Understand Long Term Loan in Nigeria

Understand Long Term Loan in Nigeria. - Loan Forms are available in different sizes to suit different needs. Some are easy to pay and can be done in a few months, others last for years due to their huge amount. Long-term loans are the type of loans that require a long-term repayment period because we use them primarily to finance large products and investments. There are many long term loan providers in Nigeria and all of them are covered in this article.


What are the long term loans in Nigeria?

Many companies frequently have to cut capital projects that require a large capital. The project ranges from procurement of equipment to the definition of contracts with people willing to buy a property. Since these people expect to return most of the time (from their salary), the company has to take long term loans from banks to run the project. This is a clear picture of Nigeria's continuous cycle of long-term loans.


The loan is repaid in installments depending on the corporate or personal cash flow. It can be monthly, quarterly, half-yearly, or even annual. Generally, Nigeria's long-term debt can be anywhere from one to two years or more. Examples of these loans include equipment lease financing, operating vehicles, project financing, commercial mortgages, personal loans, asset financing, etc.


The structure adopted by most banks for long-term loans is that they finance a certain percentage of the total amount, while you spend the rest. It is mostly in the 70/30 ratio.

Long-Term-Loan-in-Nigeria

How to get a long term loan in Nigeria

It is not difficult to get long term loans in Nigeria. Especially if you meet the eligibility requirements. Most commercial banks offer long term loans and development banks like Bank of Industry and Bank of Africa. There are various government initiatives through commercial banks that lend business to the CBN. To get started, go to any physical branch or the official website of this financial institution.


However, most banks have general documents for long-term make-up. They are:


Application form

All loan application forms are duly recovered (this varies from bank to bank).

Proforma Invoice is approved by the suppliers of the products in your business

Company profile

Current bill

Final account verified

Account details for the last six months

Cash flow budget

Certificate of organization

Address proof

Other KYC need to open a checking account

Details of collateral, where applicable (varies from bank to bank and depends on the loan amount)

Third-Party Guarantor (may be requested with or without Coulter)


Note that different banks have different requirements. It may be more or less than the one described above. However, the above documents require a long-term loan standard in Nigeria.


What are the types of long term loans in Nigeria?

Nigeria's long-term loans generally fall into two categories. The categories are:


Long-term personal loan: This loan meets the needs of individuals. However, these are mostly available to high priced people. You can share them as follows;


Personal loan: They need this loan for personal reasons. Mostly they give these people a chance to give back because they have a job or just have cash flow.


Home loan: They give home loans to those who intend to acquire the property. The individual secures a loan with the bank, which finances a certain percentage of the value of the property purchased.


Home equipment finance: 

This loan reduces the purpose of the loan for home furnishings. It gives you a loan to pay for your equipment and withdraws it from your salary based on the prepaid payment structure. The amount you qualify for depends on your ability to pay.


Car loan: Car loan for those who want to buy a car. How much you can access depends on your ability to pay. It is basically given to them to pay salaries or employment with good cash flow


Long-term business and corporate loans: Business and corporate loans meet the needs of the business. We can divide them as follows:


Commercial mortgage

Equipment lease financing

The meaning of the project

Financing of operational vehicles

Office products/equipment means

Discount on invoice


Where can I get long term loans in Nigeria?

Getting a long-term loan in Nigeria is an easy decision. Virtually all commercial banks in the country provide long term loans. However, they can pay the maximum amount on individual loans. It basically depends on your ability to pay and sometimes the ability of the bank. Find out about the types of long-term loans to run at any commercial bank you are interested in.


As an entrepreneur, can I get a long term loan for my business?


Case Study

Getting a long-term loan for your business as a business owner means meeting eligibility requirements and keeping accurate documents to create a better image, take a look at David's case study, as businesses are expanding their reach.


David has experience in the conversion industry, where he has worked for the past decade. During this time, he has been in charge of leading departments, starting with factory workers, gaining experience in the commercial and manufacturing fields of the industry. They have seen food trends hit at certain times of the year at the lowest prices during their harvest period and move to extremely high altitudes, especially during dispersal.


David Yam discovered the disgusting prices, especially in the southern part of Nigeria where there are not so many farms. Although the prices seem reasonable, it is in the north where they were produced and you can see how cheap they are. When the locals traded sweet potatoes, there was no top producer in the south, supplying clean, high-quality yams and their finished products. He soon realized that it was his wealth and his job.


Putting in the Effort

His plan was to start a business supplying yam and its finished goods to the south and he raised capital for it. He was able to raise capital from family and friends and start a business and bargain more than that. The previous year the business had earned about N100 million, which was more than enough to get the principal back and get things done.


Over time he noticed a lack of yam flour in certain seasons of the year. It was important in the south and west of the country and they decided to enter that market. To do this, however, one has to spend on equipment to buy its production capacity to meet the demand. A businessman who appreciated his investment asked the banker the most possible way to finance this ambitious project. Although he usually favors an overdraft (N50 million), his officials advise against it, as it is a short term that usually accompanies the accompanying. It would not be wise to take out a one-year loan for an overdraft period before the profit is made and for a repayment period that exceeds the overdraft.


After careful consideration and discussion, his accountant advised him to opt for the long term. The preferred option in the recommendation was through a development agency such as the Bank of Industry (BOI) or the Bank of Africa (BOA). Although borrowing required a lot of documentation, David was able to adapt thanks to his many years of experience working at his food processing company.


Learn how to create value with loans

Over time, David produced the necessary detailed documentation, including his company's operating profit and established market share, and obtained a loan from the BOA at an annual %% optimal rate. By taking this loan, he was able to continue his business after expansion, consolidate profits, and pay off long-term off.


Imagining this scenario, David would not be able to expand his business without long-term debt. Because he must have taken an overdraft, which is about 12 months. Although he got the car in this time frame, his business will rush to repay the overdraft in this short time. As a good entrepreneur, this is a completely bad idea and probably won’t take any overdrafts. Instead, he will forget his dream of expansion and try to save it.


Conclusion

Long term loans are beneficial for both personal and business level. It verifies adequate cash flow to keep you updated and instantly acquires important assets. The maximum amount of long-term loan you have depends on your ability to repay your loan.

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