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How to Start Money Lending Business in Nigeria



Money Lending Business in Nigeria

Do you have some money set aside and you just like borrowing people money? You want to start a money lending business in Nigeria and you do not know how? Do you wish to build a loan app or a money lending or loan app like the Fintech companies but you do not have enough funds for that and you are not techy?

Do you want to know if the business is profitable or not, the capital you need to start this business, and the step-by-step guide on how to make your money lending business a profitable business? Read this article to the end.

In this article, I will be sharing with you everything you need to know about the money lending business in Nigeria popularly known as ajo, and how you can make profits from the business easily.

Is Money Lending Business Profitable?

The money lending business is perhaps the most profitable and lucrative business in Nigeria. This is because the business yields profits easily. Especially when a lender borrows money and does not pay on time. The more the loan is not paid on time the more the interest on the loan increases monthly, quarterly, or yearly.

How much you make in the money lending business depends on the interest you charge per money you lend to customers. Lastly, the money lending business is a profitable business in Nigeria because people always need loans. Many people need loans to do different things. This could be to buy a car, rent or build a house, start a business, and more.

As long as there is a need for loans there will always be the need for money-lending businesses.

Capital Needed to Start Money Lending Business

To start a private money lending business in Nigeria you will need a capital of #20 million naira. This capital will be used to get your money lending license and other registration needed to run an individual money lending business or a private money lending company.

But if you do not have up to this capital, especially as a sole proprietor you can still start your own money lending business it might just be a bit tougher. As I explained earlier, it is easier to amass profits in this business so you do not need to worry your business will make much money as time goes by.

How to Start a Money Lending Business in Nigeria

Here are steps on how to start a money lending business in Nigeria.

1. Register your Business Name

The first step to starting a successful money lending business is to register the business as a company under the CAC, the Corporate Affairs Commission. After doing this successfully the next step will be to apply to the magistrate court with the following information.

You should read our article on how to register your business name in Nigeria for more tips on this.

1. Application letter

2. Certificate of incorporation

3. Tax and Police Clearance

4. Evidence of a current account

5. Company memorandum and article of association

6. Certified copies of CAC

When this is successful the magistrate court will grant you a letter and money lending ordinance form B to proceed. After this, the next step will be to apply to the Ministry of Home Affairs and Tourism with the following steps.

1. The payment of #10,000 to purchase your money lender certificate.

2. Collect an invoice of #50,000 from the ministry.

3. Submit your application form (forms B and C) from the magistrate court, evidence of payment of fees, a certificate of incorporation, a police report from the police commissioner, a PAYE Certificate, and A 3-year income tax certificate.

If the registration and documentation process of your loan business is too much you can get a CAC worker or a chartered accountant or auditor to do it for you.

2. Create a Process for Accessing Loans

To make your loan process easy for you and your customers you need to create a loan giving process. This can be a printed document containing KYC which means ‘know your customer’, bank details of customers and BVN, interest on loans, and more

There are many templates on the loan-giving process online but if you want to know how the local loan businesses around do theirs you can visit their company pretending to get a loan and get their loan process document.

3. Get a Location for your Office

Location is very important for a business like this. Customers need to know where they can meet you or your company to get loans and the place has to be an open place. This is why you really need to rent a place. This can even be a shop or a room where you or your workers can meet customers and document loans.

4. Getting your First Clients

After successfully registering your money lending business and you have gotten a location, the next step you should work on is locating customers that need to lend money. This is why you need marketers. You can employ at least two ladies or do this yourself. These marketers will go to companies, organizations, schools, and the market to convince people to come get a loan from your company.

If they really work hard they can bring in at least 20 customers daily to get loans. You can attract customers to your money lending business easily by reducing the interest on loans. You can also get friends and family to come get loans from you at a low interest.

5. Ensuring Loan Seekers Pay Up

The most difficult part in the money lending business is getting your loan seekers to pay up. Money lending businesses have gone bankrupt just because they could not get loan seekers to pay up their loans on time. To make sure you do not lose when customers cannot pay up their loans you can collect collateral for huge loans – loans running into millions.

For small loans, you need to get the BVNs of all customers or guarantors.

6. Profits in Lending Business

As a private money lender in Nigeria, it is easy to increase profits in your business you just need to increase the interest on loans for customers. If they do not pay back as at the time they promise interest will continue to increase which will in turn increase profits for you. The interest you charge on loans really depends on you. It can range from 10% – 30%.

You can also make more profits by selling assets used as collateral when securing loans. So many money-lending businesses make good money from selling the assets of their customers when they do not pay up their loans.


Money lending business is a profitable business especially if you know how to convince loan seekers to get loans and guide them on how to pay up. Your business can easily make profits running to billions of naira if you are properly structured and run. You also make massive profits from the interest that your clients pay for their loans.

In all, it is important that you keep your clients’ information private so that you will not be sued if this information falls into the wrong hands


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Ralph Bamigboye is an Accountant. He is the owner of, and Finance Naija YouTube Channel. He has helped many individuals to start their businesses and make money online. How can he help you?

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