As a business owner in Nigeria, finding the right SME loan to fund your enterprise can be a daunting task, especially when you don’t have any collateral to secure the loan.
Collateral refers to any asset the lender can seize if you default on the loan repayment. This could be your property, vehicle, or any valuable item.
However, the good news is that you can still get the financing you need without collateral. Several financial institutions in Nigeria now offer business loans without collateral.
These loans are specifically designed for small and medium-sized businesses that need capital to grow but don’t have any collateral to offer.
In this article, we’ll be discussing the top 17 SME loans without collateral in Nigeria. We’ll give you an in-depth review of each loan product and what you need to know before applying. We aim to provide a comprehensive guide to help you make an informed decision and choose the loan that best suits your business needs.
So, if you’re looking for SME loans without collateral or business loans without collateral in Nigeria, you’ve come to the right place.
Keep reading to learn more about the best SME loans available to Nigerian business owners in 2023.
Understanding Collateral-Free SME Loans in Nigeria
Collateral-free SME loans do not require any collateral to be provided by the borrower. Instead, they are given based on the creditworthiness and financial history of the borrower. These loans are ideal for SMEs that do not have the assets to provide as collateral but still need financing to expand their businesses.
In Nigeria, several financial institutions offer collateral-free SME loans. These institutions include commercial banks, microfinance banks, and non-bank financial institutions. Before applying for a loan, it is important to research the different options available and compare their terms and conditions.
It is important to provide accurate and complete information about your business and its financial history when applying for a collateral-free SME loan. This includes information about your revenue, expenses, assets, and liabilities. The lender will use this information to assess your creditworthiness and determine the financing you are eligible for.
It is also important to read the terms and conditions of the loan carefully before signing the agreement. This covers the interest rate, repayment period, and any additional fees or charges related to the loan.
Ensure you understand all the terms and conditions before agreeing to the loan, and ask questions if anything is unclear.
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Importance of SME Loans
SME loans are created exclusively for small and medium-sized businesses. Banks, credit unions, and other financial institutions typically offer them and can be used for various purposes. Some common uses for SME loans include:
- Purchasing inventory or equipment
- Hiring additional staff
- Expanding operations or opening new locations
- Covering unexpected expenses
- Improving cash flow
The benefits of SME loans are numerous. For one, they provide businesses with the capital they need to grow and thrive. Without access to financing, many SMEs could not make the investments necessary to expand their operations. This could limit their ability to compete with larger firms and ultimately lead to their failure.
SME loans also offer businesses flexibility. Unlike other forms of financing, such as equity investments, SME loans do not require business owners to give up ownership or control of their company. This means that they can continue to make decisions about how to run their business without outside interference.
Another advantage of SME loans is that they can be easier to obtain than other types of financing. Many banks and financial institutions are willing to work with SMEs, even those with less-than-perfect credit histories. This is because SMEs are seen as vital to the economy and are often viewed as less risky than larger corporations.
Of course, like any financing type, SME loans come with some risks. Business owners need to be careful about taking on too much debt and always have a clear plan for how to repay the loan. However, with proper planning and management, SME loans can be an excellent way for businesses to access the capital they need to succeed.
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Top 17 SME Loans Without Collateral in Nigeria 2023
As a business owner, securing a loan is often necessary when growing your business. However, not all businesses have collateral to offer for a loan. Fortunately, several options are available for SME loans without collateral in Nigeria.
Here, we will review the best SME loans without collateral in Nigeria:
- 1. ZEDVANCE
- 2. Carbon’s SME Loans
- 3. SMEDAN Loan
- 4. Kiakia Loans
- 5. Lidya
- 6. Fast Credit SME Loan
- 7. Aella Credit
- 8. QuickCredit for Small Business
- 9. Brass
- 10. EZ cash for SMEs
- 11. Specta
- 12. Prospa
- 13. Credpal
- 14. C24 Capital
- 15. QUICKCHECK
- 16. UBA Business Loan
- 17. GTBank Business Loan
ZEDVANCE is a top-tier financial institution that offers a range of loan products to individuals and businesses in Nigeria.
Their SME loans without collateral offer up to ₦5 million in funding to help businesses grow and expand. The loan application process is simple, with a quick turnaround for approval and disbursement.
ZEDVANCE’s SME loans without collateral have flexible repayment terms of up to 18 months, making it easy for businesses to repay the loan without undue stress.
With competitive interest rates and no hidden charges, ZEDVANCE is a great option for businesses looking for a reliable lender for their SME loans.
