Interestingly, in Nigeria currently, you have a wide range of options ranging from banks to online lenders available to you when you need a loan.
Nevertheless, all loans are not designed equally, and First Bank loans have an edge over others as a result of their highly competitive rates.
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Brief History Of First Bank Of Nigeria.
Speaking of one of the biggest financial services institutions in not just Nigeria but Africa, First Bank must surely come to mind.
The bank has more than 758 business locations dispersed across 10 different countries.
Also, the bank has an enviable track record having been established in 1894 with its headquarters in Lagos, it has been in existence for more than 120 years!
Alongside other Nigerian banks: Guaranty Trust Bank, Access Bank, Zenith Bank, and United Bank for Africa, First Bank has worked its way to become one of the “tier-1” Nigerian banks.
The bank offers a wide variety of loan options – retail and corporate financial services to business loans.
In a bid to support the growth of Small and Medium enterprises, First Bank introduced a collateral-free loan for them.
In this article, I am going to discuss the various types of loans available in First Bank, the requirements you need before you can access loans from the bank as well as frequently asked questions about First Bank loans which include if they give loans without collateral.
Different Types Of Loans Available In First Bank
1. Secured Term Loans
This loan option from First Bank will help you get the help your business needs to implement capital projects or expand.
Also, you will be entitled to a maximum of N40 million and repayments can be made within 3 years.
2. Contract Finance
Just as the name implies, contract financing enables businesses to carry out huge contracts granted by respected organizations.
Interestingly, the bank can contribute up to 70% of a contract’s value, however, you are required to provide collateral once the loans exceed N50 million.
You have a maximum of 9 months to you.
3. Revenue Loans and Overdraft
First Bank’s overdraft loan option gives you more than the money in your account.
Nevertheless, there is a limit to the amount you can borrow and all these are pre-defined.
You may be wondering – what use is it? It serves as a great backup source of funds specifically made to sort you out in case of emergencies.
4. Bonds and Guarantees
If you have a contract that requires a bank to stand as a guarantor for your company before the contract is awarded, then, this loan type is for you.
Please note that First bank can only guarantee you for a period of 1 year.
5. Petroleum Dealership Finance
This finance option is for businesses in the petroleum sector whereby they are permitted to stock white petroleum products (PMS, AGO, and DPK).
Registering your business with IPMAN, and being an approved dealer of a prominent oil marketing company are prerequisites for this loan product.
6. Cement Distribution Finance
This loan scheme is tailor-made for distributors of cement products, and the repayment plan is flexible, collateral is required.
7. Invoice Discounting Finance
You can be given advanced cash for your organization based on unpaid invoices, and this is great for managing your working capital.
8. Import Finance
If your business has to do with the importation of raw materials or finished goods, you may want to consider import financing.
Loans are made available via a wide range of finance products which includes letters of credit and bills for collection.
9. Telecoms and Distributorship Finance
Telecom distributors who are looking for better ways to distribute and sell merchandise products can seek funding from this First Bank loan option.
10. Oil and Gas Contract Finance
Oil and gas companies in Nigeria can have access to as much financial help as they need through this credit facility.
They are given up to 70% of what it costs to execute the contract to enable them to accomplish specific contracts.
11. Fast Moving Consumer Goods (FMCG) Key Distributorship Finance
This First Bank loan option was created to assist distributors of FMCG with funds to grow the volume of their business.
12. Local Purchase Orders Finance (LPO)
Local Purchase Order finance is targeted at providing a way for businesses to acquire funds based on the rear of a verified purchase order.
Also, they can advance up to 70% of the purchase order, and a maximum tenor of 150 days is applicable.
13. Operational Vehicles
Just as the name implies, this loan option empowers you financially to purchase a new vehicle for your day-to-day business activities.
Please, the vehicle cannot be used for the purpose of commercial transportation, and the maximum loan amount is N10 million.
14. FirstEdu Loan
It is safe to call this loan type an Educational loan because it helps proprietors of private schools when they need additional cash to see to the day-to-day running of their schools.
20 million is the highest amount you can be loaned and loan tenors range from 3 to 12 months.
15. First Trader Solutions (FTS)
This is best described as a short-term overdraft facility whereby the bank offers First Trader Solution to traders in pre-approved market zones.
These traders don’t just deal with any kind of goods, they specifically deal with fast-moving goods.
N5 million is the highest loan amount that can be provided for them and this loan is provided for either 90 or 180 days.
