startup, funding, money

Complete guide on raising money for your start up – Business


It happens everyday. Well-prepared entrepreneurs are walking into the banks with brilliant business ideas with well developed business plans — and are walking out empty-handed.

The most difficult question before you when you plan to start any new business or wish to expand an already existing business is how to raise capital to fund your business

To support the business, make sure that you have the proper financial resources and particular amount of funding before you commence on launching your business. Failure to do so can be very harmful for your business as you won’t be able to fully support the business during its initial stages and making a name for your business would be an impossible task.
Nevertheless hundreds of thousands of individuals start businesses each year. How do they do it? Where do they get the money to get started?
Here are some solutions for startup funding for Nigerian Entrepreneurs. Some are nearly risk-free. Others involve significant financial risk and should be used with caution.

Start part-time: If you need a steady source of income to meet your financial obligations, start the business as a part-time venture. Don’t quit the day job until the part-time business has a steady flow of customers and profits.

CBN Microcredit: This program is designed by the Central bank of Nigeria to support small business in Nigeria. To have access to this facility please visit CBN also give free grant to Nigerian corpers through the department of finance CBN (

Consulting: Another way to fund a startup is to get a job. The best sort of job is a consulting project in which you can build whatever software you wanted to sell as a startup. Then you can gradually transform yourself from a consulting company into a product company, and have your clients pay your development expenses.

Local Government Revolving Loan Funds, (RLF): Many local Governments supporting Made in Nigeria have revolving loan funds used primarily as “gap” financing to bridge the gap between what a business needs and what it qualifies for this type of financial assistants are carried out by the Microfinance banks on behalf of the local Government.

Equity Financing: Equity financing involves no direct obligation to repay any funds. It does, however, involve selling a partial interest in your company. In effect, an equity investor becomes your business partner and will have a degree of control over how your business is run; equity investors are interested in the business’s long-term success and future profitability.

Advertising in the newspaper: As simple as it seems, one of the easiest ways of raising money is by advertising in a newspaper or a national publication featuring such ads. Your ad should state the amount of money you want – always ask for more money than you need so you have room for negotiating. Your ad should also state the type of business involved and the kind of return you’re promising on the investment.

Barter System: A business sells products or services that somebody requires, and hence it is in existence. A company can very well barter these services or products to obtain those things that are required by the business to grow or serve the customers. A firm can also barter for personal things required typically, for which funds have to be withdrawn to pay for. Business can barter for, rules, advertising, accounting or travel services, landscape, television cleaning services and many more.

Go for Strategic Investors: A business can also obtain finance by finding strategic investors. Firstly, a small venture needs to find out, whether its products or services are directly benefiting a larger organization or not. If yes, then it is better to contact them immediately. The small venture has to convince the larger company that their products or services have the potential of positively influencing their trade. This way, a firm can obtain finance by the means of direct equity, loan, or prepaid contracts. A company has to search for strategic investors, and there is no dearth of them in the market.

Tap the Suppliers: If the firm plans to expand its business rapidly and require capital to pay for supplies, then they can ask the suppliers to provide advance payment. When the business expansion contributes to a substantial portion of the annual receipt of suppliers, the firms can request the vendor to offer a yearly or two-yearly period loan by highlighting the vendor’s benefits. Thus, it is fine to negotiate for at least three months payment deal.

Friends and relatives: If they believe in you and your idea, friends and relatives are sometimes willing to fund you. Choose this route with care and ensure you execute a formal loan document stating loan terms (interest, terms of repayment)

Life insurance: Some types of life insurance policies have cash value, which can be borrowed at very low interest. You are not obligated to pay this money back but if you don’t your policy payout is reduced by the amount borrowed

Start the business from home: You can start your business for much less money if you don’t have to foot the bill for office space and utilities for an out-of-the-home office. While you may not want to advertise the fact that you work from home, you will have plenty of company.

