Where to get funding for your small business

[Guide] Where to get financing for your business in Nigeria


As a popular Nigerian proverb goes “Na money them dey take pursue money”, starting a profitable venture will involve some financing. You might have that killer idea but without the finance to pursue it, it’s almost like building castles in the sky.

A friend of mine has it in mind to start a delivery business. He has done the calculations and drafted a business plan but is yet to start due to no funds.

The problem of difficulty in securing funds is a problem facing hundreds of thousands of Nigerian youths today. Obtaining finance is an uphill task but one that can be achieved.

So how can I raise finance in Nigeria for a small business?

There are not many options when it comes to getting funds for small and medium sized businesses in Nigeria. I say SMEs because the popular description of entrepreneurship in Nigeria falls in this bracket. For bigger companies, they may have other options such as venture capitalists due to their bigger structure.

For an entrepreneur, below are ways of obtaining finance in Nigeria:-

Personal savings

Perhaps, the least stressful way of financing a business in Nigeria. All that is required to fund the business is the entrepreneur’s personal savings. This may be savings from his day job or from sale of personal assets. There is no interest attached because he owns everything and bears 100% risk.

In the case of my friend mentioned above, if he had tangible savings his problem would’ve been implementation of his business plan. Now he plans on working for some time while saving up the capital for his intended business.


Family and friends

There is no harm in obtaining finance for your start up from a family or friend. As long as the person is ready to assist, such an opportunity should be grabbed with both hands. There is a great chance the loan will be interest-free. It is an easier way of obtaining finance compared with loans from financial institutions and other options talked about below. When approaching family, it is always a good idea to draw up and agreement and discuss a payment plan beforehand  to avoid problems down the line.

Commercial banks

A bank loan is an amount of money lent by a bank to a person to be paid back at a later date with interest. Bank loans can be classified into short, medium and long term.

Commercial banks in Nigeria provide loans for entrepreneurs who are able to meet certain conditions. These conditions could be having an account with the bank for at least six months, a good business plan, collateral etc. Failure to pay up the loan after a set period of time could lead to certain penalties such as seizing of collateral. For an example small business loans, see this loan offered by Stanbic IBTC bank.

Microfinance banks

Unlike commercial banks, microfinance institutions are meant to serve small business owners and entrepreneurs. They are not as big as commercial banks and nearly never have more than a branch or two. With a microfinance bank there are more friendly interest rates and less requirements. Due to their financial strength, they mostly provide small loans. I doubt one can get a loan of 10 million from a microfinance bank. For a full list of microfinance banks in Nigeria, see CBN’s list of microfinance banks.

Cooperative societies

Every business person in Nigeria is familiar with cooperative societies. A group of like-minded people can pool their resources together and help one another. The key requirement is active membership of the society, paying all dues and fulfilling all obligations. In cooperatives, members can contribute some amount of money every month and provide loans to certain members. An entrepreneur can sign up at a local cooperative then follow their guidelines on getting loans. Typically, there is little to no interest requested. Also village town hall meetings sometimes function as cooperatives providing loans to members.


Grants are non-repayable funds provided by governments/organizations to successful applicants who have gone through a screening process. Every year, millions of dollars are awarded in grant worldwide for business, research and other activities. In Nigeria, there are grants available for entrepreneurs to fund their businesses. Since applications are screened, entrepreneurs have to meet all requirements of the offering body. Grants are very competitive so there is need for an entrepreneur to bring his A-game when applying.

The Youth Enterprise with Innovation in Nigeria (YouWin) is a special business grant and mentorship programme for young business owners. Launched by ex-president Goodluck Jonathan in 2011, the scheme has gone on to provide grants for thousands of Nigerian businesses. The programme runs every year and the Buhari-led government has promised to continue with the initiative.

Other grants available to Nigerian entrepreneurs are;

The Tony Elumelu Foundation

Shell LiveWIRE

Dangote Foundation


Angel Investors

Think of a very rich man in your city. This man has decades of professional experience and/or a good amount of money. He decides to invest in and mentor a young business with potential.

That is an angel investor.

In exchange for their capital (and sometimes mentorship), angel investors usually get a stake in the business. An angel investor can also be a friend or family member making this financing source an overlap with family and friends above.

Angel investors can collaborate with one another to form what is now called ‘Angel Investor Networks’. As a group, angel investors can pool their resources to fund more businesses. Examples of angel investor networks in Nigeria is 440.ng and Lagos Angel Network (LAN).

Venture Capitalists

Venture capitalists are group of investors who invest in growing businesses with great potential. Their aim is to fast track growth in already existing businesses. Venture capitalists include groups of wealthy investors, investment banks and other financial institutions.

For the high risk with financing businesses, VC’s usually have significant say in company decisions. Like, angel investors, they also get an ownership stake in the company. From observation, venture capitalists are a bit skewed towards tech start-ups. This doesn’t mean that don’t invest outside this field. Example of venture capitalist firms in Nigeria are Henshaw Capital Partners, United Venture Capital, Adlevo Capital, and EchoVC. Outside Nigeria, there are other venture capitalist firms seeking to invest such as 500startups.


Getting finance for business involves careful planning. A well thought-out business plan is more likely to attract funding than one that’s not. Any would be investor in your business would like to know how profitable it is or how soon you plan to pay back the loan.



Have any experience getting funding for your business in Nigeria? We’ll love to hear from you


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