Is Capital a Problem for Your Business? Learn How to Obtain Almost Interest Free Loans

Experience has shown that many people are willing to start one business or the other but are hindered by lack of capital. Start-up capital has been the major setback for many intending business men and women. In fact, it is the reason why poverty is still having a hold on many able bodied individuals in our society today. Almost every unemployed youth I see nowadays complain of money to start a business. They will always tell you that they can start something of their own if they can raise reasonable capital. 

Yes I agree with them. Capital actually is needed for any business idea no matter how wonderful to thrive. Capital makes the difference between idea and reality. You can have a wonderful business idea but may not have money to implement it. Without capital to back up your idea, what you are just doing is day dreaming. So I share the pains of many youths who lack capital to actualize their dreams of owning a business. 

Now, how can someone who has a viable business idea be encouraged to actualize it even if the person lacks capital? 

To answer this question, we look at the various sources of capital for businesses. One of the easiest and cheapest source of capital for businesses is grants from family. Another good source is grants from friends. Government can also help in financing business. Suppliers are another good source of financing a business. But when all the above fail, banks become the next and/or last resort. 

Look, I listed the sources of business financing above based on their cost. Grants from family, and friends are usually at no cost. Government grants may cost but very cheap. But when it comes to bank loans, it costs much more. But most times, banks are the only option for raising capital for business as they are always willing and available to give, unlike friends and family who may give one excuse or the other and government grants which is very rare and extremely difficult to access. 

So, this article will focus more on cheap and low costs loans from the banks. Our major concern will be on how and where people can access this package. Now, how can individuals easily obtain loans from banks? It is as simple as ABCD. Smart business persons started with little of their equity and depended majorly on bank loans. How they did it, and how you too can do the same is now the big question?

I know by now many of you will be asking whether the loans can be obtained without collateral. The answer is yes. Soft loans can be obtained without collateral. The highest it can cost you is just a guarantor. By just bringing somebody to guarantee you, you can get as much as N500,000 – N1,000,000 for your business start up. Now let’s go into details on how and where to obtain these loans.

I will like to start with the places where you can obtain such loans, starting from the cheapest to the costliest. I will basically discuss three different types of loan that one can get to start up a business. They are government loan, loans from Micro finance banks and the loans from commercial banks.

Government Loans

I know this will sound strange to some people. Some might ask if the government also gives loans. Yes, government gives loans to its citizens through its programmes on MSMEs. The banks such as Bank of Industries (BoI) give near free loans to serious minded business men and women. This loan can be given out as low as at 5% interest rate. You can imagine what good a 5% loan can do to your business. The percentage is almost free. But to qualify for this type of loan, the applicant will need a convincing business plan. You must be able to convince the government with your business ideas before they can approve such loan for you. Therefore, you need to learn how to write a convincing business plan if you are yet to do that.

Micro Finance Banks Loans

Another cheap type of loan is the one obtained from Micro Finance banks. This type of loan can be very easy to access and at the same time, cheap. You can get it at about 13% interest rate. At 13 percent, any good business can be profitable. Micro Finance loans do not even need collateral to be obtained. Most times they only require a guarantor from applicants. Guarantor of course is not difficult to get. They are everywhere; all you need to convince them is your character and integrity.

Commercial Banks Loans

People can as well approach commercial banks to obtain loan for their businesses. Commercial banks are ever willing to give out loans to their customers, but subject to some qualifications. To access loan there, you will need to meet some requirements. But one good thing about them is that they offer a longer term loans. Just that out of the three sources we discussed here, they have the highest rate. They can charge up to 24 to 28 percent.

Therefore, we say that capital for business start-ups should not be seen an impossible task. Anybody with a fantastic business idea should try to explore the sources of raising capital we have discussed here.


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