Without a doubt, some borrowers can borrow up to N300,000 from the financial sector or the Nigerian lending market without putting up any tangible collateral. This was made possible by the successful implementation of bank verification numbers (BVN) and national identification numbers (NIN), as well as other technological advancements that can aid lenders in recovering loans or forcing defaulting borrowers to pay. Borrowers who need a large sum of money for working capital or asset financing must still provide tangible collateral to secure the loans.
Many banks will not lend without collateral at this time. It is neither normal nor legal just because some bankers do it. The pressure to make money drives many branch managers to break the law by issuing unauthorized overdrafts, especially in market branches. The borrower is charged extremely high interest rates because this type of lending is too risky. Remember that the higher the risk, the higher the lender’s profit. If the law is followed, the banker will be imprisoned if the uncollateralized loan is not repaid. As a result, smart customers who want to expand their capital through a bank loan start early to position their businesses by acquiring suitable assets that they can use as collateral for bank loans, assuming they meet all other loan criteria.
Borrowing money from a bank is not like going to the convenience store. Customers who are wise plan ahead. In Nigeria, most banks are very comfortable using landed property as collateral. So get yourself one. Land alone is not very acceptable until it has a building on it that has been approved. The government may take possession of undeveloped land. It has happened previously.
The property that will most likely appeal to a lender must meet the following requirements:
1. The easiest-to-sell property is the best option for loan security. The whole point is for the bank to be able to easily sell your property if you default on your loan. The property’s location is crucial. Those in city centers are the most appealing.
2. A property that lacks a legal title (e.g., a C of O, a Deed of Assignment, or a Conveyance with the governor’s consent) is considered to have no title. You must obtain the appropriate title to your land in order to access the treasure it contains.
3. Even if the land has a C of O, the property must have an approved building plan. Governments have previously demolished unapproved structures, lowering the property’s value. Even if you have already developed the land, you can get an approved plan by paying a penalty. Make an inquiry at the Ministry of Lands.
4. The dead should not be buried in the compound. The commercial value of a beautiful property has been reduced by a visible grave or tombstone within the compound. What if the grave contains a well-known native physician? Bury your dead somewhere else. That is why cemeteries were created in the Western world.
5. If your village or town is not a city, the banker will not be interested in your property. He will not accept a palace or land with a shrine. Those are difficult to sell.
Small borrowers can use their fixed deposits and Treasury bills to borrow money. Shares of blue chip companies can be used to secure a loan in a stable economy.
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When selling your home quickly, keep in mind that a bank can only lend you up to 75% of the amount that can be sold. The price at which an uninterested buyer might purchase your property due to a lower price is known as forced sale value. This is typically a 25-30% discount off the market value of your home.
Use some of your profit to purchase land in a city and construct a house (even if it’s just a boys’ quarter) on it. Then, have an estate valuer determine the property’s market value and forced sale value. This will give you a rough estimate of how much money you can borrow from the bank.
Don’t tempt your banker into lending to you without any security. It’s like doing something without any safeguards. Please don’t do it to your banker. Many successful business people have discovered the above secret.
Now that you know, take action today!
Ezenwegbu Ikenga
16 May 2022
