This blog post on ways to raise funds to start a personal business in Nigeria is a complete guide to persons looking forward to starting their own business, here you will learn the sources as well as everything you need to know about them.
The financing aspect is one of the most important issues to consider when starting a new venture. The majority of money deposit banks will not offer loans to companies that are starting up due to a large amount of risk as well as the uncertain return that they bring with these loans.
What should entrepreneurs do to get the funds needed to start a business? In this article, I’ll provide you with a few legitimate ways to raise money to start your company. They can be classified into conventional and alternative sources.
Funding from traditional sources
Traditional sources: These include self-financing, debt financing as well as family and friends’ soft loans.
If you’re a brand new business owner, your first investor in your company is you. Investors from outside will be eager to help your business when they are able to observe the progress you’ve made because of your own determination.
It is best to start small and even consider going micro depending on the amount (or less) you are able to invest in your business. Consider your business investment and pay periodic interest on the capital as it is due. doing this will allow you to remain focused to grow your business despite the odds.
2. Friends and family members
Another option for financing beyond your personal account is your family members and trusted friends.
Therefore, you must take into consideration what your family members think about your venture by soliciting them to invest in your venture.
3. Microfinance institutions
Microfinance institutions are a significant source of capital for entrepreneurs in Nigeria. This is due to the fact that they do not require the need a lengthy list of requisitions to be fulfilled before they can issue low-interest short-term loans.
Technically, once you’ve registered the process takes 3 (3) up to (4) weeks on average to obtain an unsecured loan from a microfinance lender. They typically have a variety of kinds of loans, the majority of which can be flexible in terms of size and do not require collateral.
But, while this is a low-cost option for capital to startups for the short-term, however, they are not suitable for long-term financing due to their interest rates that compound. The most common microfinance institutions in Nigeria include:
- LAPO: is One of the top institutions offering finance to millions of entrepreneurs in Nigeria. It was founded in the late 1980s. It is primarily a household business by provides micro-credit to startups as well as established companies. You can go to their website to get aware.
- GROOMING Center: Another non-governmental Organization that was established in the year 2006. The grooming center provides financial services, including micro-credit facilities and low-interest loans to traders and business owners who do not have access to conventional financing in Nigeria.
Find funding from non-traditional sources
1. Angel groups and startups incubators
Angel organizations and startups incubators seek money, for example:
- Lagos Angel Network (LAN): Lagos angel network(LAN): Lagos Angel Network is a non-profit organization created with the intention of coordinating the seed funders (“business angels”) to invest in businesses that are starting according to their site. They provide financing and mentorship for young entrepreneurs. Their website is lagosangelnetwork.net
- Accelerator program FAST
- Venture capitalist for Africa
2. Direct investors
Directly pitching to investors on TV shows such as:
- Lion’s den Like Shark tank, Lion’s den is a reality show for businesses that gives hopeful Nigerian entrepreneurs the to present their ideas for business to potential investors in five different ways called “Lion’s.
The Lions are well-known business people and women who are eager to aid in the development of the Nigerian economy by making investments in top businesses with the promise of a percentage of the ownership stake of the venture. In addition to financing, they will also become mentors and partners for the companies.
It has eight(8) rules for the den:
- Rule 1: The pitch Each entrepreneur begins by sharing their name as well as their company’s name, the company they’re pitching, how they will need to raise, and what percentage of equity they’re willing to exchange. Following this, they are given three minutes to make their pitch in depth. If the time exceeds three minutes, Dragons are entitled to interrupt the pitch of an entrepreneur.
- Rule 2. The Q&A: After the Pitch, Lions will be able to ask questions regarding the business, and entrepreneurs may decide not to provide revealing answers. But, this can impact the overall decision of the Lion. Entrepreneurs are also able to inquire about whether Lion is a good fit for their company. Lion is the right choice for their business.
