How to Get a Personal Loan in Nigeria Without Collateral

Raising capital for any startup in Nigeria is hard, and it is discouraging to invest in a business idea that is not easy for some entrepreneurs.

Applying for secured personal loan or even a loan without collateral is not promising to anyone too.

So, if you are looking for a business loan without collateral, you have to understand that getting a small business loan without collateral is certainly tough in today’s economy.

That’s why you find a lot of searches on the internet about “how to get a loan without collateral” and it is commonly asked by many people from all parts of the country.

When you visit a forum like Nairaland where entrepreneurs meet often to discuss about cash loan without collateral, you’ll find discussion threads talking about start up business loans, simply because their businesses are either established through a loan or personal investment.

There is no doubt that it’s difficult to find money to start a brand new business. In fact, as mentioned earlier, this is one tough hurdle you have to cross if you are a business owner and you’re trying to raise a startup capital.

There are many problems confronting entrepreneurs, though, the main one is how you can raise venture capital. If you have an excellent idea, the only thing that could hold you up putting that idea into reality is how you can finance such idea and get started with your business.

Almost everyone in business today has one story or another to tell regarding how difficult it turned out for the entrepreneurs to get capital to start their businesses.

However, there must be a proven way or the other; some people increasingly are turning it into a hurdle. Several doors could have been closed, but the reality is that you’ll find proving and simple steps on how you can get start-up capital to finance fresh idea or grow a current business.

Why People Find It Difficult To Get Loan

Inadequate preparation – most of us battle to raise money to start our business because we don’t plan ahead. A journey of a thousand miles starts with an easy step forward.

It is much easier to accomplish everything you want for those who have properly planned them, and of course executed the plan. Be wise with your spending and start saving a small portion of your income today.

Get yourself involved in different types saving option available in the banks today. You could start with CD savings before going into the actual saving account.

You don’t have to be a victim of the proverb saying we hear everyday that “a starter uses his first earnings on bread and cake”. You should be a smart spender knowing so well, that good first salary, you have earned may not last forever.

Going into an unrealistic or unconfirmed idea – Having an idea in mind does not necessarily mean it will work out and it isn’t enough. You have to put that idea at work by testing the idea’s feasibility to find out if your idea is noteworthy in today’s market.

Many have wasted a large sum of money by putting their life saving to an idea that they thought it could work after a careful evaluation, but instead of going to the business/angel investors to review the idea before showing its prospect.

Analysis of the idea to find out its potential and profitability are critical so that don’t pour your hard-earned money in a project or business that you’ll later realize that the idea is a lame duck. You should find the right statistics before you venture into any business.

No wise lender would be happy to throw his/her money into a Lagoon. Getting a business that won’t yield returns for your investors and the lenders is like throwing money into a lagoon.

Inability to convince lenders- Being a lender, your purpose is to make profit; and this is another reason why many people find it hard to get a start-up loan simply because of the lack of ability to convince the lenders about the project’s feasibility.

Even if you were involved with the well-known personnel to complete the loan application at the bank, you must convince the lender before they commit a kobo into the idea.

To convince lenders about your business idea’s viability, you must understand what the lenders are interested in and know about their interest rates.

Don’t be in a hurry to rush out of the door because your loan has been approved. Keep in mind you have to pay back the money with an interest. Read the fine prints and ask questions before signing anything regarding money.

To the majority of people who believe you can get a loan without collateral, or presenting a guarantor isn’t possible anymore. I would say congratulations to anyone you have seen offered that type of loan to get started with a business. In most cases, the commercial banks or lender often takes a huge percentage of the business profit due to high interest.

Ways to get a loan in Nigeria without collateral

AB Micro Finance – This type of financial institutions offer loans to low income earners in Nigeria. They are designed to provide loans to small businesses with low interest rates and the loans are given out without collateral.

You have to sign an agreement paper stating how and when the loans will be paid back to the bank with an interest.

Co-operative Society – If you’re a business owner, you will find out there are many cooperative societies established by companies to help members secure a loan without a collateral.

To be eligible for this type of benefits, you have to become a member. Although, not all cooperative societies are into loans without collateral, you have to do your research and find out which one provides what you’re looking for joining.

Keep in mind; you have some dues to pay bi-weekly or monthly.

Angel Investors – This is a group of individuals who are interested in a percentage of your business in order to give you a loan without collateral. They are financially okay with the purpose of helping small businesses in Nigeria to grow. Again, keep in mind you have to pay back based on the agreement between both parties. Typically, the angel investors take part in running the business in order for the business to be successful.

Federal Government – The federal government have some agencies who are interested in helping small businesses to grow by offering loans without collateral to the owners. Most of the popular agencies in Nigeria are interested in Agricultural technology.

If you’re into agriculture and other small businesses; it is easier to secure a loan from the federal government agencies without collateral. Be ready to pay back based on the agreement between both parties

Individual Revolving Loans – This is type of loans are given to any of the group members. It has been in existence for a while and it involves a group of people who contribute a certain amount of money on weekly, bi- weekly or monthly basis.

Then, at the end of the agreed period of time a large sum of money is given to one person. The distribution of the money continues that way, until it gets turn around  to all members of the scheme. It’s a form of co-operative meetings.

In Yoruba, it is known as “Osusu”, Hausa call it “Adashe” while in Igbo it is called “Utu”. This is another way you can get a loan in Nigeria without collateral.

The lists mentioned above are ways you can get a collateral free loan in Nigeria. Let us know if you know any other ways.

Do you have anything else to add to this article? Leave your comment below




  1. Condo July 4, 2017
  2. Micheal August 25, 2017
    • Damilola February 5, 2018
  3. Alex February 4, 2018

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