4 Alternatives to the Bank of Industry for no-collateral loans

Although the Bank of Industry is a great place to access low-interest loans for your business, navigating their application requirements can be a bit challenging. But don’t worry; we’ve got your back!

We’ve put together a handy list of four fintech and government agencies that offer no-collateral loans. Plus, we’ll walk you through the requirements and application process for each loan provider.

If you haven’t read our article about how to get a loan from the Bank of Industry, you can find it here.

Now let’s start with our list of alternatives: 

Oze

Oze is an award-winning business app for small businesses to manage their finances. Using Oze, business owners can track transactions, send invoices and receipts to customers, and sell online. Alongside all these things, Oze also allows small business owners to access no-collateral business loans that have affordable interest loans so a fantastic option for accessing a business loan as their loans have affordable interest rates and no hidden fees. 

So, how does it work? You can apply for an Oze no-collateral loan in three steps:   

• Create a free account. All you need is your phone number to get started.
• Link your bank account to your Oze account.
• Record transactions for at least 30 days
• Apply for a loan (You may be asked to provide additional information like your bank or mobile money statement)

Now, let’s weigh the pros and cons:

Pros

• There are no hidden fees
• Oze partners with renowned financial institutions and banks to provide loans for businesses 
• Oze’s loan application process is quick and seamless 
• Oze’s loans have affordable interest rates as low as 3% per month

Cons

• The amount of credit you can access is linked to your business performance, which means you may not be able to access high amounts unless you use Oze often

Central Bank of Nigeria (CBN) Loans 

The Central Bank of Nigeria is in charge of controlling and implementing monetary policies in Nigeria. 

One of its main goals is to provide an economic environment that makes it easy for businesses to access the funding they need to grow their business. 

In line with this mission, the CBN has introduced several financing solutions, channelling them through its partner financial institutions (PFI), which include microfinance banks, commercial banks, development finance institutions, etc.

However, two of its standout SME loans are the Agri-Business/Small and Medium Enterprise Investment Scheme (AGSMEIS) and the Creative Industry Financing Initiative.  

The Agri-Business/Small and Medium Enterprise Investment Scheme (AGSMEIS)

The Agri-Business/Small and Medium Enterprise Investment Scheme (AGSMEIS) was created to boost agriculture and SMEs in Nigeria. 

With the AGSMEIS loan, you can: 

• Borrow up to ten million Naira with a 7-year repayment period 
• Postpone loan repayments by 18 months for the principal and 6 months for the interest 
• Enjoy a low-interest rate at 5% per annum

Wondering if your business qualifies? It might if it is a:

• Businesses that handle agricultural storage, processing, production, or logistics
• Small and medium-sized enterprises (SMEs) in the service sector are linked to manufacturing, agriculture, modular ventures, mining refineries, or local ICT projects.

The AGSMEIS loan is managed by Nirsal Microfinance Bank. To get started: 

• First, apply for training from any CBN or Nirsal Microfinance-approved Entrepreneur Development Institutes (EDI) near you.
• Next, swing by your chosen EDI to fill out an AGSMEIS loan application form.
• Fill out the form and hand it over to the EDI

If your application is approved, you will be called for an interview by CBN. 

The Creative Industry Financing Initiative

The Creative Industry Financing Initiative (CIFI) is an incredible opportunity for creative entrepreneurs to secure long-term, low-interest loans for their projects.  

These loans are specifically designed for individuals working in various creative fields like fashion, information technology (IT & student software development), movie production, and music production and distribution.

Here’s a quick breakdown of the loan details:

• If you’re in the IT business, you can access loans of up to three million Naira, with a maximum payback period of three years.
• Movie Production businesses can access loans of up to thirty million Naira,  with a maximum payback period of ten years.
• Movie Distribution ventures can access loans as high as five hundred million Naira, also with a maximum payback period of ten years

To qualify for the Creative Industry Financing Initiative, you and your business must: 

• Belong to the creative industry (fashion, music, movies, or IT)
• Be registered with the Corporate Affairs Commission
• Submit a comprehensive business proposal
• Maintain a clean Credit Bureau Report with no unpaid obligations.
• Ensure a satisfactory CRMS (Credit Risk Management System) report for owners, sponsors, and directors.

As enticing as CBN’s non-collateral loans are for small businesses, you should consider these pros and cons. 

