This guide features the laws governing loans in Nigeria.
For any business to thrive effectively, it must have enough financial strength.
Securing a loan from time to time to run a business is a prerequisite for the growth of any business.
Micro, small and medium enterprise(MSME) cannot do very well without seeking for additional funds or capital.
The bigger the business, the bigger the amount of money being managed and also the amount needed.
In this article, I will discuss on loans, money lending and laws governing loans in Nigeria. Read on as I churn out some vital information you need to know.
Who Is A Money Lender?
Commonly, a money lender is any person who gives out smaller amount of money to another person over a period of time in order to get back a larger sum at the end of the agreed period.
Some give out money by taking a collateral from the borrower. Others give out money based on the influence of the guarantor, or based on the borrower monthly earnings or current balance in the borrowers bank account.
For the sake of clarity and professionalism, a money lender is a person or an organized group of people or company who is duly registered with CAC or/and with the Central Bank or other commercial bank like First Bank, Zenith Bank, UBA etc.
They are charged with the responsibility of granting loans to people who meet up with the demand as stated. Examples include Palmcredit, Kashkash, FairMoney, Okash etc.
The interest rate on any money borrowed differs from another and from company to company.
Requirements For Being A Money Lender
For one to become a money lender in Nigeria, he should have satisfied this list.
1. He must have a company name.
2. He must be duly registered with CAC and/or other recognized federal financial institutions.
3. Certification of incorporation of the company.
4. Tax clearance.
5. Police clearance.
6. Court clearance. Etc
Why Should I Take A Loan?
A lot of MSME don’t believe in seeking for loan to boost their businesses. This is because they are scared of not being able to remit and pay for interest at the end of the duration.
Securing loan from time to time helps in business growth. Although, it is important that the borrower should have legit plans of what to do with the money borrowed and also how to pay back.
A right timing and planning with loan can drastically upgrade an SME.
Laws Of Money Lending In Nigeria
Money lending laws and regulations helps to govern the way money is being given out in Nigeria. Here are the laws and regulations governing loans in Nigeria.
1. The individual or company lending money must secure the money lending license before he can function as a money lending company.
2. He must have a functional current account with a reputable financial institution In Nigeria.
3. The individual or company should have a legitimate source of income before becoming a money lender.
4. He must adhere strictly to the acts of money lending in Nigeria issued by the magistrate court.
Money lending is a lucrative business in Nigeria but however, it requires a rigorous process and also huge capital to set up.
Businesses that wants to grow cannot do without loans be it soft loans or not.
I hope you find this article about laws governing loans in Nigeria useful.
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