Last Updated on July 1, 2024 by admin
Microfinance Banks (MFBs)in Nigeria duly licensed by the CBN to provide loans, accept deposits, and carry out fund transfer and other related financial services to underbanked working individuals or families, entrepreneurs, and small businesses that do not have access to traditional sources for such financial services.
The microfinance market served more than 20 million borrowers and 15 million savers…Most Microfinance banks in Nigeria have higher interest rates when compared to traditional banks. The goal of microfinance was the alleviation of poverty
Read: How to apply for microfinance bank loan and list of MFB in Nigeria
The interest rate on Microfinance loans ranges from 5%-8% depending on the loan
size.Most of the loan tenure ranges from 1-3 months, 4-6 months and 4-12 months as the case may be, even as loan repayments are made monthly except for group loans which are repaid weekly
You can get as low as N50,000.00 and as high as 10 Million subject to the result of evaluation.The loan application takes 3 – 5 working days after you have submitted your documents.
What Are Microfinance Banks?
Microfinance banks are financial institutions that provide small loans to individuals or groups; entrepreneurs and organizations, and access to credit facilities for their businesses. The loans are given to be paid back in small installments with a little interest.
Most microfinance banks grant loans for business purposes, asset procurement, agriculture, educational purposes and loans for salary earners. No microfinance bank will give you a loan if there is no money back guarantee.
Some microfinance loans are made at interest rates substantially higher than average loan rates at traditional financial institutions, they provide necessary funding that is designed to help low-income or otherwise disadvantaged earners improve their economic positions.
Also read: How to apply for AB microfinance bank Various Loan application
What are the requirements to get a Microfinance bank loan?
1. To get a loan from a microfinance bank in Nigeria You must have been in business for more than one year and been at your shop for more than 6 months.
2. You must provide 2 passport photographs.
3. Mode of Identity (Driverâ??s license, Permanent voters Card or International Passport) BVN.
4. Utility bill not less than 6 months
5. A Guarantor (a business person or salary earner).
6. Collateral for SME loans.
7. Account statement and cheques for loans above 400,000.
9.Evidence of business location
ALSO READ: How to Apply for Various Accion Microfinance Bank Loan In Nigeria
Collateral/Guarantors
Most of the microfinance bank doesn’t required collateral for their loan, rather they require guarantors, The Guarantors must be financially stable either as business person or salary earner of which 35% of their earnings must cover monthly repayment Where there’s a default in repayment by the customer.
The Guarantor will be required to repay the loan amount. On the day the loan agreement is signed, the prospective customer and the guarantors are required to sign the agreement.
Documents required to serve as Guarantor
Before you can become a Guarantor in any microfinance bank in Nigeria you mut provide the following documents.
1. Guarantor must provide 2 recent passport Photographs during the loan application.
2. You must provide Copy of recent utility bill
3. Valid means of identification (National I.D card, International Passport, Driver’s License)
What is a Delinquency Fee?
This is the fee chargeable upon default by the customer. It is valued at 2% on the outstanding balance of the loan.
How do I repay a Microfinance bank loan?
1.You can make use of your Debit Card (Brighta Cash).
2. You can make transfers from correspondent (other) banks to your MfB account.
3. You can make transfers from Quick teller on ATM machines or on your mobile phone to your MfB Account.
4.You can also visit any of Agent Banking officers to deposit through POS into your MfB. account
Open an account with MfB of your choice
The first thing you will be asked to do when you go to apply for a loan in a microfinance bank is to open an account with the bank to access a loan. . This is to show that you are serious and you are willing to be committed to the bank.