- Rule 3. Opting out”: A lion can opt out of a contract by declaring that they are ‘ours when they are completed, the lion is not able to return to negotiations. After all five Lions have gone the entrepreneur has no other choice than to quit the den.
- Rule 4. Investment Entrepreneurs must obtain at least the entire amount of the funding they sought at the start, or that or he departs the den empty-handed. If a lion offered lower amounts it is possible to persuade other lions that they should invest in his venture. However, getting a bigger sum of money than what he originally asked for is permissible.
- Rule 5 Multi Lion investment: Each individual lion may invest as much (or less) as they like in a venture, but the business owner has the obligation to convince all the other Lions to invest in his venture. proposal for the venture.
- 6. Refusing to invest Entrepreneurs may reject an offer if not sure that the Lion is the best choice for their business, or the offer isn’t favorable. Rule 7: A contract The parties are to make sure that a deal is executed in accordance with their honesty. If they are unable to agree on a common understanding after subsequent meetings the parties are not bound to continue the agreement.
- Rule 8: An Advocate each entrepreneur is permitted to have an advocate. The advocate must be properly knowledgeable about the business and, in the best case, be directly engaged in the business alongside his presence in the business’s den. Advocates can assist to answer some of the questions asked by the Lions. They need to be pre-approved and screened. They must also undergo a personal check as the business owner.
The site’s official web page at .ultima.ng
3. Business grants
How to apply for a business grant:
- Tony Elumelu Foundation (TEF) Entrepreneurship program The TEF is the top charitable organization that aims to empower and train African entrepreneurs with business ideas and ideas for young owners of businesses that are less than 5 years old. In addition to providing seed funds, The program also offers mentorship and training in business management. Go to www.TEFconnect.net to submit an application.
- Youth Enterprise with Innovation in Nigeria is an initiative of the federal government of Nigeria to assist young people with business ideas that are viable and plan to expand their businesses and provide financing opportunities for those with established companies.
The YouWin application must be completed
- Age: The applicant should be between 45 years old. age.
- The Nationality requirement is that you must be Nigerian from birth.
- Place of Business: Your company should be located in Nigeria.
- Business plan: A viable business plan that has the potential of creating jobs for Nigerians.
- Candidates must have an ID card that is valid.
Visit their official website on youwin.org.ng for more details about ways to submit an application.
- Bank of Industry: The bank of the industry offers to fund different types of SMEs, startups, and even big businesses. Based on the business concept the entrepreneur can get between N500,000 and N2 million in financing. In the case of N500,000, for instance, there’s the federal government’s special intervention fund for micro, small and medium-sized enterprises. This fund was set up to offer loans subsidized for small, medium, and micro-businesses at a single-digit annual rate and interest-free. Official website: http://www.boi.org. boi. N
- Grants for AYEEN: African youth Entrepreneurship Organization is designed to build an empowered community of entrepreneurs. Their goal is to support and train millions of business owners who are young across Africa through the provision of business grants.
- African Development Fund for Women: Another source of financing for female-owned businesses. As per their official website, it states that they say that the African Women’s Development Fund “is an organization that grants money to support the realization and advancement of African women’s rights by providing independent Women’s organizations across the globe. You can make an application for a grant on their official website: Www.awdf.org
- CBN creative industry funding initiative The CBN together with the banker’s committee has created a platform for funding that is geared towards those working in the ‘creative industry. To be eligible for the program, your company must be in one or all of these four areas of fashion, information technology, film, or music-related production. The applicants who are interested should submit their applications to their banks for approval before payment. The loan will carry an annual rate of 9%(all charges included) and a certain number of years of the loan’s repayment. Go to www.cbn.gov.ng to find out more details.
4. The next big show
Next titans show an entrepreneurial reality show which gives young Nigerians innovative and creative business concepts.
As part of the competition, participants will battle each other in completing a variety of entrepreneurial tasks to be able to win. The winner takes home an award of fifteen million naira as seed money or support for a business that is already in the company.