Sources of Business Finance for Entrepreneurs in Nigeria


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Either you are looking for finance to start up your business or to expand your existing business, some of these sources funding will be suitable for your needs.

Sources of business funding available to 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
  • AYuTe
  • Nirsal Microfinance
  • Bank of Industry
  • Tony Elumelu Foundation
  • Lagos Angels
  • Governments empowerment programs
  • Shares

What You Need to Know of Each of this Sources of Business Funding in Nigeria

Personal savings $ investment

The first source of fund for your business as a startup should be your personal savings. Having fantastic business idea is not enough, you need to have some finance to commit to the business. Investing your own money first is a signal to prospective investors and grant donors how serious you are in your business pursuit. No one will be willing to invest his money in your business idea when you are not will to invest in it. Putting in your finance and getting some works done have the capacity to turn your business idea from a mere business idea into a potential business opportunity. Most investors invest in business opportunities, not in business ideas.

Family & Friends

The second easiest and cheapest source of startup finance available to entrepreneurs outside personal savings and investment is money from loved ones. As entrepreneur you can get grant or soft loans from members of your family or within your friends circle who believe in your idea and want your success.

Bank loans

Bank loans are the foremost commonly used source of funding for little and medium-sized businesses, unfortunately, most banks in Nigeria no longer give loans to startup entrepreneurs. Banks usually ask for some form of security through collaterals (assets in choice locations) and strong account statement. Consider the very fact that each one bank offers different advantages, whether it's personalized service, interest rate or customized repayment. It is a good idea to move around and find the bank that meets your specific needs.

Venture capital

The first thing to bear in mind is that risk capital isn't necessarily for all entrepreneurs. Right from the beginning , you ought to remember that venture capitalists are trying to find technology-driven businesses and corporations with high-growth potential in sectors like information technology, communications, agritech and biotechnology.

Venture capitalists invest huge sums of money in emerging or expanding companies with tremendous growth and traction potential, and typically invest much more capital than angel investors. 

Venture capitalists take an equity position within the company to assist it perform a promising but higher risk project. This involves abandoning some ownership or equity in your business to an external party. Venture capitalists also expect a healthy return on their investment, often generated when the business starts selling shares to the general public. Make to choose certain investors who bring relevant experience and knowledge to your business. Some of  venture capitalists in Nigeria are Sahel Capital, AgFunder etc

Sahel Capital – FAFIN 

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

FAFIN invests in high-growth enterprises across the agricultural value chain in Nigeria, primarily in processing, livestock, storage, distribution, organic farming products and production.

As well as providing capital to these companies, the fund also offers a technical assistance facility to help strengthen their capacity.


AgFunder is a new kind of venture capital firm. Its mission is to invest in bold and impactful technologies rapidly transforming our food and agriculture system. Their invest mostly on Agritech innovative ideas.

Government empowerment programs

Governments at different levels from time to time roll out entrepreneurship empowerment programs to train and give startup kits to entrepreneurs. Sometimes governments also grants to existing small businesses. Just be on the look out for such government program to benefit from it, if quality and selected.

Central Bank of Nigeria’s Anchor Borrowers program

The Central Bank of Nigeria through its Anchor Borrowers Scheme and other interventionist program provides financing for businesses especially in the area if agriculture and manufacturing.

Business Grants

Business Grant is one of the best source funding for entrepreneurs in Nigeria especially startups who many not have the structure to accommodate venture capitalists, or collaterals and strong account books to access bank loans. The beauty of business grant is that you are not going pay back. But to access business grant you have to present a persuasive innovative business ideas with a lot of potentials. Some of the private sources of business grant in Nigeria are: AYuTe Africa Challenge, Tony Elumelu Foundation, AYEEN.

AYuTe Africa Challenge

AYuTu is a funding platform that organises agribusiness competition, where the winners are given funding for their agribusiness.

AYuTe African Challenge awards $1.5  million in cash grant annually, startup agritech innovators in Africa

Tony Elumelu Foundation


AYEEN which stands for Africa’s Young Entrepreneurs Empowerment Nigeria is an annual entrepreneurship empowerment program of Africa’s Young  Entrepreneurs (A.Y.E). The program provides business grant to entrepreneurs, mentorship and also connect entrepreneurs with investors.

A.Y.E was founded in 2014 by Smart Francis.

Nirsal Microfinance MSME Loan

Nirsal Microfinance Bank is a Federal government owned banked with mandate to providing soft loans for Micro, Small and Medium Enterprises in Nigeria. Entrepreneurs can access loans up N10 million with about 5% interest rate per annum.

Bank of Industry

Bank of Industry (BOI) is one of Nigeria’s principal financing institutions and it provides long-term support to different industries and various sectors of the economy. With the vision of providing financial support for the development of micro, small, medium and large businesses, BOI focuses on businesses that engage in manufacturing, processing, Oil and Gas, information technology amongst others. It is the largest and oldest financial institution in the nation.


If your business has a dedicated following, you can launch a crowdfunding campaign using a platform such as Kickstarter or GoFundMe. Crowdfunding platforms let you set the terms and rewards – which may range from a heartfelt thank you to valuable merchandise. If you launch a Kickstarter campaign, you won't receive any of the money pledged unless you reach your funding goal. If you use GoFundMe, you get to keep all the money even if you don't reach your goal.

Although GoFundMe's approach is relatively risk free, Kickstarter's all-or-nothing policy creates a sense of urgency that spurs people to donate. When launching a crowdfunding campaign, be sure to include the cost of rewards in your budgeting process.

Hire Purchase

Hire Purchase is form of asset finance that allows businesses to spread the cost of a particular asset over a period of time. An asset finance provider agrees to buy the asset for the business directly against a down payment, typically 10% of the purchase price. The entrepreneur must then repay the remaining value of the asset on regular installments with a final payment at the end of the lease term. After this final payment, the entrepreneur takes ownership of the asset.

HP is a useful form of funding for businesses that don't have enough capital for the items they need. You must pay the full value of the asset on the date of purchase over time, even if its value depreciates. Contract purchase assets appear as an asset on your balance sheet during the lease term and the hire purchase amount is shown as a liability, less HP payments already made. For this reason, it is worth considering whether you will need the asset for the long term - otherwise it may be more profitable to use a lease. The repayment options for hire purchase are usually flexible in terms of quantity and frequency. The payment period is usually between 1 and 5 years. There are 9 points to consider before buying goods on hire purchase.

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