There are lots of Money lending business coming up nowadays in Nigeria, especially the online loan apps and other financial loan business, have you ever ask yourself the motive behind it?
I usually tell my friends that selling money is the best business because you make more profit. Though, there are lots of risk involve only if you can do your homework properly before given out loan to that customer that need the loan.
The practice of money lending has evolved over time and in the modern form is seen mostly by the banks. Although banks render credit facility services to consumers, this does not make them “money lenders”
In our today’s discussion, I shall work you through what you need to consider before disbursing loan and process to get your Money Lending License!
You can also read: How to apply for First Bank Home Loan and-mortgages & requirements
How to obtain Money Lenders Licence in Nigeria ?
Before you can apply for a money lending licences you need to first register your company either as a limited liability LTD, business name or public liability company PLC.
To register a new company you need to obtain all the necessary licenses from the government, which can be done online without visiting the CAC office for registration.
1. Visit the Corporate Affairs Commission website on the following URL: http://new.cac.gov.ng/home/
2.Company Name Reservation
3.CAC1.1 Pre-Registration Form
4 Paying the Filing Fee and the Stamp duty fee
5 Document Scans (CAC1.1, MEMART, Proficiency certificate, Form of Identification for Director\s and Secretary, Stamp Duty Certificate, Evidence of CAC payment)
6.Uploading the documents mentioned above
7.Submitting the originals of these documents to a CAC office of your choosing.
How to Obtain a Moneylenders License
1.Submit an application to the Magistrate Court.
i Application letter
ii Certified Copies of the CAC Form 2 and 7 Memorandum and Articles of Association of the company Certificate of Incorporation
iii Tax and Police Clearance
iv Evidence of Maintenance of a current Bank account
Once you recieve your letter from migistrate court head up to stage two
i.Apply to the Ministry of Home Affairs and Tourism
ii.Make the payments of 10,000 Naira for the purchase of the Money Lender certificate and then Collect an invoice for a sum of 50,000 Naira from the Ministry.
The applicant shall submit the Application with the following documents
A covering letter
Tax clearance certificate
Form B and Form C from the Magistrate Court
Certificate of Incorporation
Evidence of payment of application fees.
Stage 3 – Visitation
– Inspection from the Ministry to the registered office address to investigate operations of the applying company. A successful pass of these three stages will guarantee the applying company a license permit.
Renewal of Money Lending License
Money lending Licenses issued by states has a one-year duration. The license must be renewed annually.
The requirements for the renewal of money lenders license
Application for renewal
Moneylenders ordinance (form B) from Magistrate Court
Duly completed and endorse (form C) from Chief Magistrate court
The previous license issued
Updated tax clearance
Evidence of payment of renewal fee.
Re-visitation and inspection.
What to consider Before given out loan
Before you give out loan as money lender, check the client character during your background check, fine out if the potential customer is a trouble maker, fine out if the person is a debtor
2. Give out loan to already existing business owner that must have been in business for more than one year and in a particular location for at least six months.
3. Make sure the business location is not against government restriction location like selling along the road at least the person should have a lock up shop in a good business location.
4. Ask the potential client his/her daily sales profit make sure at least 1/6 percentage of his/her daily sales or monthly sales profit will cover repayment
5.Make sure the person is the rightful owner of the business.you can carry out this findings by asking for the person nickname or popular name the client is known with then go on behalf of the client to do your proper findings. My experience as microfinance loan officer you get the best information that will help you evaluate the client.
6.Ask them for their daily, weekly, monthly expenditures like school fees, house rent, shop rent,feeding and other cost for cloths, party celebration and gift to family members.
This will help you determine if the loan amount will be reduce or increase. Work with repayment plan of 1/6 percentage of the client profit after expensive
7. Before concluding how much you will disburse to your client, ask them how much can they pay even when they go for “owanbe” celebration and party…. They will definitely tell you. Then carry out your judgement base on all this factors given.