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How to Start a Lucrative Online Loan Business in Nigeria

In this article, I will show you how to start a lucrative online loan business in Nigeria with little or no capital.

But before that, look at these numbers:

Nigeria’s consumer lending is expected to rise by 21.4% to N1.74 trillion in 2021, from N1. 42 trillion in 2020, according to a recent report by Euromonitor International. 


It is no wonder there are 876 microfinance banks and 94 finance companies licensed by the CBN to engage in financial services, as of June 2021.

Why Start an Online Loan Business?

Difference between online loan business and physical loan business

First, you need to understand the difference between the physical loan business you are accustomed to and the online loan business in Nigeria.

The main difference is that online loan businesses are conducted entirely over the internet, while physical loan businesses require customers to visit a brick-and-mortar location. 

What’s more, online loan businesses may be able to offer lower interest rates and faster approval times than traditional physical lenders, but they also typically have less flexible repayment terms. 

On the other hand, physical loan businesses may require collateral or a cosigner, but they often have more lenient credit requirements.

Now that’s clear, here are some reasons why you should consider an online loan business in Nigeria:

1. You can make a great income from online loan businesses

The potential to make good money is one of the biggest reasons why people start an online loan business in Nigeria.

With proper planning and execution, you can easily generate a six-figure annual income from your business. 

Additionally, since most of the work involved in running an online loan business can be done remotely, you have the flexibility to earn money while working from anywhere in the world.

2. There is high demand for online loans in Nigeria

In today’s economy, there is a growing demand for alternative financing options such as online loans. This is because traditional lending institutions have become increasingly strict with their lending criteria, making it difficult for many people to qualify for a bank loan. 

As a result, more and more people are turning to online lenders here in Nigeria for financial assistance. 

Guess what?

By starting an online loan business in Nigeria, you will be able to tap into this growing market and capitalize on this increasing demand.

3. You can be your own boss with an online loan business

Another great reason to start an online loan business in Nigeria is that it gives you the opportunity to be your own boss. 

You see, when you are in charge of your own business, you get to make all the important decisions regarding how it is run. 

And that includes setting your own work hours, choosing who you want to work with, and dictating the overall direction of the company. 

I mean, being your own boss comes with a lot of freedom and flexibility that many people find very appealing.

Who doesn’t want that?

4. It’s relatively easy and inexpensive to start an online loan business model

Another benefit of starting an online loan business is that it is relatively easy and inexpensive to get started. 

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Unlike traditional brick-and-mortar businesses, you won’t need to worry about leasing office space or purchasing expensive equipment. 

And thanks to the power of the internet, you can reach beyond the Nigerian borders with your loan products and services without incurring significant marketing costs.

5. You can make a difference in people’s lives with an online loan business

Finally, by starting an online loan business in Nigeria, you will be able to help other people achieve their financial goals. 

FYI, there are many individuals out there who are struggling to make ends meet and could really benefit from access to alternative financing options such as online loans. 

As a result, by starting an online loan business, you will not only be able to make a great income for yourself but also help others in the process.

Types of Loans

a). Student Loans

A student loan is a type of personal loan that helps students pay for their education. The amount borrowed must be repaid with interest.

b). Mortgage Loans

A mortgage loan is used to finance the purchase of real estate. The property serves as collateral for the debt, which means that if you default on your mortgage payments, the lender can foreclose and take ownership of the property. 

You make monthly payments over a set period of time until the entire mortgage balance is paid off—typically 15 or 30 years.

c). Auto Loans

An auto loan is financing provided by a lender to help cover the cost of purchasing a new or used vehicle. 

The loan is secured by the vehicle itself, which means that if you default on your payments, the lender can repossess and sell the car to recoup its losses. 

You make monthly payments over a set period of time until the entire loan balance is paid off—typically three to seven years.

d). Personal Loans

A personal loan is an unsecured loan that can be used for any purpose. 

Unlike a mortgage or auto loan, there are no restrictions on how you use the funds from a personal loan. 

You simply borrow an amount of money and agree to repay it with interest over a set period of time—usually days or even months.

e). Payday Loans

A payday loan is a short-term, high-interest loan that is typically due on your next payday. 

