Olamide Famuwagun

Sometimes, emergencies arrive and individuals feel the need to take loans, to pay back as agreed. It could be weekly, monthly, or even once in three months. It depends on the period that both parties agree upon. When these emergencies arrive, an employee will need to ask his or her employer for a financial upfront referred to as a salary advance loan.

This article discusses everything you need to know about salary advance loans, highlighting their requirements for applications and repayment means.

What is Salary Advance Loan? 

A salary advance is a loan usually given to an employee. As the name implies, it is usually a part of the wages of an employee paid at the end of the month. Naturally, only an individual with a salary job is eligible for this loan. 

This loan is usually short-term, and it comes also with interest rates, though subsidized. Also, there are terms associated with repayment. You can make it once at the end of every month, or once every three months. It is important to understand that employers rarely give salary advance except otherwise stated.

Banks are in charge of this. However, if an employer gives a salary advance to one employee, he must extend the opportunity to other employees. Discrimination based on performance, race, age, or gender is highly discouraged. 

What should you know before you take a salary advance loan?

Salary Advance policy educates you about the information you need to equip yourself with before you can take a loan in Nigeria. These include: 

1. Are you eligible for a loan?: Most times, the eligibility criteria are for individuals who earn a stipulated amount each month. This means that only individuals with a salary job are eligible for this loan.

2. What percentage of your salary do you need: A salary advance loan cannot give you a complete salary as a loan unless you apply for a particular percentage of your salary. It is important to know exactly what you need before you apply for a loan.

3. How much will I be paying in return?: It is always important to check this out because some interest rates can be outrageous. Always select a loan option with a favourable rate.

How to get a Salary Advance loan

Typically, most Nigerian banks such as First Bank and Access Bank give loans of up to N500,000, although this amount depends on your salary and your past financial records.

To get a loan, all you have to do is contact your bank for more information on the process involved. After this, they will notify you about the loan periods and repayment plans. For instance, Zedvance loan periods count after a day (the day on which you get the loan). 

Where can I get a Salary Advance Loan?

We can get salary advance loans from different financial institutions across all tiers. It could be a commercial bank, like the Zenith Bank loan, community bank, or microfinance banks

Conclusion

A salary advance loan is perfect for you because they have designed it to handle emergencies. Also, there is usually no waiting period before the collection of the loan. As soon as an application is made, and they check the eligibility status of the client, the loan is made available almost immediately.

When we think about lending, most times our minds drift to the options financial institutions offer. However, peer-to-peer (P2P) lending is something that most of us have engaged in at some point in our lives. We call it the “borrow scheme” or “can I see” scheme. You know, “can I see N500,  I’ll give you back by tomorrow…”  

P2P lending is the same concept, however, to define it we can say that: Peer-to-peer (P2P) lending is a form of microlending that enables individuals to obtain loans directly from other individuals, cutting out the financial institution as the middleman

What are the types of P2P lending?

The two major types of P2P lending include:

1. Peer funded for Individuals

This type of P2P loan is usually funded by regular individuals and peers. These individuals invest in credit financing and earn returns based on interest charged on the loans.

2. Group Peer funded

Slightly different from individual-funded credit. They are funded by a group of people, usually high-net-worth individuals through hedge funds, bank endowment funds, etc. Large investors fund this type of personal loan through peer-to-peer lending platforms. 

The major difference between the two types is the amount of money involved. Group peer-funded loans deal with higher amounts of money than individual funded. 

How P2P lending works in Nigeria

Though the concept of p2p is familiar, the organizations pioneering its progress in Nigeria are fairly new. FINT, Farmcrowdy, and Kia Kia are at the forefront of driving this lending system. These organizations partner with individuals who act as investors on the back end while packaging these loans for the recipients who are in need.

These organizations do the hard work of running credit history as well as setting up certain criteria to make sure that these back-end investors are protected. 

Peer to peer lenders typically processes loans in two ways:

Firstly, your application is updated usually for days allowing potential investors to review your application. 

Investors then fund your loan, based on your application, by offering a portion of the total amount requested. If your request reaches 100 percent funding or at the expiration of the listing time, you may accept or decline the loan. 

