Quick Loans for Nigerian Small Businesses: The Pros and Cons

 

To ensure you are ready to apply for quick loans for Nigerian small businesses, keep reading the article to the end as we list the pros and cons of fast loans for Nigerian Small companies, plus other relevant information. 

 

Please, see here, How to Apply for Quick Loans in Nigeria: A Step-by-Step Guide

Also, see the:

Full list of approved loan apps in Nigeria

 

Before we go further to the main reason for this article, let’s point out the types of quick loans in Nigeria.

 

What are the Types of Quick Loans for Nigerian Small Businesses?

Arguably, the increasing demand for Quick loans for Nigerian small businesses is overwhelming. Since it is one of the best practices for individuals and companies to access short-term financing. This monetary aid comes without requiring lengthy and delayed application processes and collateral requirements.

There are different quick loans in Nigeria you can borrow from. They are as follows:

 

• Payday Loans
• Personal Loans
• Business Loans
• Microfinance 

 

Payday Loans

Are you looking for short-term loans that cover unexpected expenses or emergencies? Payday loans are the best option. These loans come in small amounts for easy payments. They are expected to be fully reimbursed on the borrower’s next payday.

 

Personal Loans

From the words – personal loans,  you know that they are loans for individual purposes. They are unbarred loans for education, home repairs, medical expenses, vacations, etc. These loans have elongated tailor because they are usually of a higher amount.

Business Loans

This type of loan is only for people in business. They are designed for any kind of business -big or small. The reason for this loan is to provide financial assistance to entrepreneurs who are financially incapacitated. Once they are qualified for the loan, they can use it for hiring employees, purchasing inventory, or expanding inventories.

Microfinance Loans

If you can’t access traditional banking services as an individual, go for Microfinance loans. They are designed for low-income individuals or groups in the above category. They help in growing your small business or assist in their investments.

 

The Pros and Cons of Quick Loans for Nigerian Small Businesses

Quick loans are very good for business growth. But it has both advantages and disadvantages.

 

Let’s look at them below:

 

Pros

1. Fast Approval: The reason many entrepreneurs prefer quick loans is because it has quick approval. It doesn’t take longer than hours to get it: most times, some minutes. So, any individual who needs immediate or emergency funding will quickly go for quick loans, giving you easy access to capital. This will enable you to take advantage of business opportunities, cover unexpected expenses, or manage cash flow.

 

1. Zero Collateral: Many quick loans come with no collateral and minimal requirements. For this reason, many people get comfortable with it because it is more accessible to a wide range of discrete borrowers.

 

1. Flexibility: Another advantage of obtaining quick loans in Nigeria is its flexible repayment terms. These terms are usually customized to suit the borrower’s needs. 

1. Aids Business Growth: Another advantage of obtaining quick loans for Nigerian small businesses is that it sponsors business growth. They can help you invest in marketing, expand your operations, or purchase new equipment.

1. Stress-Free: Getting a quick loan comes with reduced stress. Have you imagined owing money for a long time and watching the interest accumulate? It could affect you psychologically. The sleepless nights and excessive thinking. Getting quick loans for your business growth is soothing and stressless. 

1. Multiple Choices: Applying for quick loans for Nigerian Small Businesses comes with many choices. You can decide to borrow from fintech companies or commercial banks. However, online loan applications have become convenient for borrowers because it is fast, accessible, and have a more flexible tenor.

 

1. Minimal Interest: Quick loans in Nigeria have reduced interest. Therefore, you can save money as a side hustler or a person in business.

In simple terms, the pros of quick loans for Nigerian Small Businesses are as follows:

1. The approval pattern is easy and quick.
2. There is no collateral required.
3. It has flexible repayment terms.
4. It boosts business growth.
5. The application process is stress-free.
6. Borrowers have multiple choices.
7. It has reasonable Interest.

Cons

 

1. Default Risk: Since quick loans for Nigerian Small businesses are often issued with fewer checks on the borrower’s creditworthiness, there’s a higher risk of the company defaulting on the loan. This can lead to severe consequences. This harmful effect may include damage to the business’s credit score, legal action from the lender, and difficulty securing future funding.
2. Debt Trap: The cycle of high-interest payments can trap a debt business, another shortcoming of getting a quick loan in Nigeria. Instead of focusing on growth and investment, the company becomes stuck paying off the loan, hindering its ability to thrive.
3. Short Repayment Terms: Quick loans typically have shorter repayment terms than traditional ones. This can strain the business’s cash flow, making it challenging to meet other financial obligations.
4. Limited Use of Funds: Quick loans may not suit all business needs. The amount offered might not be enough to address the core issue the business is facing.

 

In simple terms, below are the cons of quick loans for Nigerian Small Businesses:

 

1. It has a high default risk 
2. There is a debt trap in quick loans.
3. The repayment terms are short.
4. It has limited access to funds.

 

Factors to Consider before Applying for Quick Loans for Nigerian Small businesses

Before you consider applying for quick loans for Nigerian Small businesses, there are necessary things you should consider.

 

They are as follows:

 

• Loan Amount
• Repayment Terms
• Interest Rate
• Lender Reputation
• Demanded Collateral

 

Loan Amount

The first thing you should consider before any loan application is how much you need to borrow. It is usually essential to check your buoyancy before application. After this survey, you can select the loan options that offer your desired amount. Don’t borrow loans higher than you can reimburse.

 

Repayment Terms 

Quick loans with flexible repayment terms could be advantageous, especially if they prioritize your financial situation.

 

Interest Rates and Fees

Compare interest rates and fees from different lenders to find the most affordable and suitable option for your business or side hustle.

 

Lender Reputation

Another crucial factor before opting for quick loans for Nigerian small businesses is the lender’s reputation. Ensure you select an esteemable lender that offers fair and transparent loan terms.

 

Final Thought on The Pros and Cons of Quick Loans for Nigerian Small Businesses

In a nutshell, opting for Quick loans for Nigerian small businesses is very crucial. It boosts business growth, provides quick access to business funding, and many more. However,  considering the pros and cons before deciding will help you. 

 

In this article, we have successfully listed the pros and cons of quick loans for Nigerian Small businesses, the types of fast loans, and the factors to consider before applying for a quick loan. 

 

Remember,  getting informed about the advantages and disadvantages of quick loans for Nigerian Small businesses can help you make an informed decision that benefits your business.

 

Good luck!