#2. Carbon’s SME Loans
Carbon is another financial institution that offers SME loans without collateral in Nigeria. Formerly known as Paylater, Carbon is a digital lending platform that provides quick and easy access to loans without collateral. The application is fully online and takes only a few minutes to complete.
Carbon’s SME loans without collateral offer up to ₦20 million in business funding, with flexible repayment terms of up to 12 months. With competitive interest rates and no hidden fees, Carbon is a reliable and trustworthy lender for SME loans in Nigeria.
Carbon’s SME loans have fairly flexible conditions. You can apply for this loan if your firm is at least six months established and has a monthly income of at least 1 million Naira.
#3. SMEDAN Loan
SMEDAN (Small and Medium Enterprises Development Agency of Nigeria) is a government agency that supports and assists SMEs in Nigeria.
One of their programs is the SMEDAN Loan, which offers SMEs without collateral up to ₦5 million in funding.
The SMEDAN Loan has a flexible repayment plan of up to 5 years, with a low-interest rate of 9% per annum.
The application process is straightforward, and the loan is disbursed quickly, making it an excellent option for SMEs needing funding.
#4. Kiakia Loans
Kiakia loans are quick and easy to obtain, making them an excellent option for business owners needing urgent financial assistance.
The loan application process is entirely online, and you can receive a loan within hours of applying. Kiakia loans offer flexible repayment plans and competitive interest rates.
One of the major advantages of Kiakia loans is that they do not require collateral. This means you can access your business’s funding without risking any assets.
Additionally, they have a transparent and straightforward application process, making it easy for business owners to understand the terms and conditions.
Lidya is another excellent option for business owners looking for a loan without collateral. They offer loans of up to ₦50 million to SMEs in Nigeria. Lidya’s loan application process is entirely online, and they provide a quick turnaround time.
One of the unique features of Lidya is its use of technology to assess creditworthiness. They use machine learning algorithms to analyze data and make loan decisions. This allows them to offer competitive interest rates and flexible repayment plans.
Another advantage of Lidya is that it provides business advisory services to help SMEs grow and thrive. This includes access to business experts who can guide finance, marketing, and operations.
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#6. Fast Credit SME Loan
Fast Credit SME Loan is an excellent option for business owners who need a loan quickly. They offer loans of up to ₦5 million without collateral. The loan application process is straightforward, and you can receive funding within 24 hours of approval.
Fast Credit SME Loan offers competitive interest rates and flexible repayment plans. They also provide a range of loan options, including working capital loans, asset financing, and invoice discounting.
One of the unique features of Fast Credit SME Loan is its focus on customer service. They have a team of experienced loan officers who can guide you through the loan application process and answer any questions.
#7. Aella Credit
Aella Credit is a perfect choice if you are looking for a hassle-free SME loan without any collateral requirements. With a maximum loan limit of ₦2 million, this fintech startup has catered to small businesses and individuals since its inception in 2015.
Aella Credit boasts of a simple and user-friendly online application process, allowing quick access to loans with no hidden fees.
The company’s competitive interest rates range from 4% to 29%, depending on the repayment term and the borrower’s creditworthiness. Its efficient credit scoring system enables loans to be disbursed within 24 hours, making Aella Credit a go-to lender for SMEs seeking fast financing.
#8. QuickCredit for Small Business
QuickCredit for Small Business is a loan product offered by Access Bank. It’s designed for small businesses looking for quick access to funds without collateral.
The loan amount ranges from N50,000 to N500,000, and the repayment period is three to six months. The interest rate is 3.5% per month, and there’s a one-time processing fee of 1% of the loan amount.
QuickCredit for Small Business has a quick and easy application process. You can apply for the loan online, and the funds will be disbursed within 24 hours if your application is approved. Another advantage is that you don’t need collateral to access the loan.
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Brass is a mobile lending platform that offers loans without collateral to SMEs in Nigeria. The loan amount ranges from N70,000 to N250,000, and the repayment period is three to nine months. The interest rate is 2.5% to 4% monthly, depending on the loan amount and repayment period.
The brass loan application process is entirely online, and the funds are disbursed within 48 hours of approval.
Also, the interest rates are relatively low compared to other loan products, making it an attractive option for small businesses.
#10. EZ Cash for SMEs
EZ Cash for SMEs is a product of Stanbic IBTC Bank, one of Nigeria’s leading financial institutions. It is designed to provide quick and easy loan access without collateral for SMEs.
The loan product is available to SMEs that have been in operation for at least six months and are registered with the Corporate Affairs Commission (CAC) or possess a valid business registration certificate.
