It all begins with a great business idea!
Then you check all the pros and cons, chew on the idea for some time, review the list of your prospects, pitfalls and most importantly the figures, this is where many entrepreneurs hit the first ‘high jump’!
Having made your projections on how much would be needed to start things off and down the line (in a few years), how much profit should be rolling in. But before profit, there must be capital. For this, you clean out your savings, borrow from family and friends but you still find yourself short off the mark. You can then consider getting a loan. What you might be looking for is a start-up business loan of some sort.
A start-up business loan is the financing required to pay for the needs of a new business. It can help you cover the initial costs needed to establish your new business, including things like working capital, real estate, equipment, supplies, inventory and other overheads.
Funding new businesses are very risky for banks. So understandably, they are nervous about start-up loans. Hence, those loan applications rejected by banks are not always based on the applicants’ circumstances. Some banks and financial institutions are finding ways around these ‘anxieties’ and offering collateral-free loans to new businesses in the Small and Medium Enterprise (SME) business sector.
At FirstBank, we understand and value the role that SMEs play in economic diversification, job creation, social stability, and GDP growth and we are committed to empowering them for growth.
If a new business is assisted in setting up by providing access to financing with minimal complications, achieving the goals of productivity and profit will be easier.
Apart from commercial banks, collateral-free loans can also be accessed through government grants, funding for SMEs through institutions like the Bank of Industry (BOI) and Development Bank of Nigeria. With the explosion of FinTech’s in the financial sector, alternative lenders also provide fast funding, flexible terms and in many cases, relaxed criteria.
Accessing funds by new businesses is becoming less of an obstacle but as a new business, there are some fundamentals that should be in place to aid benefitting from collateral-free loans from banks.
You should have a business plan that outlines in detail, your business objectives and how to go about achieving its goals. A business plan lays out a written roadmap for the firm from marketing, financial, and operational standpoints.
Get your business registered and open a corporate bank account. These will ensure the venture is recognised as an entity. Even if the new business started as a side hustle or hobby, for it to grow, it should be registered by a recognized body (e.g., Corporate Affairs Commission) and show its financial savviness by having a bank account.
FirstBank has the FirstSME account to serve this purpose and aid your access to funds.
Be open to assistance and recommendations, either from mentors, bank staff or advisory services. Yes, it’s your business idea but you need people to make it come alive. Be clear on what loan you want, how you want it and for how long you want it. If you are clear on what your business idea requires to start off, you are likely not to derail as time goes by and this will increase your eligibility for funding.
Avail yourself of more information on our website www.firstbanknigeria.com or visit a branch closest to you.
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