A number of new Nigerian online lenders and marketplaces have emerged which may be opening up new pools of capital for small businesses through greater innovation in how small business loans are evaluated, decisioned and managed. Entrepreneurs and small business need soft loans in Nigeria in order to expand their businesses.
The growth of online small business lending is not just supported by access and a greater inclination to take on risk in small business lending, and open new pools of capital for small business owners. The growth is also driven by the ways in which alternative lenders are ‘innovating’ in small business lending, particularly in terms of simplicity and convenience of the application process, speed of delivery of capital, and a greater focus on customer service. For example, all of the biggest players emerging in the alternative lending space offer online and mobile applications, many of which can be completed in under 30 minutes.
These are not just inquiries; these are actual loan applications, which compares to the average of about 25 hours that small businesses spend on filling out paperwork at an average of three conventional banks before securing some form of credit. Upon filling out an online application, owners can be approved in hours and have the money in their account in just days, whereas in the conventional banking model small business owners may not be approved for several weeks.
The number of Nigerians taking out soft loans in Nigeria online has risen steadily over the years, with an 18% increase from 2015 to 2017, according to data from the National Bureaux of statistics. Online loans are processed and disbursed faster than traditional loans. While traditional lenders can take anywhere from a few days to a few weeks to make their decision, online lenders have a different approach. Online lenders start by evaluating your loan request much faster than the competition. What could take a traditional lender weeks to assess, an online lender can give you an answer on approval in about 10 minutes in some cases.