Jaiz Bank — how to get an SME business loan or financing

Jaiz Bank offers multiple interest-free business finance products.

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Jaiz Bank is a Nigerian Islamic or non-interest bank. It is the first such bank established in the country, and it has its head office in Abuja.

The bank commenced operations in 2012 — with branches in Abuja, Kaduna and Kano. Since then, Jaiz has gone on to expand nationwide.

Jaiz Bank provides a mix of personal, SME and corporate banking services.

Funding and types of business loans available through Jaiz Bank

Working Capital Financing (Murabaha)

Through this working capital finance facility — Jaiz Bank can help with your business’s daily cash needs. Use this facility to finance the purchases of inventory or stock — among other things. The facility works by you sourcing goods, and presenting a proforma invoice to Jaiz. The bank will then directly make payment to the supplier. You are to repay borrowed funds (cost plus profit) at an agreed future date.

Project Financing / Construction (Istisna’)

Jaiz Bank’s project financing facility, is a great way to finance relatively large industrial projects. Here, the bank agrees to construct and to sell the project in question — on deferred payment terms. The bank’s selling price will be at “cost plus profit margin”. Repayment can be tailored to your needs — you have the option of paying in full after the project has been delivered, or paying in installments.

Lease to Own Finance (IjarawaIqtina)

With this leasing facility, Jaiz Bank enables you to rent or lease assets from the bank — with the option of purchasing the asset at the end of the contract. Here, Jaiz simply buys an asset for you — while you make regular lease payments over time.

Jaiz Ijara Service Corporate

The Jaiz Ijara service, provides a means for companies to pay for salaries, professional services, labor, travel and other related working capital expenses.

Equity-based Finance (Musharaka)

Jaiz Bank, with their Musharaka facility, forms a partnership with your business. Under this partnership, each party will make an equity or capital contribution — to establish a new project or expand an existing one.

Bonds and Guarantees (Wakala/Kafala)

These products are targeted at businesses that need to demonstrate their creditworthiness, or their capacity to meet their contractual obligations. Here, a bank guarantee can be issued by Jaiz Bank for things like advance payment, performance bond and more.

Import Finance (Murabaha)

Companies involved in importing goods from overseas, are the beneficiaries of this product. Under this import financing facility, Jaiz has products like letters of credit — that enable you to easily make trade payments with reduced risk.

Export Finance (Murabaha)

Export financing, like import financing, is a form of trade finance. Nigerian exporters and trading companies, can benefit from this product. Funds can be advanced both at the pre and post-shipment stages.

Qualifying for a Jaiz Bank business loan

Jaiz Bank has a variety of funding options — suitable for both big and small companies.

Each funding option will come with its own set of terms and conditions. As such, not all products will be appropriate for your business. That being said, there are certain lending criteria that you must meet as a minimum — no matter the finance product that you apply for.

In general terms, to be eligible for financing — your business must be somewhat profitable. Your company will also need to have a good credit history — particularly if you want to get an unsecured loan. Secured loans place slightly more importance on the collateral offered — rather than prior credit history.

Other general lending requirements can (but not always) include:

  • Having a registered business or company — with the Corporate Affairs Commission (CAC)
  • Having a business or corporate bank account
  • Been trading for some time (1-3 years minimum)
  • Must have a good Credit Bureau Report — with no unpaid obligations or bad debt
  • Being an active customer of the bank

Although only registered companies, are eligible to apply for a business loan with Jaiz — there are other options for unregistered businesses.

Jaiz Bank does also provide personal loan products and salary advances — that you may be able to use for business purposes.

Another option is to apply for finance with SukFin — who can provide you with a mix of other funding solutions.

How to apply for a Jaiz Bank business loan

Jaiz Bank accepts business loan applications at most of its bank branches. Before you make an application, it’s good to be aware of the financing products on offer — this can be further discussed with a loan adviser in-branch.

Most loan applications will involve filling in an application form. This form will ask for various details of your company, its trading history and the loan purpose. In addition to filling in an application form — you will often be required to provide supporting documentation.

Jaiz will evaluate your businesses suitability for financing — using the completed application form, supporting documentation and any relevant publicly available information. Evaluation will be done against Jaiz Bank lending guidelines.

Should your loan application be approved — Jaiz will issue you an offer letter. This offer letter will state any terms and conditions to be met — before funds are disbursed.

A checklist of important documentation, often requested includes:

  • Completed application form
  • Company profile
  • Business plan
  • Cash flow budget
  • Bank statements (12 months)
  • Audited financial accounts
  • Certificate of Incorporation
  • Valid means of identification (driving license, passport, voters card)
  • Proof of address
  • Details of collateral offered (if any)

Note. The specific documents you will be asked to provide, are unique to the credit facility sought.

Frequently asked questions (FAQs)

How long will it take before receiving funds from Jaiz Bank?

The time it takes to get funds, mainly depends on the credit facility in question. Smaller unsecured loans, tend to be disbursed the quickest.

How long do I have to pay back a Jaiz Bank loan?

Jaiz Bank credit facilities are both short and long-term. The repayment structure, for any funds advanced, is also flexible.

How much can I borrow from Jaiz Bank?

Your company turnover, is the primary factor that influences how much money — Jaiz Bank will lend to you.

What is a non-interest bank?

Non–interest banks or Islamic Banks, like Jaiz, do not give or receive interest. Instead, they make money through buying and selling assets, through leasing (and collecting rent payments) and through partnership (i.e. joint ventures on an agreed profit and loss sharing formula). Islamic banks cannot finance things like alcohol, tobacco and gambling. Partaking in very speculative or uncertain transactions, is also prohibited.

Does Jaiz Bank require collateral?

Jaiz Bank does not require collateral for all of its loan products. Nevertheless, when borrowing large sums of money — you will commonly be asked to pledge some kind of collateral.

Acceptable forms of security or collateral may include:

  • Obligations of the Federal Government of Nigeria (FGN Bonds, FGN Eurobonds, FGN Treasury Bills etc.)
  • Obligations of state governments or agencies of the Federal Government of Nigeria
  • Other non-government debt instruments
  • Physical assets e.g. real property
  • Third party guarantors (or collateral)

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