16. Agricultural Financing
Of course, Agricultural loans aren’t left out as First Bank has made available a range of various loan options for businesses involved in agriculture.
Worthy of note is the fact that three of the products on offer, are sponsored by the Central Bank of Nigeria (CBN) namely- the Micro SME Development Fund, the Real Sector Support Facility, and the Commercial Agriculture Credit Scheme (CACS).
Lastly, agribusinesses are also offered conventional term loans and overdrafts.
17. Commercial Mortgage
Companies who want to purchase a landed property for commercial purposes can consider a loan from a First Bank commercial mortgage.
18. Health Finance Product
Private hospitals and registered pharmacies amongst others are some of the facilities that will be able to leverage this health finance product.
First Bank makes available the finances used in buying drugs as well as other medical supplies.
However, you can have access to a maximum of N5 million within the space of 6 months.
How To Qualify For a First Bank Business loan
It’s an established fact that First Bank has a wide variety of loan options, you can see about 18 above.
It’s only normal that the requirements for approving a loan depend on the loan product you are interested in.
Also, certain loan options are designed for specific businesses in particular sectors of the economy.
Let’s look at health loans, for example, they are only available to medical-related businesses.
Just like every other loan application, your ability to prove that you are capable and willing to repay a loan is an added advantage.
You can do so by presenting proof of your regular monthly income as well as possessing a good credit history.
I have listed below other standard lending criteria that may be required of you, and they are:
- Your business or company must be registered with the Corporate Affairs Commission (CAC)
- You must possess a good Credit Bureau Report that has no bad debt or unpaid obligations.
- You must have been in a business for some period of time (maximum of 1-3 years)
- You must have a business or corporate bank account
- You must be an active customer of the bank
Furthermore, if your business is registered, you are qualified to apply for business loans, if not, you can opt for personal loan products — which First Bank also offers.
How To Apply For a First Bank Business Loan
Applying for loans in First Bank is not a hard nut to crack, however, you must note that the bank accepts loan applications only at relevant branches.
Walk into any of the First Bank branches and complete your application there, or download the appropriate application form online, fill it out, then take it to a First Bank branch.
First Bank must first access how suitable your business is for funding, and your aim of taking loans before the Bank will make a decision on whether to give you a loan or not.
Also, there will always be a set of terms and conditions accompanying any loan approval letter for you to meet before any money can be expended.
Below are documents that may be required of you and they include:
- Completed application form
- Bank statements (1 year)
- Certificate of Incorporation
- Business plan
- Proof of address
- Company profile
- Audited financial accounts
- Cash flow budget
- Valid means of identification (voters card, passport, driving license)
- Details of collateral offered (if any)
Please note that the documents you are to present depend on the loan facility you are applying for.
Frequently asked questions (FAQs)
1. Does First Bank Require Collateral?
Interestingly, First Bank doesn’t need collateral for some of its loan options, however, if the amount you want to borrow is huge, then, a secured loan will likely be the only suitable resolution.
Acceptable forms of collateral or security may include:
- Other non-government debt instruments
- Third-party guarantors (or collateral)
- Other non-government debt instruments
- Obligations of state governments or agencies of the Federal Government of Nigeria
- Physical assets e.g. real property
- Obligations of the Federal Government of Nigeria (FGN Bonds, FGN Eurobonds, FGN Treasury Bills, and so on)
2. How Long Will It Take Before Receiving Funds From First Bank?
It takes different times for funds to be disbursed, it all depends on the loan option you are interested in because each of them has verification processes specific to them.
That being said, you have to know that smaller loan amounts and unsecured loans are most likely to easily get processed.
3. How Long Do I Have To Pay Back a First Bank Loan?
Note that First Bank credit facilities are both short and long-term, loans that do not need collateral are given shorter reimbursement periods.
4. How Much Can I Borrow From First Bank?
The two major contributing factors to the amount of money you are entitled to are the size of your business and your profitability.
Also, First Bank is capable of catering to the financial needs of both small and larger organizations because they have adequate resources.
5. What Is The Interest Rate Charged On a First Bank Loan?
Although First Bank can disburse loans from its own balance sheet directly, it also provides funding on behalf of government-affiliated organizations like the CBN.
Generally, collecting loans directly from First Bank is more costly than funds sponsored by the government.
In conclusion, I have come to the end of this article, and I sincerely hope that this article will give you all the assistance you need to secure a loan from First Bank of Nigeria.