How to Finance a Small and Medium Scale Business in Nigeria

I read recently that the richest man in my country (who is also the richest man in Africa according to Forbes magazine), Aliko Dangote will be financing his new project (An oil refinery and petrochemical plant in the southwestern part of the country) through a $3.3 billion dollar loan from 12 banks. I began to wonder how young Nigerian entrepreneurs without the securities and the&nbsp; means of getting such high profile loans will be able to finance their Small and Medium Scale business start-ups?<br />
<a href="http://www.inspirenaija.com/2013/07/10-small-scale-business-you-can-start.html" target="_blank">Sometime ago i wrote a post on business ideas one can start in Nigeria with little capital</a>. But capital is required in starting up a business no matter how small. this article is aimed at investigating how young Nigerian entrepreneurs can raise money to finance their small and medium scale businesses.<br />
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<b>Bank Loans:</b> Securing&nbsp; bank loans is not an easy deal in a country like Nigeria. Especially as a young entrepreneur trying to start something all from the scratch. Meeting the requirement for securing a loan in Nigerian banks (which are not very friendly to young businesses and SMEs) is very difficult. Though the probability that the bank will turn you down is quite high, Bank loans still remains one the major sources of finance for young business.<br />
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If eventually, the bank turns you down, please don't let it discourage you as there are other ways you can still finance that your business.<br />
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<b>Family and Friends</b>: Africa boasts of very strong extended family system. Leveraging this extended family tradition is a very good way of raising some few safe thousands of naira for your business. Family is the nucleus of the society. Your family and friends should be the very first people you must sell your business idea to. There is no way they will see you with a nice business proposal ad wont be able to raise a few bucks for you.<br />
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Charity they say begins at home. Financing your business should as a matter of fact, start from home. A good reputation on your home front will help you here.<br />
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<b>Partnership:</b> None of the global brands and businesses in the world today was started by one person. That is to show the benefit and importance of partnership. Getting someone who shares the same idea with you will make the job of financing the business easier. You and your partner will pull all your resources together and kick start the business in little or no time.<br />
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A little note of warning here. Partnership only thrives in an atmosphere of trust and respect. so when choosing a partner, be sure to choose someone who is resourceful. someone you respect and you can trust.<br />
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<b>Co-operative Societies:</b> When i was much younger, co-operatives (Isusu) is something my mother did very well. Contributing small and negligible amount of money on daily basis for some period of time, usually one year. She then uses the money to solve a particular family need.<br />
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Joining a Co-operative will definitely help you pile up a reasonable amount of money with which to start up your business.<br />
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co-operatives also exposes its members to some specialized loans and grants like that of the FADAMA project.<br />
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<b>Investors and Government</b>: Your smart and intelligent business proposal can interest an investor or an agency of government and they can end up financing your business. This looks difficult and impossible but it is true. Every business man/investor is interested in making profit. If you can convince him that your business proposal is profitable, he will definitely bankroll the business for you.<br />
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By investors, i dont mean the Dangotes and Adenugas (though they bare the biggest investors in Nigeria today). There are many successful businessmen/investors in their own rights in your vicinity that can finance your business.<br />
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Local and State governments are also a very good place to submit your business proposal. They will consider any business that will add something good and worthwhile to their constituencies<br />
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<b>Loan/Grant Schemes:</b> Once in a while, you hear of some government and private loan/grant schemes for small and medium scale enterprises. Taking advantage of such offers will certainly help in financing your business fully/partially.<br />
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Most of these schemes are not regular, so you have to be on the lookout for such schemes and apply<br />
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1 comments:

All those relatives you approached told you they would love to give you money for your new business but just don't have it right now. It's the same story over and over again, but they have expenses of their own to cover and investing in a new business is just too risky. Your new idea is a sure winner, but you have to convince everyone else of that fact.

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