The application process is straightforward, and funds are disbursed within 24 hours of approval. The loan amount ranges from ₦50,000 to ₦5,000,000, with a tenor of up to 36 months.
The interest rate charged on the loan is 19.5% per annum. However, there is a one-time processing fee of 1.5% of the loan amount.
Specta is an online lending platform that provides unsecured loans to individuals and businesses in Nigeria. Sterling Bank Plc, a leading financial institution in Nigeria, owns the platform. Specta offers loans to SMEs without collateral, and the application process is entirely online.
To access a loan, SME owners must create an account on the platform and provide their personal and business information.
The platform uses an algorithm to determine the applicant’s creditworthiness and the loan amount they are eligible for. The loan amount ranges from ₦10,000 to ₦5,000,000, with a tenor of 1 to 12 months.
The interest rate on Specta loans ranges from 5% to 30% per annum, depending on the applicant’s creditworthiness. There are no hidden charges or processing fees on Specta loans, making it an attractive option for SME owners.
Prospa is a fintech company that offers unsecured loans to small business owners in Nigeria. The company’s loan process is entirely online, making it easy and convenient for business owners to apply. Prospa offers loans ranging from ₦50,000 to ₦5,000,000, with repayment terms ranging from 1 to 6 months.
Prospa has a fast approval process. Business owners can get approval for their loan in as little as 10 minutes, and the funds are disbursed within 24 hours of approval.
Prospa also offers competitive interest rates and flexible repayment options, making it an excellent choice for small business owners looking for quick and convenient funding.
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Credpal is another fintech company that offers unsecured loans to small business owners in Nigeria.
The company’s loan process is entirely online, and business owners can apply for loans ranging from ₦100,000 to ₦2,000,000. Repayment terms range from 3 to 12 months, with monthly interest rates starting from 2.5%.
Credpal has a flexible repayment option. Business owners can repay their loans weekly or monthly, making it easier to manage cash flow. Credpal also offers a fast approval process, with loan approvals typically granted within 24 hours of application.
#14. C24 Capital
C24 Capital is a top-tier fintech company in Nigeria that provides unsecured loans to SMEs. They are renowned for their fast and easy loan application process, which takes less than 24 hours.
C24 Capital’s loan options range from ₦50,000 to ₦10,000,000, with repayment periods ranging from 3 to 9 months.
Their interest rates are also competitive, with an annual percentage rate (APR) of 20%. Additionally, their loan disbursement process is seamless, with funds being credited directly to the borrower’s bank account, making them a top choice for many business owners.
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QuickCheck is another leading fintech company in Nigeria that provides unsecured loans to SMEs. They leverage technology to simplify the loan application process while ensuring borrowers receive the funds they need on time.
QuickCheck’s loan options range from ₦10,000 to ₦500,000, with repayment periods ranging from 4 to 26 weeks. Once approved, the funds are disbursed immediately to the borrower’s bank account.
One standout feature of QuickCheck is its flexible loan repayment options. Depending on their cash flow, Borrowers can repay their loans weekly or monthly. QuickCheck’s interest rates are relatively low, with an APR of 28% annually.
Their loans are affordable, and their seamless application process makes them a top choice for many business owners.
#16. UBA Business Loan
UBA is one of the leading financial institutions in Nigeria, and its SME loan offering is one of the best in the market. The UBA Business Loan requires no collateral and is designed to help SMEs fund their business operations. The loan amount ranges from ₦50,000 to ₦50 million, with a maximum tenor of 36 months.
One of the unique features of the UBA Business Loan is the competitive interest rate. The interest rate for this loan is 1.58% per month, which is significantly lower than most financial institutions in Nigeria offer.
Additionally, the application process is easy, and the loan is disbursed quickly. However, it is important to note that the loan is only available to SMEs that have been in operation for at least one year.
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#17. GTBank Business Loan
GTBank is another financial institution in Nigeria that offers SME loans without collateral. The GTBank Business Loan is designed to help SMEs meet their financial obligations without providing collateral. The loan amount ranges from ₦50,000 to ₦5 million, with a maximum tenor of 12 months.
One of the unique features of the GTBank Business Loan is the simplicity of the application process. The loan application can be completed online, and the loan is disbursed within a short period.
Additionally, the interest rate for this loan is competitive, and the repayment plan is flexible. However, it is important to note that the loan is only available to SMEs that have been in operation for at least six months.
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Factors to Consider When Seeking No-Collateral SME Loans
Choosing the best SME loan without collateral in Nigeria entails more than simply going with the first offer. However, access to financing is a common challenge for SMEs, especially those that lack collateral.
