Getting Bank loans without collateral

Getting Bank loans without collateral

Starting up a business or just wanting to expand your business? A loan might come in handy, even though many entrepreneurs and business owners know that they can get loans from their family, friends, enemies and yes, the bank. A lot of people tend to avoid going to the bank and leave them as the last option because let’s face it, the banks will be asking you for a collateral that you probably don’t have. Coupled with the fact that their interest rate are quite outrageous. SMEs are finding it somewhat difficult to access these loans especially loans without collateral.

Banks usually charge between 5-9% interest rate and more, for 1-5 years short-to-long term business loans.

In Nigeria, you can obtain bank loans from as small as ₦50, 000 to as big as ₦100 Million Naira depending on the type of your business. Recent studies have shown that there are financial establishments that are looking at giving out loans to SMEs without collateral, they are willing to offer startups, business owners and entrepreneurs certain amount of money in the form of business loans without collateral. This is an effort on the part of these banks to empower growth in the Nigerian SME subsector, by giving out loans to businesses that need them.

Here are a list of the banks that gives businesses/startups loans without collateral, in no particular order:

  • First Bank Nigeria Plc

First Bank of Nigeria provides non-collateral loans for SMEs in Nigeria. This initiative of the bank is aimed at empowering economic growth Nigeria through the SMEs. This loan is easily accessible with no limitation of location or business type.

The process is this; you will need to go through a psychometric test, pass the test and provide the bank with your business plan and your business financial projections. That will be all.


  • Heritage Bank

The bank has also built initiatives around promoting access to the market for SMEs. One of their major programs is the Youth Innovative Entrepreneurship Program (YIEDP) backed by the Central Bank of Nigeria – in recognition of its commitment to SME and Youth development.

This program is aimed at connecting the hidden entrepreneurial spirit among youths to affordable loans to help implement their business ideas. They offer short term loans.

  • Diamond Bank

The bank’s non-collateral loans are designed to stimulate growth for Micro, Small and Medium Enterprises (MSME) in Nigeria. Even though Diamond Bank Plc has about 5 SME friendly accounts that you can open and start with. If you want a loan without collaterals, you’ll have to look at the bank’s SME loan packages and choose the one that is best to you kind of business.

  • Wema Bank

WEMA has more dealings with retail businesses, the bank has built its structure around retail banking, conducting transactions with market women and SMEs. When seeking a loan, you should be armed with a sound Business Plan and a solid Repayment Plan for the loan. Wema Bank gives business loans from ₦100,000 to ₦1 million without any collateral.

Wema bank requires that you have a cooperate account with them before you are granted loans, all you need to do is to have steady transactions for 6 months in your corporate account to qualify for their loan offers.

  • Stanbic IBTC Bank

The bank’s loans are designed to help SMEs buy their business assets. However the assets only become your own when you make the last payment on the received loan. To apply for Stanbic IBTC non-collateral loan, you should be prepared to provide the bank with the following information:

  • The full names and capacities of those who will sign;
  • CV of each member of the management team;
  • The reason why you need the business finance;
  • Your business’ financial statements, including an income statement, balance sheet and cash flow statements;
  • Personal statements of assets and liabilities of all the partners, members or directors;
  • A 12-month cash flow forecast or financial projections;
  • The amount of your own contribution and the source of the funds.

Finally, before you approach any of these banks for a non-collateral loan, it would be in your best interests to first open, run and maintain an account (corporate preferred) with such a bank for a period of at least 3 to 6 months. To show willingness to give out this type of loans, banks have even put up a loan calculator on their websites – which helps interested loan applicants to calculate how much the bank would be expecting from your loan request.


About the author

Sandra Chinedu

Chinedu Sandra is an Entrepreneur within the I.C.T space and loves blogging. She is on the Honour list of GEM, a World Bank Project for start-ups in Africa.

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