How to get bank loans (1)

 

 by Emeka Anaeto     

Emeka Anaeto
| credits: File

This article is focusing on business loan. In future, we shall be dealing with other loans, mainly personal or consumer loans.

Getting a loan from any bank in Nigeria is not as difficult as most people think. The problem is largely that of huge communication gap (knowledge gap) between the lender and the borrower, and not really unavailability of funds or unwillingness of banks to lend.

Also, it is not all about the borrowers’ shortcomings as it has been overstretched in some quarters.

If only we note that banks have excess funds which are ready for lending and at same time they are not ready to throw away depositors’ money simply because somebody wants a loan, the borrower-lender field will become even.

Below are some of the things one must have in mind before going for a bank loan:

First, the bank has a duty to protect itself or the depositors’ funds from any loan that may go bad. Hence, it will have to examine and appraise any credit facility being requested properly, after which the request may be granted or rejected.  Some basic conditions must be met before a customer can apply for a loan in the first instance.

Opening and operating a current account for about six months (some banks have relaxed this condition for small borrowers).

• The account must be satisfactorily operated – deposits and withdrawals must be reasonably stable and regular.

• Customer must have unquestionable character and good health.

• Company’s registration details.

• Business case for the loan, rationale behind it.

• Company business plan.

• Your business financial statements including an income statement, balance sheet and cash flow statement.

• Personal statements of assets and liabilities of all the business partners, members of the Board of Directors (may not be required for small scale businesses).

• A 12-month cash flow statement of your company.

Note that a satisfactory presentation of the above does not still qualify an application for loan to be granted automatically.

Next week, we shall examine other considerations for a successful loan transaction between a bank and its customer. We shall also be examining some cobwebs in a typical bank loan transaction in Nigeria