Here, we will discuss the factors to consider when seeking no-collateral SME loans.
1. Interest Rates
Interest rates are a critical factor when seeking any type of loan. SMEs should always compare interest rates from different financial institutions before settling on one.
It’s important to note that no-collateral SME loans have higher interest rates than collateralized loans. However, the interest rate shouldn’t be so high that it becomes unaffordable for the SME.
2. Loan Amount
The loan amount is another factor to consider when seeking no-collateral SME loans. SMEs must evaluate their funding needs and find financial institutions to provide the required amount.
It’s important to note that some financial institutions have a maximum loan limit for no-collateral SME loans.
3. Loan Tenure
The term loan tenure refers to the length of the loan. SMEs should opt for loan tenures that align with their business objectives.
For instance, a long-term loan tenure would be ideal if the SME seeks to finance a long-term project. However, a short-term loan tenure would be more appropriate if the SME seeks to finance short-term working capital needs.
4. Repayment Terms
Repayment terms refer to the conditions that govern loan repayment. SMEs should always evaluate repayment terms before taking up a loan.
The repayment terms should be flexible and should not place a strain on the SME’s cash flow. SMEs should also look for financial institutions that offer grace periods and flexible repayment schedules.
5. Application Process
The application process for no-collateral SME loans should be simple. SMEs should look for financial institutions that have a streamlined application process and do not require extensive documentation.
The application process should not be a barrier to accessing financing.
6. Reputation of the Financial Institution
The financial institution’s reputation is an important factor to consider when seeking no-collateral SME loans.
SMEs should look for financial institutions with a good track record of lending to SMEs without collateral. Doing due diligence and researching the financial institution before taking up a loan is important.
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How to Apply for a Business Loan Without Collateral in Nigeria
Are you an entrepreneur or a small business owner in Nigeria seeking to expand your business, but you don’t have the required collateral for a traditional business loan? Well, don’t let that stop you! In this blog post, we will guide you through how to apply for a business loan without collateral in Nigeria.
First and foremost, research financial institutions that offer collateral-free loans. These institutions include commercial banks, microfinance banks, and non-bank financial institutions like KwikCash, RenMoney, and FairMoney. However, note that their loan terms and conditions differ.
After researching these institutions, evaluate the interest rates and other fees. Ensure that they are favorable to you before selecting one. Next, prepare all the required documents. This typically includes:
- Business plan and financial projections
- Bank statements for the past six months
- Personal identification documents like a passport, driver’s license, or national ID
- Proof of income like your pay slips or tax returns
- Registration documents for your business
When you have gathered all these documents, apply for the loan. Some institutions offer online applications, while others require in-person visits. It is important to provide accurate information and comply with all requirements.
Once your application has been processed, you will be notified of your approval status. If authorized, the loan money will be deposited into your bank account. Make sure to use the funds solely for business purposes and ensure prompt loan repayment as per the agreement with the financial institution.
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Frequently Asked Questions
Who can apply for SME loans without collateral in Nigeria?
Any SME owner who meets the lender’s eligibility requirements can apply for these loans. However, the lender will consider various factors, such as the borrower’s creditworthiness, the time the business has been in operation, and its annual revenue before approving the loan.
How much can SME owners borrow without collateral?
The loan amount SME owners can borrow depends on the lender and their specific loan terms. Generally, the loan amount can range from N50,000 to N5 million, depending on the borrower’s business needs and creditworthiness.
How do SME owners repay these loans?
The repayment terms of SME loans without collateral vary from lender to lender, but most lenders offer flexible repayment plans to make the loan affordable and easy to repay. Repayments can be made weekly, bi-weekly, or monthly, depending on the terms agreed upon by the borrower and lender.
What are the risks associated with SME loans without collateral?
The risks associated with SME loans without collateral include high interest rates, stringent repayment terms, and the possibility of defaulting on the loan, damaging the borrower’s credit score and reputation. SMEs must assess their financial capacity to repay the loan before applying.
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Small and medium-sized enterprises (SMEs) are the backbone of Nigeria’s economy, providing jobs and contributing to economic growth. However, securing funding can be a significant challenge for many SMEs. That’s why the emergence of SME loans without collateral is a game-changer for Nigeria’s SMEs.
With these loans, SMEs can access the capital they need to grow their businesses without worrying about collateral. The process is fast and efficient, with minimal paperwork and flexible repayment terms.
SMEs can now take advantage of this opportunity and expand their operations, invest in new equipment, or even hire more staff. It’s an exciting time for Nigeria’s SMEs, and SME loans without collateral are vital for success.