Breaking News
Translate

Criteria for obtaining microfinance bank loan

By Providence Emmanuel

TO obtain credit facilities from Microfinance Banks (MfBs) in the country, applicants, prospective customers and individuals must meet certain criteria to qualify for funding to grow their businesses.

Also, it is imperative for prospective customers to have been in business for at least one year, operating from the same location for at least six months

The tenure on loans depends on the type of loan, it could range from one to three months; four to six months or four to 12 months as the case may be, even as loan repayments are made monthly except for group loans which are repaid weekly. But in recent times, the banks have devised a daily contribution initiative where some of their staff visit customers to collect specified amount depending on the amount of the loan on a daily basis for easy repayment for both market women and men.

Microfinance banks in Nigeria are financial institutions that provide  small loans to individuals or groups; entrepreneurs and organizations, access to credit facilities  for their businesses. The loans are given to be paid back in small installments with a little interest.

However, the roles of MfBs in the development and growth of a country’s economy cannot be overemphasized.

To obtain loan from Nigeria MfBs, you must follow these simple steps:

Have a genuine reason or project for the loan

MfBs will never grant loan meant for frivolities, you must have a genuine reason as to why and for what you need the loan for. It could be for business purpose  or  personal development, in as much as your purpose for applying for the loan is important. MfBs only grant loans that fall into the category of small and medium enterprises (SMEs) hence they are  also into business and no business wants to run into loss. Granting loans is a serious business, therefore, whatever you need credit facility for, must be serious business or an important project, with a guaranty that you will repay your debt.

The kind of credit facility that most MfBs grant are loans for business purposes, asset procurement, agriculture, educational purposes and loans for salary earners. No  microfinance bank will give you loan if there is no money back guaranty.

Documentation

You can further facilitate access to loan from a microfinance bank by presenting a document in respect of your  reason for applying for that loan. It could be in form of a document concerning a project you are working on, for which you need financial assistance.

For instance, if you are a contractor needing financial assistance  to complete a project for which you have been paid in part,  in which you will not be given the balance of your payment until the project is completed.

All you need to do is present the proposal for the contract, acceptance of your proposal, payment agreement and all other relevant document. This will stand as a  proof  that your purpose for applying for the loan is genuine. It will also serve as a reference.

Open an account with MfB of your choice

The first thing you will be asked to do when you go to apply for a loan in a microfinance bank is to open an account with the  bank. This is to show that you are serious and you are willing to be committed to the bank.

Service the account for a period of time

It doesn’t just stop at you opening an account with the microfinance bank, you need to actively service the account i.e paying and withdrawing money from the account constantly, before you can be qualified to apply for a loan. This  will help  them to build trust in you.  It will also assure the  bank  that you will repay the loan if it is granted.

Collateral (optional) 

You also need to present a collateral when applying for a loan, this may not apply to small business loans for petty traders and individuals, some do not require collateral, but it will be necessary for business loans that fall into the category of assets acquisition, agriculture and other loans of a larger amount.

Your collateral must equate the amount of loan you are applying for or supersede it, but it cannot be lesser in money value to the loan in question.

These processes of acquiring a loan from MfBs are peculiar to Nigeria, it may vary from country to country.

All rights reserved. This material and any other digital content on this platform may not be reproduced, published, broadcast, written or distributed in full or in part, without written permission from VANGUARD NEWS.

Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.
Do NOT follow this link or you will be banned from the site!