Secondly, P2P lenders fund your loan by approving your application and getting the required funds from a stock of blind investors. In this type of funding,  investors don’t review your application individually and you do not have to wait for your loan to be funded. 

What are the requirements for P2P lending in Nigeria?

Criteria will differ based on the specific organization, however, listed below are some general requirements: 

• The borrower must be a salary earner
• must have a national means of identification, 
• bank account statement for the last 6 months (salary account), 
• employment offer letter, 
• a recent utility bill (not older than the last 3 months). 

What are the benefits of P2P lending?

Benefits of p2p lending are, but not limited to:

• Access to interest lower rates
• Quick turnaround time on application decision
• Transactions are very transparent, including any fees imposed by the p2p platform
• Can be more flexible than traditional loans

Conclusion

Next time you need an instant loan, think of p2p lending as an option, based on some benefits discussed, it could be a viable option to meet your needs. 

NYSC Business Loan

Are you an intending corps member, corps member or ex-corp member with intentions of getting a loan for your business? Your dreams of being an entrepreneur are achievable through the NYSC business loan for youths. In this article, you’ll learn how the application for the NYSC loan is made.

The CBN has made it possible for youths to apply for loans in Nigeria to start businesses in order to create employment opportunities. This loan has been made possible through Heritage Bank, in partnership with Youth Innovative Entrepreneurship Development Programme. (YIEDP)

Individuals can apply for loans of up to 3 million, while a group of three to five persons can apply for loans of up to 10 Million. The following explains how you can apply for the NYSC loan.

The YIEDP scheme is aimed at harnessing entrepreneurial skills amongst Nigerian youths by providing accessible loans to help youths implement business ideas.

How to know if you’re eligible for an NYSC loan?

In order to qualify for the NYSC loan, the following must apply to you.

• Only applicants between the ages of 18 and 35 can apply.
• Applicants must be serving corps members
• Ex-corp members not more than five years of post-NYSC can also apply for the loan.
• Present and have a business idea. 

The loans are available to specific business sectors. The following listed fields are the qualified business sectors for the NYSC loan.

• Agro-allied
• Food Processing
• Power & Energy
• Film & Photography
• Manufacturing
• Cottage Industry
• Construction Support
• Technology (ICT)
• Automobile
• Education Financing
• Information and Communication Technology
• and other fields

How to apply for an NYSC loan

If you’re a serving corps member or an ex-corp member of not more than five years, you can apply for the loan online. Take note of the following information before you apply for your business loan.

• All qualified applicants can apply for the loan through the official portal.
• You’ll need to use your NYSC state code to apply for the loan.
• An individual is eligible for loans of up to three million
• A group application is eligible for loans of ten million.
• Applicants can only submit one business idea at a time.
• The application progress can be tracked through the portal.

What do you need to apply for an NYSC loan?

Apart from meeting the above requirements to qualify for the NYSC loan, you need the following list of documents as collateral for the loan.

The Heritage Bank NYSC loan scheme requires the following documents as collateral to obtain the loan.

• Tertiary Institution Certificate
• NYSC discharge certificate or you pledge your discharge certificate if you’re still serving
• Any legal ownership of assets financed by other banks

The possibility of starting a business as a youth can be daunting without the required capital. The NYSC loan is a good scheme that youths can count on to generate the required funds for their business ideas.

Conclusion 

The NYSC loans are also available to corps members who have been discharged within the last five years. There are also other forms of loans in Nigeria available to the general public from which a corps member can benefit from.

The art of lending or financing is a concept that has been around since the beginning of civilization itself. Thousands of years ago, farmers used their grains and seeds to borrow capital and also used livestock as a repayment option.

Ever since then, the lending system advanced to become the complex financial structures we know now.

What is Lending?

It merely means giving out money or property to another individual with the expectation that it will be repaid in the future. In a financial context, lending includes different kinds of commercial loans. 

Who are Lenders?

Lenders are financial organizations or institutions that are in the business of giving out loans. While individuals can also be called lenders, their motive for lending may differ from that of a financial institution who are in it to make a profit. Overall, they’re also called creditors.

