Categories: Credit Financing

How to Start a Moneylending Business in Nigeria

Lending business is a lucrative business. The industry is booming in Nigeria and all thanks to the bad economy that makes people go for loans. Well, that is a story for another day. Lending business is one of the best businesses you can think of in Nigeria though it requires a lot of capital and if you get the process right, you will be smiling at your bank statement every month.

There are many people that would love to borrow money to finance their business or even get an advance payday loan. But it is hard to get such funding from banks. They should worry not. There are few registered loan companies that can fill this gap.

If you can set up a lending business that is buoyant enough to give loans to people, you will have individuals and businesses at your company’s doorstep every day. What I’m insinuating is that if you can make your business online you will make money.

Niches in the loan business

There are many niches in loan industry, depending on your ability and the amount of capital. Below are this niche

Payday loan

This loan is for individuals who need loans to settle some bills before their salary will come in. This niche is very good and about 85% of people who take payday loans do pay back. But the amount of loan requested here is small and therefore the profit is also small.

Business loan

This niche requires a lot of capital. If you don’t have much capital do not go into this niche. Also, you will be dealing with businesses so you need a legal practitioner at your side. Business loan profit is much but it is also full of risk. Businesses can fail at any time in Nigeria. So, know very well what you are dealing with before you go into it.

Property loan

Here you can offer a property to people such that they will pay the money back in instalments. This is what “Easy Buy” is all about. You pay for the product and give it to the customer who will pay half and pay the remaining one later. It is also full of risk but it is very profitable if done well.

How to Start a Lending Business in Nigeria

Since you already know the niche you want to venture into, the next is to start your business

Gather knowledge

You need to gather knowledge before you embark on this business, look for people that are making money with this business, and learn one or two things from them.

You need to know how to gather staff and what amount of money you should give out to the borrowers. There are times in the economy when you should not give out money, if you do you will not get your principal back not to talk of the return or profit.

Feasibility study

Since you will be going into to online loan industry you don’t need to go to any location survey. Your feasibility should be done online. Get data and check the numbers of potential customers.

Contact five or ten of them and ask them various questions about the loan industry, they will tell you what they are looking for in a loan company make sure you write it down. You can also create a survey that will ask questions further.

To know the backend of the business, go to your competitor and disguise as a customer, you will see different parts of the loan company that you can improve on.

Look for capital

In the loan business, you need a lot of capital before you can make a profit. I’m talking of millions of naira. You can look for Investor or ask family members. Do not use a bank loan as capital it is very dangerous if there a mistake comes up.

You can also take money from your savings. Whatever option you take make sure it will not affect your business in the long run.

Write business plan

The best thing to do is to write your business plan, when do you want to break even, write it down and how you will do this.

A business plan is very crucial for your business, it is what you will show Investors when you need funds. You can give it to a professional to help you out.

Register your business

You need to register your business name with the Corporate Affairs Commission (CAC). It is not hard, you can do it on your own and if you think it is hard, you can go ahead and hire a professional. Business registration is part of the requirements to receive a license.

Open your office

Your office location is not a problem if you are targeting online customers but if it is offline, you need to set up your business in a buzzing environment where people will be able to see your business.

Obtain a license

This is where the problem lies, you need to obtain a license from a Magistrate court. Go to any Magistrate court in your area with the below document

  • Certificate of Incorporation
  • Application letter
  • Certificate of incorporation
  • Tax and police clearance
  • Memorandum and articles of association of your company
  • Evidence of maintenance of a current bank account
  • Certified copies of the CAC form 2 and 7

That is not all. You need to go to the Ministry of Home Affairs and Tourism and register with the documents below:

Form B and Form C from the Magistrate court

  • Evidence of payment of application fees
  • Certificate of incorporation
  • A police report from the commissioner of police
  • PAYE certificate
  • A 3-year income tax clearance certificate
  • You will pay between ₦10,000 to ₦20,000 to obtain money lender certificate

After this, an agent from this ministry will come to your office for a proper inspection. Yes, you need to set everything in place before you will go for a license.

What they will check during the inspection are your environment, workers, and some records.
You see, you must have set up your business before you should request for a license.


When getting staff, go for quality. Interview as many as possible and employ the best. The loan industry currently is plagued by poor customer service. If you can employ people that will give their best to satisfy customers your business will boom.

Let your staff be responsible when dealing with defaulters, you don’t want to be too harsh and you don’t want to be too. Gentle with them.


There is no business that does not need marketing, you need to advertise your business so that many people will be aware.

If you are doing online loans, go for an online medium, such as Facebook ads, google ads and others. You can also use video ads, it is one of the best as of now.

For offline, you need billboards, sign posts, Radio and TV ads. Offline advert is very costly, so you need to prepare for it.

Frequently Asked Questions (FAQs) and Answers

Is loan business profitable in Nigeria?

Yes, the loan business is very profitable, if done right, you will be smiling to bank every day.

How to solve the issue of defaulters

In the loan business, there will always be defaulters. So, you should be ready for it. But don’t worry too much, the number of people that will pay back their loan will make up for the defaulters.

What is the cost of starting a loan business in Nigeria?

The cost of starting a loan business is between ₦1M to ₦5M, depending on the niche you are going into.


Explained above is how to start a loan business in Nigeria. As you can see, it is very hard to start up, especially the part of obtaining the license but who says starting a business will be easy? You need to eat the frog and do the hard things.




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