Guides · 7 min read
What a lender wants to see before giving your business a loan
The short answer
Lenders want proof that your business makes money regularly and can repay: usually several months of records or bank statements, your ID and BVN, and often your CAC registration. Start building that proof today, months before you need the loan, and borrow only what your monthly profit can repay.
Step 1Keep at least six months of clear records
Lenders trust a business that can show its sales month after month. Start with our records guide and keep every month: sales, spending and profit. Six months of steady records is a strong start.
Step 2Pass your sales through one business account
Bank statements are often the first thing a lender checks. When your customers pay into one business account (see separating your money), your statements show your real sales. Sales scattered across personal accounts look smaller than they are.
Step 3Know your monthly profit
Work out your profit for the last few months (our profit guide shows how). It tells you, and the lender, how much you can afford to repay.
Step 4Work out what you can safely repay each month
From your monthly profit, take away what you take for yourself. Of what is left, plan to use no more than about half for repayments, so a slow month does not leave you unable to pay. Then choose a loan size and length that fits that amount.
Step 5Gather your papers
Lenders commonly ask for some or all of these: a valid ID and your NIN, your BVN, bank statements for the last six months, your CAC certificate, proof of your shop's address, and sometimes a guarantor. Ask the lender for their exact list, and put the papers in one folder or phone album.
Step 6Write what the loan is for, in a few lines
Say exactly what you will buy and how it brings money back: "₦300,000 for 20 more cartons of stock each month, which I sell out every week." A lender listens to a clear plan, and writing it helps you check the loan makes sense.
Step 7Compare the full cost, and check the lender
Ask every lender for the total you will pay back, not just the monthly payment, and compare those totals. Read what happens if you pay late. If it is a loan app, check that it is on the list of approved digital lenders on the website of the Federal Competition and Consumer Protection Commission (FCCPC) before you share your details.
An example: how much loan a fruit seller can afford
Ngozi makes about ₦120,000 profit a month and takes ₦50,000 of it for her home:
- Monthly profit₦120,000
- What she takes for herself− ₦50,000
Left in the business each month₦70,000
Using no more than half of that for repayments gives her ₦35,000 a month. A loan of ₦300,000 over 10 months with ₦45,000 in total charges means paying back ₦345,000, which is ₦34,500 a month. That fits under her ₦35,000, with room for a slow month.
Or let Clara do it
Clara can do all of this for you
Instead of rushing to gather proof when you need a loan, let Clara keep it from today. She keeps your records month after month, ready to share as a PDF or spreadsheet when a lender asks.
How much profit did I make last month?
ClaraLast month your profit was ₦120,000. Your book is ready to share as a PDF whenever a lender asks for it.
Free while Clara is in private beta. Works on any phone, even offline.
Mistakes to avoid
- Applying for a loan with no records. Start keeping them months before you need the money.
- Looking only at the monthly payment, not the total you will pay back.
- Borrowing for personal spending and repaying from the business.
- Sharing your BVN, photos or phone contacts with a loan app before checking it is approved.
Do this today
Start a folder or phone album for your loan papers, add your ID and your last bank statement, and work out last month's profit so you know what you could afford to repay.
Questions owners ask
What documents do I need for a small business loan in Nigeria?
Lenders commonly ask for a valid ID and NIN, your BVN, six months of bank statements, your CAC certificate, proof of address, and sometimes a guarantor. Each lender has its own list, so ask them.
How much loan can my small business afford?
Take your monthly profit, minus what you take for yourself. Plan to use no more than about half of what is left for repayments, so a slow month does not leave you unable to pay.
How do I know if a loan app is safe?
Check that it is on the list of approved digital lenders on the FCCPC website before sharing your details, and read the total amount you will pay back before you accept.
Or let Clara do it
Clara can do all of this for you
Instead of rushing to gather proof when you need a loan, let Clara keep it from today. She keeps your records month after month, ready to share as a PDF or spreadsheet when a lender asks.
How much profit did I make last month?
ClaraLast month your profit was ₦120,000. Your book is ready to share as a PDF whenever a lender asks for it.
Free while Clara is in private beta. Works on any phone, even offline.
