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🇳🇬 Nigeria /Economy & Trade

Jaiz Bank plans collateral-free loans for SMEs

From The Punch · () English

Summarized and contextualized by DistantNews.

At a glance

News Named sources New plan
  • Jaiz Bank plans to offer collateral-free loans to small and medium-scale enterprises, pending approval from the Central Bank of Nigeria.
  • The new financing model will assess borrowers based on cash flows, aiming to expand financial inclusion and reduce collateral burdens.
  • The bank also seeks shareholder approval to raise an additional N150bn to fund expansion in agriculture, SMEs, and other key sectors.

Jaiz Bank is preparing to launch new financing products that would allow small and medium-scale enterprises (SMEs) to access loans without traditional collateral. The bank is awaiting approval from the Central Bank of Nigeria for this initiative, which aims to assess borrowers based on their cash flows rather than physical assets.

We have developed an SME-friendly product just awaiting the approval of our regulator, the Central Bank of Nigeria. Once that is achieved, we will be doing cash-flow lending. We’ll assess you based on your actual cash flow, either with Jaiz Bank or with any other bank, and then we can lend to you depending on the capacity that you have.

— Dr Haruna MusaExplaining the new collateral-free loan initiative.

Dr. Haruna Musa, the bank's Managing Director and CEO, explained that this move is designed to broaden access to finance and deepen financial inclusion. "We have developed an SME-friendly product just awaiting the approval of our regulator, the Central Bank of Nigeria," Musa stated. "Once that is achieved, we will be doing cash-flow lending. We’ll assess you based on your actual cash flow... and then we can lend to you depending on the capacity that you have."

Instead of that collateral structure, we might end up getting loan guarantees and signed GSI mandates. With that, we intend to see a lot of improvement in support for SMEs.

— Dr Haruna MusaDescribing alternative security for the proposed loans.

The proposed model may involve loan guarantees and signed GSI mandates instead of physical collateral, which Musa believes will significantly improve support for SMEs. The bank also plans to leverage technology for a seamless, remote application and financing process, allowing customers to apply from their homes or offices. This initiative aligns with Jaiz Bank's strategy to support agriculture, SMEs, and underserved communities through digital channels and agency banking.

We intend to make it a straight-through process whereby, from the comfort of your office or your home, you can use your mobile device to access our financing seamlessly without having to come to the bank.

— Dr Haruna MusaDetailing the planned digital approach to financing.

In addition to new loan products, shareholders have approved plans for Jaiz Bank to raise an additional N150bn in capital. This capital raise, expected to occur in two or three tranches after regulatory approvals, will strengthen the bank's balance sheet and enable financing for larger transactions, particularly in agriculture, export trade, manufacturing, and renewable energy. Musa indicated the bank aims to commence this process immediately and complete it within the third quarter.

Jaiz Bank has always been at the forefront of supporting agriculture and micro, small and medium enterprises.

— Dr Haruna MusaHighlighting the bank's commitment to key sectors.
DistantNews Editorial

Originally published by The Punch. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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