How To Finance A Small Business Idea In Nigeria

How To Finance A Small Business Idea In Nigeria

When we use the phrase “small business” it doesn’t mean the capital is going to come that easy. For many business owners, finding the capital to or raising capital for establishing a business is the hardest part of it all. Don’t think it’s a normal thing. Nope. Financing a business no matter how small the business is, is very important and vital as far as other aspect of the business is. One of the reasons why so many business starters find it so difficult to get is because they don’t know the various options to explore in other to financially established their dream businesses.

There is this generic inbuilt knowledge about business financing. When we hear about business financing, we jump into thinking of getting loans for it whereas there numerous options that are far safer to explore. This is what this publication is all about. We have decided to bring to you options on How To Finance A Small Business Idea In Nigeria. Believe me, you will be thrilled at what you will be reading. Do all you can to take note and take actions. And please don’t forget to contribute to it should in case you have other options not listed here. You can do that via the comment box or email us at

1. Small Business Loan

Many people are not aware of this scheme and that’s the reason they haven’t taken adequate advantage of it. Whereas for those who knows about it, they still can’t get it because of some reasons that have to do with knowledge and proper credit facilities etc. In Nigeria, there are allot of government assisted loans that are available for small business starters, we have banks loans, FINTECH company loans and some new generational loan houses like Palm credit, Soko loans, Etc. These loans houses do offer small soft loans for those who wants to start a small business. Let’s take a good look at an example of this government loan scheme. We have Bank of Industry (BOI). I believe most of us have heard of it. Yeah. They are responsible for giving out soft loans to starting ups. You can decide to make out time and go see them and I tell you, it will worth your time. To be able to obtain a loan from the banks or any other financial institutions as the case may be, then you have to understand all what it takes. For example, it takes a setting up of a meeting with the local banks official. It will be wise to do this with a bank you are already familiar with. My advise? Do it with the bank you are already doing business with. This will first create a nerve environment, and a trust environment. Then speak to them about your intentions regarding your loan for your small business. Remember not all banks offer loan services to their customers. Some do but they have a variety qualifications to make that happen. So when you are with them, they will tell all their requirements and procedures to obtain the loan.
So that’s basically it. When the loan is obtained, there is usually a timeframe duration for payment and you must not exceed it else you will be paying more and more interest. The time duration to pay back varies from bank to bank and it could be weeks, months or years as the case may be. You don’t walk up to a bank and immediately you get the loan. It doesn’t work that way. It’s gonna take some procedures and some time for it to be released.
But you can also take advantage of the online loan houses i mentioned earlier on like solo loan, opay, palm credit etc.

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Business Ideas In Nigeria
Business Ideas In Nigeria

2. Self-financing.

For me, this is absolutely the best. It saves you the stress of trying to pay back loans and trying to work your ass out. But it has it’s own disadvantage as well. It makes you too relax and not pushy. But it is generally said that the is the best form of financing your small business. Before you set out to open a business, it would be advised that you work for sometime and save a large chunk of it for your business. This you should explore first before setting out to venture into other options listed. One of the reasons many experts have seen this probably as one of the ways on How To Finance A Small Business Idea In Nigeria, is because of it’s financial safety. They call it the wisest thing to do. Like I told you, it has it’s own short comings and another is the fact that you will be limited to the money you have. Over here, when you start making profits, trust me, you stand alone in it and you have a total control of all aspect of the business. But remember too that, you alone still bears the risk.

3. Business Grants

Information is key inside the business world. There a whole pack of different organizations that are offering grants in form of money to early business starters and if you are not aware of it, you are on the loving side. Remember that when we talk about grants they are not loans. Nope. They are not meant to be refunded or paid back. Once given and that’s all. But you see, you ought to no which grants are available and how to get them because there are different categories of grants that are very much available. Not all grants are for business. Nope. There are some that are meant for financing small scale business and am sure that’s the category you fall into. Don’t think it’s as easy as we just explained. Nope. It may take time and process to make it happen. So patience is the key here. You have to give it your time and make a conscious effort to find the one that works for you.

4. Crowdfunding

Don’t mistake this for investors package. Nope. Raising funds via this method is simply getting many people involved. The purpose for it is that you won’t to raise the capital little by little. You don’t want to heavy task anyone so you share it among many of them. Like I said before now, they are not your investors so they shouldn’t be expecting returns. But it’s also advisable to let them know about the business too. These people should be made clear who they are. They are not shareholders as the case may be. Now, this is what they are ought to get from the business. Remember without them there wouldn’t have been a y business. So on your part, you owe them gifts that may come in for the product that you plan to sell or having a meeting with the business owner. There is actually no hard felt risk in this method of funding because you are totally under complete control and all profits are yours and yours alone which also includes the fact that should in case anything happens to rhe business negatively, you are not under pressure or obligation to repay anyone anything. Like I said before, there is a downside to this and that’s the fact that you alone is the risk bearer

5. Venture Capital or Angel Investors

Don’t let the name confuse you at all. It’s simply talking about investors here who provides capital for small businesses or start-ups companies. One of their criteria is that, such a business must have a promising growth potentials. You can get these from well-off investors, investment banks and any other financial institutions that are engaged in providing capital to small business start ups.
From the desk of our expert analysis, don’t get fooled by thinking that venture capital only take a monetary form but that’s  not the entire truth. They could also provide assistance via technical or managerial expertise. It should be noted that venture capitalist invests capital in return for equity, rather than running into debt, in other words, so its a loan that also involves higher risks in exchange for potentially higher returns. We have seen too often that these venture capital actually don’t like being outside the  decision making body. So sometimes they want to have a seat on the board of directors of your company.

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The other guys called Angel investors do invest in small business companies by providing capital for start-ups or for expansion of the business. They don’t just accept any form of return on investment (ROI). They are looking out for a higher rate of return on investment. These are the rate they demand for in any investment package they are going into 20 to 25 percent of their initial investment or more. So understand this first before you make your decision. Well the both are perfect options. What matters is if you can meet up with their Return on investment. They have some kind of scary requirements but in all they still want to invest so no needs getting worried at all because they will do all they can to make they invest in the business especially if it meets their standard.

6. Raise Funds From Family & Friends

This is another unique method to raise funds for your business. Yeah. It is. After all they will be the first partaker of the proceeds. We have seen many great entrepreneurs who had their capital for their business come from friends and family. That’s the truth. Now, you need to be very tactical and smart else you could jeopardize your financial future or relationships with them. Am sure you understand this. Please as you meet these people i will advise that you tell them the risk involved in your business. Because we all are aware that every business do have some form of risks and yours is not an exception. So whoever gives you cash should as well be ready to lose that cash. Now you should have a structure on ground that should enae you to no what you are actually offering these people. Is it a loan you are getting or an equity? Many experts have always preferred equity from friends and family as been the best but that doesn’t mean you should throw caution to the wind. A lawyer and a draft legal agreement will be ideal here. Don’t forget to ask tbem to invest rhe money they can lose and still don’t get bordered and moved.

What we have shared with you are priceless. Though there are other methods to get finance for your business but what we shared with you for us as experts have stood the test of time. One major factor to look out for as you try to explore on How To Finance A Small Business Idea In Nigeria is put into full consideration the nature and size of your business. This is a must before you set out to explore How To Finance A Small Business Idea In Nigeria methods we have shared.

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