee. you can lease virtually anything, but its in your bet interest to rent assets that are durable enough to be returned i  good condition. this ensures you can lease the good multiple times and, perhaps, eventually sell it. 

To ensure maximum profit from this kind of business model, the key is to ensure that the revenue you get from leasing the asset before it looses its value is greater than the purchase price. as far it goes the is a business model common to real estate. 

6. INSURANCE: entails the transfer of risk from a customer to a seller of an insurance policy. in exchange for the insurance company (the seller of the policy) taking on the risk of a specified event occurring, they receive periodic payments (premiums) from the policy holder.

In a sense, insurance is the sale of safety. it provides value by protecting people from unlikely but catastrophic risks.

 

7. RESELLING: is the purchasing of an asset from one seller and the subsequent sale of that assets to an end buyer at a premium price. this is the common practice for wholesales and retailers, in  any type of business. we could comfortably link this with the product model, because you have to be reselling something that is physically tangible. so you make your profits from your markups.

8. AGENCY/PROMOTION: agents create value by marketing an asset, which they don't own to an interested buyer. they then earn a fee for bringing the buyer and seller together. 

Running a successful agency requires good connections, excellent negotiation skills, and a willingness to work with diverse set of individuals. the most common we can relate with here are house agents, which falls under real estate agency. 

So before you start up your startup, you must accept that, that is what it is "a startup" and not a business. the only time it qualifies to be a business is when your formula is repeatable, scalable and profitable and you can only get that by choosing a particular business model to plug yourself in. and when all this is done then you can carry out your "customer development" process. 

This would help you maximize your business strategy and reduce the risk of an eventuality of business forclosure.

THANK YOU FOR READING THUS FAR

 

 

STRATEGY: THE FIRST-AID YOUR BUSINESS NEEDS

Every business is unique and different, and the primary aim for a business, start-up should be about proffering solutions and not just making profits. As a business man/woman never treat your business as a hustle, but rather an activity that you will be engaged in for a long time and enjoy doing, that is why you have to treat it with a sense of importance.

What then is STRATEGY? Giving the memorized definition of strategy not be really applicable here. Strategy is more than planning with the advancement of technology, it is more than consistency in internet usage and planning to prevent all that is affecting businesses, although it all completes the larger concept of what areas of a business you should plan for.

Strategy refers to a structured sequence of decision-making processes that guide business operations. It encompasses the overarching goal, aim and purpose of an enterprise, as well as its mission, plan and objectives. For instance, basically every entrepreneur wants to make money and have a successful business, STRATEGY answers the question “HOW”.

So How Do You Develop a Business Strategy?

This is done by simple goal setting and making plans to achieve those goals. Simple said, right?

Developing a business strategy doesn't get easier than that, good old fashioned sit and planning session with yourself and your team as the case maybe. As stated earlier, a business should be geared towards providing solutions and not so much toward making profit (although you should plan for that too), I say this because when you have the right offer presented to the right audience the money will surely come. That being said the best way to go about this is to find a problem, create the right product or system in meeting that need and watch the magic (it’s going to require some effort though, a lot of it probably). “Your strategy is what allows you to allocate all resources for business activities and guides your daily decisions (FateFoundation, KPMG,2020)”.

Now, let’s assume you have a business already and you want to start developing a strategy, you just have to review your initial goal of the business and your present position.

Taking football as a momentary example, Chelsea wants to play against Manchester United. Both managers of the team do their analysis; what has been the recent form of both teams lately? Then they look at their team, pick out their best players, pick a formation that suits them, they also check their form to see which players have been performing well lately. Because sometimes a team may have a good player who has not been in good shape in recent games, his performance being below average. Taking him out of the formation and selecting another player for his spot would be the best thing to do for the team. So the combined decision of the players and the formation would determine each sides playing pattern, which could be either;

(i)                 DirectPlay,

(ii)              Counterattack,

(iii)            Possession football or,

(iv)             Long ball

And this is a summation of their "STRATEGY".

So, just like the coach has decided upon his "strategy", that will determine how the match will be played by his team, so also is your "Business Strategy". It determines how you run your business. You just have to come up with a strategy that can carry the ambitions of your business, a plan that makes it competitive and profitable because every coach goes into a match to win, so you are starting a business to win.

 

THE X AND Y OF BUSINESS STRATEGY

 

In general, the business strategy can be said to contain these two factors, “Vision and Mission”. Your vision is the core purpose or the end goal for that business. Your mission on the other hand are the plans you have put in place to achieve that vision.

Generally, in choosing a strategy for your business, it has to be something that is adaptable, flexible, something that can adapt or change with trends and seasons. Nigeria as a case study, we wake up to different changes every day; issues like, change in dollar rate, new laws and policies being implemented, announcement being made and the sorts. So you need to have a strategy that can adapt, so that you don't have to keep changing business every time there's a change in the business environment, you need something flexible, and adaptable to navigate and keep up with the times. So your strategy has to be very inclusive, keep an open mind when creating a business strategy.

Finally, for existing businesses or start-ups as the case may be, even those still in the formative stage, now that you have come up with your goals and strategy, in most cases it's advisable to consult with a professional for validation and checks. The professional could be an expert in that business you've chosen or just a good business analyst, and doing this is just to be 100% sure. Statistics shows that: “90% of disruptive start-ups and about 31% of businesses fail between the first two years of existing”. This could be attributed to several reasons like:

1.      Business owners fail to plan.

2.      Setting unrealistic goals.

3.      Having high expectations without proper planning

4.      Not understanding the business environment.

5.      Business owners lack the necessary knowledge.

6.      Lack of finance, to scale the business.

Even the Bible says; "my people perish for lack of knowledge". They say; knowledge is power and information is key, so you need both to make a well informed strategy.