These loans are generally used to cover unexpected expenses or to tide you over until your next paycheck arrives. 

Because of the high-interest rates and fees associated with payday loans, they should only be used as a last resort.

How to Start an Online Loan Business in Nigeria

It’s time to go through how to start and grow an online loan business in Nigeria:

#1. Determine Your Business Model

When starting an online loan business in Nigeria, the first step is to determine your business model. 

As it turns out, there are two types of online loan business models: consumer lending and commercial lending.

With consumer lending, you lend money to individual consumers who need a loan for personal expenses, such as a home or car purchase. Consumer lenders usually require a credit check before approving a loan and usually charge a higher interest rate than banks.

  • Smaller, typically NGN200K or less
  • Paid off in two to four weeks

With commercial lending, you lend money to businesses that need a loan to grow or expand their operations. 

Commercial lenders typically have lower interest rates than consumer lenders and don’t require a credit check. 

However, they may require more documentation from the business borrower.

  • Include amounts from NGN350K and up
  • Have terms of 3-18 months
  • Comes with annual interest rates that range from 13% to 71%

#2. Understand State and Federal Loan Laws

Before you start an online loan business in Nigeria, it is important to understand the various state and federal laws that will apply to your business. 

Each state in Nigeria has its own regulations governing interest rates and other aspects of lending, so it’s crucial for you to research the specific laws in the states where you plan to do business. 

You will also need to obtain any necessary licenses or registrations from state or federal agencies.

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Interest rates are regulated by the government at both the federal and state levels through CBN. 

The maximum allowable interest rate in Nigeria varies by state and is often published online or in a handbook available from your state’s banking regulator. 

In addition, many states have restrictions on how much interest a lender can charge on a loan relative to the amount borrowed. Be sure to familiarize yourself with these regulations before setting your rates.

#3. Write a Business Plan

Now that you know what model to go after, and have determined the regulations, it is time to come up with an action plan.

There are many components to a successful business plan in Nigeria, but when starting an online loan business, the following is a recommended format: 

  • Executive Summary: This should be a brief overview of your business, including what it does, its target market, and what you hope to accomplish. 
  • Company Description: This section should include information about your company’s history, ownership structure, and key personnel. 
  • Products and Services: This is where you will describe your products or services in detail. Be sure to include information on pricing, target markets, and any unique selling points. 
  • Market Analysis: Here you will need to provide detailed information about your target market, including demographics and competition. 
  • Marketing and Sales Strategy: In this section, you will need to describe your plans for marketing and selling your products or services. Be sure to include information on your target market, pricing strategy, sales channels, and promotions. 
  • Operational Plan: This is where you will describe how your business will operate on a day-to-day basis. Include information on manufacturing or service delivery processes, personnel requirements, facilities needs, and any other operational details. 
  • Financial Plan: The financial plan should include detailed information on your startup costs, revenue projections, and expenses. Be sure to include information on your funding needs, as well as how you plan to use any funds raised. 
  • Appendices: The appendices should include any additional information that would be helpful in understanding your business plan, such as market research reports, resumes of key personnel, or product brochures.

#4. Find Investors or Borrow Funds

Now that you have a plan, it is time to find the funds you need to get your business up and running. 

You can either borrow money from friends or family or look for investors.

If you are looking for investors, there are a few things you need to do. 

First, create a pitch deck or use the business plan you created in step #3.. This document will outline your business idea, your target market, your financial projections, and more. 

Then, start networking with people who might be interested in investing in your business. 

Attend industry events, meetups, and webinars to connect with potential investors.

If you are borrowing money from friends or family, be sure to create a loan agreement that outlines the terms of the loan. This document should include the amount of the loan, the interest rate, when payments are due, and any other pertinent information.

#5. Obtain Tools and Services You Will Need

After you have funds for your online loan business in Nigeria, the next step is to obtain merchant services. 

This will allow you to process credit and debit card payments from customers. There are a few different companies that offer these services, so do some research to find the best option for your business.

Once you have chosen a company, you will need to provide them with some information about your business. This includes your company’s name, address, and contact information. You will also need to provide them with your bank account information so that they can deposit payments into your account.

The final step is to get a loan management system. 

A good one is Jisort System.

It is affordable and allows you to manage all of your clients’ information under one simple dashboard.