Leasing: Unlike loan, leasing is like long-term rental. At the end of the lease, you don’t automatically own the asset; you have the option to buy it at its residual value. A lease requires little or no money down and is an alternative to purchasing such item as cars machinery or office equipment. A Lots of Nigerian has built their transportation business through leasing

Export financing: These loans support export financing to small businesses when financing is not available on reasonable terms. Export financing encourages lenders to offer export working capital loans by guaranteeing repayment of a loan in a timely manner.

Get advance commitments for work: Line up one or two sources of business before you take the plunge. Former employers, if you left on good terms, are often a source of start-up work, or sometimes funding. Big companies that can send you their overflow work or small jobs that they don’t want to do can also provide the initial stream of work and income.

Franchise loans: Many franchise companies either offer monetary assistance or help franchisees find a lender. Many franchises have a list of favored lenders.

Approaching money lenders: This form of lending is very popular and vital to small business development. A lender incurs risk and charges a corresponding rate of interest based on that risk. The lender usually assesses a variety of factors such as the strength of your business plan, and your personal credit history. In Nigeria, a lot of people have set up this type of business venture, the payback period does not always exit 12 months, and they receive collateral like Cars, C of O’s radio, TV etc.

Going public: Once again this option is available primarily to fast-growth companies. This is when you offer and sell equity interests in the company (e.g. shares) through a stock exchange or broker network. Going public involves a rigorous process of regulatory compliance and promotion.

Joining a cooperative society: They are micro finance institutions, and they have existed in Nigeria since 1935, they form themselves into trade union associations, You can form one today, with a minimum of 10 to 14 members you can have access to loan worth 10 to N20Million. They do have periodic meeting to discuss the financial status of the association

Retirement plans: Some retirement plans allow you to borrow against vested benefits. Generally up to 50% may be borrowed. The government has made it compulsory for all corporate organization to be part of this scheme; it is called Insurance Trust Fund which made all the employee of a company to contribute 2.5% of their basic salary while the employers contribute 5%.

The informal saving sector: The most predominant type of informal finance in Nigeria is the Esusu. Among the Yoruba, it is called either Esusu or Ajo. Among the lgbo, it is called lsusu or Utu while the Edo call it Osusu. The Hausa call it Adashi’, the Nupe Dashi, the Ibibio Etibe, while the Kalahari call it Oku Some Esusu operate with written laws while others operate with unwritten laws but on oath of allegiance and mutual trust. The general practice is that esusu associations contribute a fixed amount periodically and give all or part of the accumulated funds to one or more member(s) in rotation until all members have benefited from the pool.

Partner savings: Having a partner helps spread out not only the business management but the financial burden. A good partnership is also synergetic, bringing more success than running a business alone.

Making use of independence fund managers: It is called the SME’s manager limited (SML), which is an investment advisory company establish by African Capital Alliance, they have an office at Octagon Towers Victoria island, Lagos, they are set up to promote SME led investment in Nigeria by making equity investment in Nigeria, also available is New Partnership for African development NEPAD, also available is the African Project development Facility (APDF), they provides credit analysis support and also assist small business in raising long term credit support usually in foreign exchange their office is at 11A Ganges Street, Maitama, Abuja.

Selling your business ideas: Once you’ve got a company set up, it may seem presumptuous to go knocking on the doors of rich people and asking them to invest tens of Millions of Naira. But when you look at it from the rich people’s point of view, the picture is more encouraging. Most rich people are looking for good investments, so you can contact them.

Mentor funding: This is takes place during apprenticeship; a mentor is someone who serves as an example, an advisor, the apprentice is settled with an amount of cash which is known as settlement after the completion of his/her apprenticeship. The settlement money now serves as the initial capital.

Sell your stuff: Sell anything you haven’t used in a year or longer. The same goes for leased items.

Joint Venture: When friends and associates whose strength and expertise complements each other decided to pool their money and resources together to start a business is referred to as joint venture; A lot of venture has succeeded through this effort.

Multinationals: Some multinationals has tried in their own way to help the small scale enterprises, they empowered the community through the support and promotion of micro and small enterprises, helping people to create additional goods and services for local markets. Today, hundreds of community based enterprises, micro-credit schemes, Youth Business Development Programmes and Neighbourhood improvement schemes have benefited from these programmes. Such programmes are traditionally implemented by NGO’s on behalf of the Oil Companies, NGO like growing business foundation and lift above Poverty Organization are examples of some NGOs in Nigeria that have been helping Small business in Nigeria through financial assistance from the oil companies

Private offering: Turn your relatives into part owners, so that they have an emotionally vested stake in seeing your business succeed.