When your family member lends you money, they may not be necessarily looking to make a gain for themselves; they probably want to bail you out of a financial situation. But that cannot be said of financial institutions such as banks and credit unions.

These loan companies in Nigeria expect not only to be reimbursed. They also expect to be paid with interest; which is the reason for this article.

What are the different Types of Lenders?

Traditionally, lenders are often referred to as banks, cooperative societies, credit unions and any other form of financial institutions. In reality, lenders have expanded beyond the scope of banks and associations. 

They are referred to as less traditional sources of funds for personal or small business loans – and they include

• Family and Friends – they are sources of funds that can bail you out of emergencies from someone you already know. This could be any member of your family or friends. However, no matter how close you are, draw up a loan agreement when taking the loan.
• You can also borrow money from yourself. This is common to lending into your own business. All it takes is the required discipline to treat yourself as a separate entity from your business. This will encourage you to make your repayments when they fall due.
• Peer-to-peer lenders – these are sources of finance you earn by association. Like club or association lenders. They are not established to grant members loans. However, they could lend a hand to a member in need.
• Crowdfunding – it involves raising a small amount of cash from many people. The best thing about crowdfunding is it doesn’t require an interest payment 

How do lenders make money?

It’s straightforward. Mortgage brokers, banks and credit unions make their profit from the interest they charge on your loan offer. This is referred to as the cost of a loan. As lending money can be a risky business, these lenders charge an interest rate depending on the risk involved. The higher the risk of not paying, the higher their interest rates.

Think about it – While lenders may seem like bad guys, they are vital to the development of the economy. For example, When You go to request a bank to request a rent loan, the bank takes funds from their depositor (savings and money market accounts) and offers you the credit; at a higher rate 

The loan enables you to pay your rent. The landlord now has more money to pay his staff. The employees of the landlord now have money to circulate to businesses. Other businesses, in turn, grow the economy.

A growing trend in retail now is the use of buy now and pay later schemes. Just as the scheme implies, it allows buyers to delay payment for a product they can take home immediately.

It’s an inviting deal that lets you get what you want now while you get the chance to pay for it over time. It sounds too good to be true, isn’t it?

How does buy now and pay later work?

Buy now and pay later are being used by anyone who enjoys using a product or service now to pay later. For example, a fashion retailer can allow buyers to get that new pair of jeans, dress, shoe or other desirable items that catch their fancy the moment they see it. Instead of having to wait because they are unable to afford it at the moment.

Buy now and pay later is basically a short-term loan.

How do you get buy now and pay later loans?

Getting a short-term loan under the Buy now Pay later scheme heavily depends on the person or organization granting the loan and the kind of business they operate. Regardless of the lender’s mode of operation, getting a loan from them would require some basic actions highlighted below;

1. Applying for a loan under this scheme will require the borrower to identify the product he wants to buy. This could either be a phone, electronic accessories, etc. 
2. After picking out his product of interest, the borrower fills out an application for the loan amount, which is equivalent to the value of the item(s) selected.
3. The lender after some background checks and due diligence on the borrower grants the loan by presenting the loan agreement to the borrower
4. If the conditions of the loan are suitable to the borrower, he signs off on it and then gets his product to be making payment in instalments till the loan amount is completely paid off

However, there are certain conditions that need to be met depending on the lender as mentioned earlier. Some creditors would require a partial payment of the value of the product you want to buy. This is usually expressed as a percentage of the value of the product.

While other loan companies in Nigeria restrict their lending services only to salaried employees to ensure prompt repayments. It is essential you understand the terms and conditions of the lender before opting for a loan under this scheme.

What are the Advantages of Buy Now and Pay Later?

The advantages of buy now and pay later include:

• Potential of paying no additional interest if payments are met on time before the loan period elapses.

• The advantage of buying desired items on the go without missing out.

• It lowers and removes buying hesitation for buyers

• It increases the average order value for retailers since more buyers get to place purchase orders.

• It leads to an overall increase in sales.

• Generates a new stream of income through the loan interest.

Conclusion

Sometimes you have to look beyond the good offer of the buy now pay later schemes and avoid anything that will goad you into impulse buying. Usually, the loan amount under this scheme is relatively low and they don’t offer cash loans to customers.