In conclusion, take a look at the present situation of some clubs in Europe; if a book was to be written about Barcelona it would likely be titled "The End of an Era", while Real Madrid is gradually becoming the youngest super squad in Europe (more like the TEEN-TITANS of Justice League] Paris Saint Germain having done all to stand, still can't win the Champions League, Italy is no longer been ruled by the "OLD LADIES", Bayern Munich has now become like Chelsea with the recent manager hiring and firing rate. Halland was the missing piece to Guardiola's Champions League with Manchester City, Arsenal still thinks they are a player away from winning the Premier League, and then there's Chelsea which said to itself "everything is fair in love and war" and that started a fast downward swirl, and let's not forget the “Legends”, Manchester United that obviously needs to hold a joint therapy session for both staff and players, maybe changes can come from there. In summary it is just a series of good and bad choices.

This been said, your strategy must on that is flexible and adaptable to change, ever evolving. It is said, “you can’t keep doing same thing and expect a different result”. 

 

References

Fate Foundation, & KPMG (2021). STRATEGY (The Nigerian entrepreneur’s Handbook)

Tracy, B. (2005). Something for Nothing

William, H. C. phd. (2009). How to Make it Big as a Consultant

 

 

THE FINE LINE

(THE CONSULTANT, THE PROJECT MANAGER AND THE CONTRACTOR)

August 2024

In the quest for efficiency and high productivity, people were required to carry out specific tasks, hence the term division of labour came into being. Just like you could use a hoe for digging and a shovel as well, the aim of the digging would determine the most efficient tool to use.

I am business consultant (Propeller Consults) and I will tell you this for free, as a business consultant I can provide you with a general overview of your business performance and also provide a general business strategy to guide towards improvement, but compared to a marketing/sales strategist I may not be at a 100 percent in providing workable recommendations and vice versa.

Just as the cheaper option isn't always the best when you need something to last long, multitasking isn't a great choice either if you are aiming for efficiency and improved productivity. Generally, as we all know assigning individual roles and responsibility improves productivity.

·      So, who then is a CONSULTANT? What is it that they actually do?:

 

Consultants operate in many different fields ranging from businesses to occupations. There are even consultants to help authors overcome writer's block. A consultant is simply anyone who gives advice, guidance, or prefer recommendations or perform other professional or semiprofessional services in return for compensation. This term could be alternatively used with the word “Coaching”.

 

·               Why People may need a consultant:

You may need a consultant for one or more of the following reasons, either as an individual or an organization. They are as follows;

1.       The need for personnel. To help with recruitment exercises.

2.       The need for fresh ideas. Developing and implementing campaigns.

3.       Company politics. Someone with an objective view on the situation.

4.       The need for improved sales. Developing marketing strategies.

5.       The need for capital. Fund sourcing and its implications.

6.       Government regulations. How policies may affect business operations.

7.       The need for maximum efficiency.

8.       The need to diagnose problems and find solutions.

9.       The need to train employees.

10.   The need for a complete turnaround. For organization restructuring.

11.   Computer, Internet and Data Processing.

 

·         Now over to the PROJECT MANAGER:

First off let’s talk about what a Project is; A project is a temporary endeavor undertaken to create a unique product, service or result. Unlike an operation that happens continually and has a low risk associated with it, a project happens once and has a relatively high level of risk and uncertainty.

A Project Manager is responsible for the planning, executing, monitoring, controlling, and completion of projects. And he does so by the application of knowledge, skills, tools, and techniques to meet project requirements.

Responsibilities of a Project Manager

What is a Project Manager’s specific role and duties: A Project Manager is tasked with the responsibility to;

1.      Build the plan.

2.      Assemble the team.

3.      Assign the tasks.

4.      Lead the team.

5.      Managing budget.

6.      Managing timeline.

7.      Engaging stakeholders.

8.      Handover the project.

9.      Document the process.

·         Lastly, we have THE CONTRACTOR, and what is his job:

A contractor or builder is responsible for the day-to-day oversight of a construction site, management of vendors and trades (in cases of procurement or logistics and supply), and the communication of information to all involved parties throughout the course of the project.

Legally, if you sign a contract to perform a specific job then you are what is known as a contractor. This applies to consultants too. Simply put, you have been contracred to carry out an operation or a given task.

Another name for a contractor is “Supervisor”. Generally, the client who could either be an individual or an organization appoints a contractor to handle their project, but in cases where a project manager is involved, he/she can be the middleman between the client and contractor. A project manager's service is more fluid and dynamic as opposed to contractors. They are not limited to just construction projects. There are expert project managers in various fields.

Roles And Duties of a Contractor

1.      Finding the right people to get the job done (Sourcing for labour).

2.      Taking care of materials, equipment, and any other services required for the smooth development of the project.

3.      Building permits application.

4.      Property Security.

5.      Providing (temporary) facilities on site.

6.      Taking care of generated waste.

7.      On-site generated waste.

8.      Site surveying.

9.      Site engineering.

10.  Schedule monitoring.

11.  Quality assurance.

 

References

 

William, H. C. phd (2009). How to make it big as a consultant (4^th Ed).

 

Semire, S. (2023, October 30).

     Procurement and contract management masterclass [PowerPoint slides].

https://iapmnigeria.com

 

Semire, S. (2023, November 6).

     Project management masterclass [PowerPoint slides].

https://iapmnigeria.com