Personal savings: Set a budget at the beginning of every month, sit down and look at how much money you’ll have coming in. Subtract the amount you’ll owe for bills that are due, and make a plan for what’s left over; you are your own best “lender” if you have the savings. This approach can be quick and easy, a lot of business has grown has a result of good saving plan.

Grants: A lot of grant seekers have developed their business as a result of their ability to request for foreign grants from foreign grant makers, for instance African development foundation ADF, supports is focused on community groups, and businesses where there is active involvement and participation and other underserved populations. Their application form is FREE, and their office is at Plot 54 Ibrahim Abdulkadir Close, Off Mississippi St. Maitama, Abuja.

Corporate support: Strategic partnering aren’t just a much-talked-about trend, they’re the best alternative for many companies that find themselves either shut out of traditional finances deals or unwilling to swallow the equity valuations or interest charges required to make those deals happen. Cash infusions connected with strategic partnering are usually much smaller than they might have been with traditional financing deal (and sometimes investments aren’t a factor at all). When a partnership’s synergy clicks, however, the resulting growth can often yield far greater capital options later on.

Sell assets to relatives and friends: Asset sales to relatives and friends can offer a neat and relatively simple alternative to either loans or equity deals. Put simply, your company sells one or more assets to someone you know or trust, he or she then leases those assets back to the business at a price that seems fait to both of you. Your company gets one tine infusion of capital and presumably, better leasing terms than it would have received if it had been dealing with an independent financier. Best of all your capital structure remains clean.

Rewarding a loyal management team: You can reward a loyal management team to invest in your business since they share your vision, you can give them 5% to 30% equity in your business

NGOs in Nigeria loan assisted programme: A lot of NGOs in Nigeria has been providing business loan to Nigerian Entrepreneurs, NGO like Youth business Initiatives, YBI; Lift above Poverty Organisation LAPO, Empowerment And Action Research Centre (EMPARC) are some of the NGOs in Nigeria that provides financial assistance for Nigeria Entrepreneurs.

Business funding initiative from foreign Countries: United States agency, call Small Business Administration SBA is collaborating with Nigeria Investment Promotion Council (NIPC) to assist Nigeria SME’s to midwife direct foreign investment in Nigeria.
This has resulted in partnerships joint ventures and other collaboration for the export of SME product to the US. For more information you can contact NIPC in their office at Plot 1181 Aguiyi Ironsi Street Maitama District, Abuja.

Government loans: The government offers a variety of loans to fund and support small businesses through NAPEP. The National Poverty Eradication Programme (NAPEP) was established in 2001 to address the challenge of poverty in Nigeria. NAPEP consists of all relevant programmes and projects that are aimed at eradicating absolute poverty among the people of Nigeria. They are currently helping small business in Nigeria through their loan programmes such as Capacity Acquisition Programme (CAP), Promise Keepers Programme, Village Economic Development Solutions (VEDS) popularly known as Village Solution.
Don’t forget to focus on the positive-first, your attitude can make all the difference.



Crowd Funding: This works for idea you believe lots of people will be willing to support and fund. Websites like, GoFundme, seedrs,,


Venture Capitalist: If your startup is fast gaining traction (Lots of increased customer or sales) approach VC’s or Angel investors to raise funding for your startup. This type of investment is more common for Tech-companies or fast growth startup. a few of VC links; Google VC4A, AbanAngels, LAN, Africa XL, DraperDarkflow, TLCom, SilverTree, Kinnekiv, Omidyar Network. Et al.



This list is not exhaustive, if you have some ideas to get capital, share in comment section below or email to


If you have questions or need funds to support your idea, drop it in the comment section, one of our expert at will give you support.


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Agric consultant

Tunji A. is a small business finance expert, with wide knowledge in agro commodities export.

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