5 Secrets acquiring a loan from Micro Finance Bank (part 1)

Add to: Digg | del.icio.us | Technorati | Yahoo | BlinkList | Spurl | reddit | Furl

FOR a long time, acquiring a loan has been something really dreaded by Nigerian businessmen and women, especially those new in business. This is such that many the troubles often encountered on the road to acquiring a loan has made many people to drop innovative business ideas requiring funding to thrive. But what most do not know is that the answer to this problem has been created a long time ago, but only waiting for those who can see the light to come forward and enjoy the benefits of this knowledge.
As an entrepreneur that has continually tried to acquire loans and in spite of numerous efforts to get the desired financial backing for a business project, has not been able to acquire any, why not try a new approach and check out the microfinance banks, (MFBs), which were created for all those who are just looking for funding for their growing business enterprises?

MFBs came into being as a result of the consolidation policies of the Central Bank of Nigeria (CBN) to make the country’s banks stronger financially. They were established to provide financial assistance to entrepreneurs and small salary earners among others, but have remained underused.
In spite of knowing what these banks stand for, many people are rarely able to take advantage of the loan facilities they offer, because a lot of them do not know how to go about it.
This has left this means of financial support for promising businesses unexplored since the creation of MFBs a few years back. MFB loan facilities are very suitable for business only if one is conversant with the benefits and how to acquire them.
Here are some of those things that make MFB loans entrepreneur-friendly and far better than those of their commercial counterparts in the mainstream banking sector, particularly where qualifying for loans and the benefits to be derived from them are concerned. These are facts that nobody will ever tell you.

Secret No. 1: Short Account Ownership Duration To Qualify For Loans
The first big secret of qualifying for loans at Micro Finance Banks, (MFBs) that is not often clear to most people is that, unlike the case in commercial banks, where one is expected to have been managing an account, preferably a current account, with an institution for up to about a year or more to qualify for a loan facility, of even the lowest amount of money imaginable, at MFBs, it is possible to acquire a loan after having opened an account for as little as one to three months, depending on which of the MFBs is approached.

Though MFBs usually have special accounts peculiar to each of them and therefore, often vary from one organization to another, all of them, like commercial banks, also operate savings and current account types, although ways of opening these accounts here are a little different from the regular types.
Taking into consideration the fact that their customers are basically small scale business owners, traders, farmers and so on, opening MFB accounts is quite easy. MFB accounts can be opened with as little as 500 to 1,000 naira for savings and between 1,500 and 5,000 naira for current accounts.
Secret No. 2: Low And Flexible Interest Rates On Loans
Another big secret of MFB loans is that the interest rates are often relatively low compared to what applies in mainstream commercial banks. While MFBs take as little as six to seven percent interest on loans, the case is quite different with the big-time commercial banks.
For instance, if you borrow the sum of 100,000 naira, you are expected to pay back just 6,000 to 7,000 naira extra when you are returning the money.
Although interests are usually fixed based on how much is being borrowed, a customer looking forward to taking a loan from any MFB is assured of getting something, no matter how small, with a rational interest.


Secret No. 3: Easy And Reasonable Collateral
One very interesting truth about MFB loans is that their collaterals are quite manageable. This is because MFBs only ask for collaterals that are exactly of the same worth as the amount being borrowed. Unlike in commercial banks and other financial institutions where one is expected to provide collaterals that are worth as much as is being borrowed as well as interests, MFB loans only require one to provide anything that is exactly of the same worth as that amount being borrowed or none at all.
Another secret of MFB loans’ collaterals is that one can use a bank account as collateral, especially if one already has a fixed deposit account with them. In MFBs, one can open an account with daily, weekly or monthly savings directed towards a particular period, e.g. Christmas, Easter, Ileya festival, pilgrimage and so on. This is a special account in which the money saved is only given back to the owner on the agreed date around that period.
However, if a need to borrow money for something else arises, the owner can use this account as collateral to get a loan from the bank. But if the account owner is unable to pay back the loan in the time required, the account will be taken over by the bank and the money used to replace that which was loaned out. The owner must continue saving in the account towards the period as agreed with the bank. Therefore, as an entrepreneur, one can open a special account and use it to obtain a loan.