Documents to Secure Term Loans in Nigeria

Every business needs funding to consolidate and grow. Others require the money to execute contracts or purchase inventory.
To secure loans you need a strong revenue base, business longevity, proof of profit and good credit. Although there are many loan providers, bank loans are the most affordable.
A bank term loan allows borrowing a set amount upfront and interest payment. They are used to access large loans for longer terms.
The most common type of loan is line of credit. A line of credit offered to assist in a cash flow emergency. New businesses encounter problems accessing loans because of few customer, poor credit and competitors.
bank
Sources for External Finance
There are many sources for long term external finance for SMEs. You have mortgage financing, loan facilities, savings and debentures. Other strategies include hire purchase, leasing, shares and grants. Short term sources are trade credit, factoring and overdrafts.
  • mortgage financing
  • loan facilities
  • savings
  • debentures
  • hire purchase
  • leasing
  • offering shares
  • grants
  • trade credit
  • factoring
  • overdrafts
Why Businesses need Finance
There are many reasons what businesses need funds. They need financing for startup, working capital or expansion. Startup funding is sourced for advertisement, equipment or securing a premises.
Others are working capital for staff wages, equipment maintenance and supplies. Expansion involves opening more branches or adding physical structures. More reasons are debt restructuring, growth funding and starting a business.
Reasons Businesses Seek Finance
  • working capital
  • asset purchase
  • growth funding
  • start a business
  • debit restructuring
Types of Credit
There are three types of credit offered by money lenders. You have the secured lines of credit, unsecured lines of credit and short-term lines of credit.
  • secured lines of credit
  • unsecured lines of credit
  • short-term lines of credit
Types of Business Loans
Before seeking loan facilities you need to know the type of loan. There are a number of loans perfect for small medium enterprises.
You have loans for established companies, government loans and online loans. Common types of business loans are short term loans and term loans.
Short term loans are small loans serviced over a short period not exceeding 3 to18 months. Micro finance banks and alternative lenders prefer offering their clients short term loans.
Term loans a huge loans for capital projects or expansion. The facility has a set term and payback period. Other types of loans are business lines of credit, equipment loans and financing. More loan types are merchant cash advances, invoice financing and business credit cards.
  • short term loans
  • term loans
  • business lines of credit
  • equipment financing
  • merchant cash advances
  • invoice financing
  • business credit cards
Secured Term Loans
To access secure term loans your business should have an annual turnover of N500 million or less. The loan facility is especially made for capital projects, asset management and acquiring new technology.
According to First Bank Nigeria you can apply for an amount not exceeding N40 million naira. The facility is limited to 50% of last six months turn over. You also have a maximum tenor of 3 years (36 months).
Loan Features
  • Company should have an annual turnover of N500 million or less
  • Loan is made for capital projects
  • The applicant can apply for an amount not exceeding N40 million naira
  • limited to 50% of last six months turn over
  • Loan facility has a maximum tenor of 36 months
Benefits of the Loan
The loan facility aids businesses in cash flow management. The loan is paid in installments and ideal for capital projects. It offers a convenient repayment plan that accommodates quarterly or monthly payment over 36 months. You are offered competitive rates.
Accompanying Documents
To access the loan you need the following accompanying documents. You need an application letter and retail loan form.
Add a proforma invoice, current utility bills and complete company profile. Other requirements are latest audited account by a public accountant and KYC requirement to open a corporate account. You are also required to include a six 6 months bank statement.
  • application letter
  • retail loan form
  • proforma invoice
  • current utility bills
  • complete company profile
  • latest audited account
  • other KYC requirement to open a corporate account
  • a six 6 months bank statement
Document for Business Incorporation and Profile
To access loans you need to present company incorporation documents. The documents generally show business structure, assets, core business and management team.
The document should include title of assets, proof of insurance, proof of tax payment and six moths’ payment slips. Other documents are marketing plan, bill of quantity (Builders), management profile and lease agreement. There might be slight variation in documentation depending on the bank and type of loan.

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