Pros

• CBN’s low-interest rates make their loans an attractive option.
• You’ll also enjoy flexible payment terms

Cons

• CBN loans are disbursed through banks, which means some banks may include additional requirements

Small and Medium Enterprises Development Agency of Nigeria (SMEDAN)

The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) was established in 2003 through the SMEDAN Act to boost the growth of Nigeria’s MSME sector. 

SMEDAN does not directly disburse loans, however, we added it to our list because of its credit information portal.   

SMEDAN’s credit information portal is a great resource for businesses searching for affordable and accessible loans. With the portal, you can find the details you need about loans from different banks and government programs. It’s like a one-stop shop for everything related to loans.

To use the SMEDAN Credit Information Portal, simply:

• Visit the SMEDAN Credit Information Portal here 
• Select “Business loan” 
• Choose the loan purpose that aligns with your needs 
• Choose your age range  
• Choose your business age 
• Choose your business location
• Input the amount you want to borrow 
• Click Check Availability

You will receive a list of institutions that meet your criteria along with their loan details and the necessary documents you would need to apply for them. 

Now that you know how SMEDANS credit information portal works, here are some factors you may need to consider. 

Pros 

• You can easily compare loans from different financial institutions
• SMEDANs credit information portal is free to use 

Cons 

• SMEDAN doesn’t directly disburse the loan 
• The loan’s requirements depend on the financial institution offering the loan  

The Tony Elumelu Foundation Entrepreneurship Grant 

The Tony Elumelu Foundation (TEF) Entrepreneurship Grant awards lucky businesses with training, mentorship, and a $5000 grant. 

But what exactly is the Tony Elumelu Foundation (TEF) Entrepreneurship Grant? 

The TEF Grant is a 10-year, $100 million initiative created by the Tony Elumelu Foundation to discover, train, and guide 10,000 entrepreneurs from across Africa.

Since kicking off in 2015, the TEF Entrepreneurship Grant has been a game-changer for 15,847 African startups, providing them with essential training, mentorship, and much-needed funding.

You can apply for the TEF Entrepreneurship Grant if:

• You are eighteen years or older.
• You are an African with a business or business idea that can grow or make money.
• Your business isn’t older than five years.
• Your business operates in Africa

However, you can’t apply if your business falls into these categories: research institutions, faith-based organizations, value-adding trading companies, and government contractors.

Meeting all the requirements is just the first step. The TEF Entrepreneurship Grant has five key stages:

1. Application phase

2. Training  and mentorship phase

3. Business plan submission phase

4. Pitching phase

5. Seed capital phase

The first stage- the application phase- is entirely free and it kicks off every year on January 1st. To start your application, you need to: 

• Create an account on the TEF Connect portal 
• Fill out the application form. You will be asked to upload your government-registered ID and a passport photograph
•  Select the category that best describes your application  (Entrepreneur)
• Submit your application 

The secret to a successful application is to make sure you describe your business plan or idea thoroughly. Cover all the bases – from the description of your business and market to your business financials and customer acquisition plans.

If you are accepted into the program, you will be asked to submit: 

• A completed self-declaration form
• A valid form of ID
• Your bank statement from the past six months
• A statement of your current personal debts (if you have any)
• A reference from an employer, bank, and/or academic institution
• Your business bank account details (For UBA-friendly countries, it must be a UBA account).

The $5,000 grant comes your way at the end of the training and business plan submission phase, which typically spans 12 weeks. 

You’re practically guaranteed the funding if you’ve completed the training and mentorship and met the participation guidelines and objectives. 

During the grant disbursement, you’ll need to provide a few more documents:

• Your business bank account details (once again, for UBA-friendly countries, it must be a UBA account).
• Your business registration document
• Notarized documents
• Tax registration form

Before applying for The Tony Elumelu Foundation Entrepreneur Grant, you need to consider the following pros and cons:  

Pros

• It’s a grant, so no payback is required.
• You will get top-notch training and mentorship
• You will also get access to the TEF Entrepreneurship Grant alumni

Cons

You need to undergo training before you can access the grant funds. This means it may not be your best choice if your business is in urgent need of funds  

Conclusion

Obtaining loans without needing collateral and at reasonable rates may seem like a tough task, but it’s possible with government initiatives like AGSMEIS, grants like the TEF Entrepreneurship Grant, and fintechs like Oze. 

Oze is the business app you need for your business. Not only do you get access to affordable and transparent loans, you can apply for the loans with just your phone. Simply create an account with Oze to get started.