Sources of Business Finance for Entrepreneurs in Nigeria


sources of business finance available for entrepreneurs and startups in Nigeria are:  • Persons savings & investment  • Family & friends  • Banks loans  • Hire purchase  • Business grants  • Venture capital  • Sahel capital  •  AgFunder  • CBN Archor Borrowers program  • Crowdfunding  • AYEEN  • AYuTe  • Nirsal Microfinance  • Bank of Industry  • Tony Elumelu Foundation  • Lagos Angels  • Governments empowerment programs  • Shares

Whether you're looking for funding to start your business or expand your existing business, some of these funding sources will suit your needs.

The sources of business finance available for entrepreneurs and startups in Nigeria are:

• Persons savings & investment

• Family & friends

• Banks loans

• Hire purchase

• Business grants

• Venture capital

• Sahel capital


• CBN Archor Borrowers program

• Crowdfunding


• AYuTe

• Nirsal Microfinance

• Bank of Industry

• Tony Elumelu Foundation

• Lagos Angels

• Governments empowerment programs

• Shares

Let us study one after the other

Read: 7 Sources of Income and Financing for Small Businesses in Nigeria

• Persons savings & Investment

The first source of funding for your business as a startup should be your own security. Having a great business idea is not enough; you must have the money to invest in the business. Investing your own money first sends a signal to potential investors and shows donors how serious you are about your business. No one will be willing to invest their money in your business idea when you are not willing to invest in it. Investing your money and doing some work has the potential to turn your business idea from just a business idea into a viable business opportunity. Most investors invest in business opportunities, not business ideas.

• Family Friends

The second easiest and cheapest way of starting money available for non-financial entrepreneurs and personal investment is money from relatives. As an entrepreneur, you can get help or loans in a good way from your family or friends who believe in your idea and want you to succeed.

• Bank Loans

Bank loans are the main sources of financing for small and medium enterprises. Unfortunately, most Nigerian banks no longer offer loans to start-up entrepreneurs. Banks often ask for some form of security through collateral (assets and principals) and a strong account statement. Consider the fact that each bank offers different benefits, be it personalized services, interest rates, or personalized returns. Its okay to shop around and find a bank that meets your needs.

• Financial Risk

The first thing to keep in mind is that it is not for all investors. From the beginning, you will remember that investors are trying to find companies and companies with high-tech technologies in areas such as information technology, communications, agritech and biotechnology.

Venture capitalists invest heavily in emerging or expanding businesses with greater potential for growth and traction, and often invest more capital than angel investors. 

Investors participate in the company to help it understand promising and critical projects. It involves transferring ownership or capital of your business to a third party. Investors expect to get a good return on their investment, which usually happens when the company starts selling shares to the public. 

Be sure to choose some investors who bring experience and knowledge that is important to your business. Some venture capitalists in Nigeria are Sahel Capital, AgFunder, etc.


• Sahel Capital – FAFIN

Sahel Capital is a private equity firm focused on agriculture, agribusiness, manufacturing and commodities in West Africa, particularly in Nigeria.

FAFIN invests in high growth businesses across the agricultural value chain in Nigeria, mainly in agricultural processing, agriculture, storage, distribution, production and production. In addition to providing capital to these companies, the fund also provides technical assistance to companies to help build their capacity.


• AgFunder

AgFunder is a new type of trading company. Its mission is to invest in bold, impactful technologies that are rapidly changing our food and agricultural systems. They often invest in new ideas of Agritech.


• Government Empowerment Programs

Governments at various levels launch business empowerment programs from time to time to train and provide start-up tools to entrepreneurs. Sometimes, the government also gives grants to existing small businesses. Just be careful about such government programs to get, if it is good and selected.


• Central Bank of Nigeria Anchor Borrower Programme

The Central Bank of Nigeria, through its Borrower Anchor Program and other anchor programs, provides loans to entrepreneurs, especially in the agricultural and manufacturing sectors.


• Business Grants

Business grants are one of the best ways to get money for entrepreneurs in Nigeria, especially startups that do not have the means to welcome capital, or strong support and bookkeeping to get bank loans. The beauty of a business gift is that you don't have to pay it back. But to get a business offer, you must come up with an exciting business idea with great potential. Some of the sources of business assistance in Nigeria are: AyuTe Africa Challenge, Tony Elumelu Foundation, AYEEN.


• AYuTe Africa Challenge

AYuTu is a financial platform that organizes agribusiness competitions, where the winners receive money for their businesses. The AyuTe African Challenge provides $1.5 million in grants annually to agritech startups in Africa. Tony Elumelu Foundation



AYEEN, which stands for Africa's Young Entrepreneurs Empowerment Nigeria, is an annual business empowerment program for young African entrepreneurs (A.Y.E). This event provides entrepreneurs with gifts, advice and connects entrepreneurs with entrepreneurs. A.Y.E was founded in 2014 by Smart Francis.


• Nirsal Microfinance MSME Loan

Nirsal Microfinance Bank is a federally mandated bank that provides soft loans to small and medium enterprises in Nigeria. Entrepreneurs can get loans up to 10 million naira at an interest rate of about 5% per annum.


• Bank of Industry (BOI)

Bank of Industry is one of the leading financial institutions in Nigeria and provides long-term support to various companies in various sectors of the economy. With the vision of providing financial support for the development of small, small, medium and large companies, BOI focuses on companies that work in manufacturing, processing, oil and gas, information technology, among others. It is the largest and oldest financial institution in the country.


• CrowdFunding

If your business has a dedicated audience, you can start a crowdfunding campaign using a platform like Kickstarter or GoFundMe. The crowdfunding platform allows you to set a schedule and rewards, which can range from sincere thanks to valuable merchandise. If you start a Kickstarter campaign, you won't get any of the promised money unless you reach your fundraising goal. If you use GoFundMe, you keep all the money even if you don't reach your goal.

Although the GoFundMe method is not without risk, the policy of Kickstarter or anything else creates a sense of urgency that motivates people to donate. When you start a crowdfunding campaign, be sure to include the cost of the service in your budget.


• Hire Purchase

Financing is a form of financing that allows businesses to spread the value of a particular asset over time. A lender agrees to purchase the equipment for a direct business in exchange for a down payment, usually 10% of the purchase price.

The contractor will repay the remaining value of the asset in installments with the final payment at the end of the lease period. After this final payment, the contractor becomes the owner of the property. HP is a useful form of financing for businesses that don't have enough cash for their needs. You must pay the value of the purchase date over time, even if the price goes down.

The purchase agreement property appears as an asset on your balance sheet during the term of the loan and the purchase price is shown as a liability, less any HP payments that have been made. 

For this reason, it is worth considering whether you will need the property for a long time - if not, it may be more expensive to rent. Repayment options for purchases vary widely in terms of amount and frequency.

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