GETTING a loan from banks in Nigeria is not as difficult as most people think, especially those that have issues attempting to do so. The problem is largely that of huge communication gap (knowledge gap) between the lender and the borrower, than unavailability of loanable funds or unwillingness of banks to lend. Also it is not all about borrowers’ shortcomings as has been overstretched in some quarters.
If only we note that banks have excess funds which are ready for lending and at same time the banks’ are not ready to throw away depositors’ money simply because somebody wants loan, the borrower-lender field would become even.
Let’s examine a cross-section of a selected few for the purpose of presenting a representative case on this issue. In a future edition we shall present some practical case study of a typical Loan transaction cycle (lender-borrower relations) in Nigerian banks.
CBN Governor, Mr Godwin Emefiele
Below are some of the things one must have in mind before going for a bank loan: First, the bank has a duty to protect itself or its depositors’ funds from any loan that may go bad. Hence the bank will have to examine and appraise any credit facilities being requested properly after which the request may be granted or rejected. Some basic conditions must be met before a customer can apply for loan in the first instance
Opening and operating of current account for about six months (some banks have relaxed this condition for small borrowers recently); The account must be satisfactorily operated, i.e deposits and withdrawals must be reasonably stable and regular; Customer to have unquestionable character and good health; Company registration details.
Business Case for the loan, rationale behind it; Company Business Plan; Your business financial statements including an income statement, balance sheet and cash flow statement; Personal Statements of assets and liabilities of all the business partners, members of the Board of Directors (may not be required for small scale businesses); A 12 months cash flow statement of your company.
Note that a satisfactory presentation of all the above does not still qualify an application for loan to be granted automatically.
Next week we shall be examining other considerations for a successful loan transaction between a bank and its customer. We shall also be examining some cobwebs embedded in a typical bank loan transaction in Nigeria.