If you’ve landed on this article page, you’re probably searching for a
good business idea—an idea that’s light on the pocket but heavy on
returns, promising both a fulfilling journey and potential profit.
|
How To start a lending business in
Nigeria
In today’s fast-paced economy, the demand for lending businesses
is on the rise. With an increasing number of individuals and
small businesses seeking alternative financing options, there
has never been a better time to explore how to start a lending
business. As an entrepreneur, you have the opportunity to tap
into this thriving market and create a successful business that
meets the needs of borrowers while generating consistent returns
for your investors.
The Moneylenders Law of Lagos state (as an example) states that
“a person who lends money at interest or who lends a sum of
money in consideration of a larger sum of money being repaid
shall be presumed to be a money lender until the contrary is
proved” (Moneylenders Law, 1990, sec.4). It goes on to stipulate
that any such lender MUST be licensed in order to operate as a
money lender legally. What does that mean for you, the
small-time side-hustling money lender?
When you choose to get a money-lending business registered as a
company, the share capital should not be less than N20 million.
You will also need to fully understand and adhere to all laid
down guidelines by the relevant government agencies.
How much is the Nigerian money lending licence?
In Lagos, you get an application form for ₦25,000 (Twenty-Five
thousand Naira). Thereafter, you will pay the licence fee of
₦200,000.
Who issues the money lending licence in Nigeria?
The certificate and licence are both granted by a state
government agency allowed to do so within the State you do
business.
In Abuja, the Chief Magistrate issues both the certificate and
licence.
In Lagos, after applying to the Chief Magistrate for the
Certificate. You would have to go a step further by applying to
the Ministry of Home Affairs for the Licence.
What is the importance of the money lending licence in Nigeria?
Simply put, the licence gives you a right to debt recovery and
enforcement of loan agreements.
It is also illegal to conduct a business dealing in money
lending without a state-issued licence and certificate. The
licence issued is valid for one year and renewable on its
expiration.
This depends on the scale of operation you envisage. As stated
above, get your licence and certificate in the States you intend
to operate in. You will definitely have more reach with the use
of a digital lending application.
We recommend you to register in all states if you will be using
a digital lending application.
Is the money lending business profitable in Nigeria?
Besides standing the test of time, financial institutions
involved in lending-related activities are among the most
successful companies in the world. If you are interested in this
business, please do it. Your investment will be put to good use.
As bank interest rates rise, so will the rates charged by
private money-lenders.
The high success rate is due to the constant need financial
help.
The application process doesn’t have to be a pain. Most delays
are because of the unavailability of required documents. But, if
you use the services of professionals, the process will be more
flexible.
Effective marketing is essential for the growth and success of
any lending business. Using targeted marketing strategies, you
can increase awareness about your services, attract new clients,
and generate a consistent flow of loan applications. Some
marketing techniques to consider include content marketing, paid
ads, social media posting, webinars, and much more. Networking
with industry professionals, such as, financial advisors,
accountants, is a key strategy to growing your client base.
Embracing Technology: Digital Platforms and Automation in the
Lending Industry
Technology is transforming the lending industry, and embracing
digital platforms and automation can give your business a
competitive edge. By leveraging technology, you can streamline
your operations, enhance the borrower experience, and improve
your risk management capabilities.
Some ways to incorporate technology into your lending business
include:
Online Applications and Approval: Offering online loan
applications and automated approval processes can improve the
speed and convenience of your lending process.
Digital Underwriting: Utilizing machine learning and artificial
intelligence algorithms can help you make more accurate lending
decisions and reduce the risk of default.
Payment Processing: Implementing online payment processing
systems can simplify loan repayment for borrowers and help you
manage your cash flow more efficiently.
Customer Relationship Management (CRM): Using a CRM system can
help you track borrower interactions, manage leads, and
personalize your marketing efforts.
By embracing technology, you can improve the efficiency and
effectiveness of your lending business, while also keeping pace
with the evolving needs of your clients.
Hire a Skilled Team
As your lending business grows, it’s essential to have a skilled
team in place to manage operations, sales, and customer service.
This team should include individuals with diverse skills and
expertise, such as underwriters, loan officers, and marketing
professionals.
When hiring staff, look for candidates with a proven track
record of success in the lending industry, as well as strong
communication and problem-solving skills. Offering competitive
salaries and benefits can help attract and retain top talent.
Get our Practical Training Guide on How to set up a Lending
Business in Nigeria. If you want to become a professional
Lender, you need to learn how to become one. So, if you don’t
know where to start, don’t worry. We will show you all you need
to know to become the Lender. In this guide, we provide a
step-by-step guide on how to become a Lender, We will also
discuss some tips for getting into this field and describe what
to expect from this career.
|