#6. Setting Up Your Website

It is about time to start setting up your website. 

This is an important step, as your website will be the face of your loan business. 

And that is why it is important to choose a platform that is easy to use and understand, such as WordPress. 

WordPress is the best platform for online loan businesses because it is easy to set up and customize, and it conforms to the General Data Protection Regulation (GDPR).

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To navigate this step, get a web developer that understands the finance industry. And be sure to explain what you need.

#7. Creating Your Loan Products

Now that you have a basic understanding of the types of loans available, it’s time to survey the market and create a loan product that meets the needs of your target market. 

To do this, you will need to research what other lenders in Nigeria are offering and how they’re marketing those products. This information will help you determine what type of loan to offer and how to price it.

Creating a loan product is only the beginning; you will also need to create an advertising strategy that will generate traffic to your website. 

#8. Marketing Your Online Loan Business in Nigeria

You can do this by creating a landing page for your loan product, writing articles about the benefits of using your product, and submitting guest posts on popular finance websites. You can also use PPC (pay-per-click) advertising to drive traffic to your website.

Go where your target audience hangs out. This could be online or in person. 

Other ideas for marketing your online loan business in Nigeria include: 

  • Using search engine optimization techniques to make sure your site appears near the top of search results,
  • Posting about your business on social media websites, and attending trade shows and other events related to lending. 

By using a variety of marketing methods, you can reach a large number of potential customers and let them know about the great services you offer.

Final Thoughts

Starting a lucrative online loan business in Nigeria is not as difficult as it may seem. 

With a little bit of research and planning, you can have your business up and running in no time. 

And with the right marketing strategy, you can attract plenty of customers who are in need of quick and easy loans. 

So what are you waiting for? 

Start your online loan business today!

Frequently Asked Questions

Q: How can I attract borrowers?

A: One of the keys to attracting borrowers is by offering a wide variety of loans. You can also offer lower interest rates than other lenders, as well as more flexible repayment terms. Additionally, it’s important that you market your business effectively so potential borrowers are aware of what you have to offer and how they can benefit from taking out one or more online loans with your company. Finally, make sure that your application process is quick and easy to complete so people don’t get frustrated and give up before they even start!

Q: How do I know if someone has bad credit?

A: There are a few ways to determine if someone has bad credit. One is by looking at their credit score, which you can obtain from one of the three major credit reporting agencies (Agusto and Co., DataPro Limited, and Global Credit Rating (GCR)). Another way to find out is by asking the borrower directly if they have any late payments or other negative marks on their record. Finally, some online lenders may perform a “soft pull” of the applicant’s credit report in order to get an idea of their history without affecting their score; however, this isn’t always accurate so it’s best to use multiple methods when determining whether or not someone has bad credit.

Q: How do private lenders make money?

A: Private lenders make money by charging interest on the loans they provide. The amount of interest charged will vary depending on the lender, but it’s typically a percentage of the total loan amount. For example, if someone takes out an NGN1000 loan with an annual percentage rate (APR) of 10%, they would owe NGN100 in interest after one year. In addition to charging interest, some private lenders may also charge fees for things like processing or origination; however, these are usually much smaller than the actual interest charges.

Q: Should I be worried about fraud?

A: Any time you’re dealing with finances online there is always a risk of fraud; however, this risk can be minimized by taking precautions such as only working with reputable lenders and never sharing your personal or financial information with anyone unless you’re absolutely sure who they are and what their intentions are. Additionally, most online lenders have security measures in place to protect both their borrowers and themselves from fraudulent activity; so as long as you do your part to stay safe then you shouldn’t have anything to worry about!

Q: Is money lending legal in Nigeria?

A: Yes. Money lending is legal in Nigeria and you can set up a money lending business without any issues from the authorities as long as your company follows relevant laws, regulations, and guidelines regarding financial institutions/services businesses. However, note that there are certain types of loans that require special licenses or permits (e.g., forex trading).

Q: How can I get a lender license in Nigeria?

A money lenders license in Abuja and in other states in Nigeria is obtained or commenced through the Court. An application will be made in the prescribed form to the Chief Magistrate within the magisterial jurisdiction where the business will be carried on with the applicant’s letterhead

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