How To Get A Small Business Loan From A Bank Or Any Organization

Let’s talk about getting a small business loan from a bank. One of the
challenges of running and expanding a small business in Nigeria is
getting access to funds to finance the business. People usually start
their businesses with money they have saved and, sometimes,
donations or loans from friends and family. Sometimes, money from
these sources is not enough to really grow a business, and so the
business owner starts looking for other ways to finance his ventures.


Some business owners say that banks are not willing to lend money to
small businesses. This is not the case. The issue, many times, is that
business owners do not know how to organize and present their
businesses in a way that will help them get money from banks.


Here are five simple ways through which you can increase your
chances of getting a loan from a bank, and grow your business.




· Number one, you must understand why banks give out loans in the
first place. Banks give out loans because they expect to be paid back.
They will therefore only lend to a business purpose that they think is
sound. A bank will not lend you money unless you can show that bank
that you have a good business plan and that you will use the money
that you are given as your business plan says.


· The second thing is your reputation . Do you have a record of
borrowing from banks and repaying what you borrowed? Or have you
borrowed from other banks and not paid back? If you have a track
record of not paying loans you have taken or issuing cheques which
bounce, most banks will not be willing to lend you money.


· Number three; do you have a good accounting system in place for
your business? Many banks will only lend to businesses that have a
good and accurate accounting system. The accounting system must
show that the owner’s accounts and the accounts of the business are
separate. The accounting documents which banks like to see before
they lend you money for your business are the profit and loss account
of the business, the balance sheet, the cash flow statement and etc.


· Four, are you familiar with your industry? It is easier to convince a
bank to lend to you if you are able to show that you understand the
industry that you do business in and, that you understand the value
that you bring to that industry. Do you know who your major
competitions are? What do you offer that they do not or cannot? How
do you intend to win a bigger market share over time? If you can show
that you understand your competition and how to get ahead of them,
banks may consider your business a good one to support.


· Finally, be persistent. Many small business owners try just one of two
banks and then give up on their goal of getting a loan because they
have been rejected. It is important to know that banks have different
business areas in which they focus.

They also have different areas of
knowledge. Some banks prefer to lend to really big companies while
others prefer to lend to small or medium sized ones. If you really need a
loan, don’t give up after trying just one or two banks.

If you have a good business plan, keep the right accounts and find the
right bank, chances are that you will get the loan that you are looking
for to grow your business.

This has been courtesy Wema Bank as part of The Bankers Committee
Financial Literacy Public Enlightenment Programme brought to you by
The Bankers Committee, comprising all the commercial Banks in Nigeria
and the Central Bank of Nigeria, CBN.