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

TAJBank can add value to your business — through its non-interest finance products.

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TAJBank is the second non-interest or Islamic financial institution — to commence operations in Nigeria.

The bank has its head office in Abuja — with a further branch in Kano (Northern Nigeria).

TAJ offers a range of retail, public sector, SME and corporate banking services.

Funding and types of business loans available through TAJBank

Cost Plus (Murabahah) Working Capital

TAJ Bank, through this working capital finance facility, helps you finance purchases of raw materials and assets. The facility works by TAJ appointing you as an agent — to source for the goods or assets you need. Once sourced, the bank will directly pay the supplier. You are required to pay back, at an agreed future date (or in installments), on a “cost plus profit” basis.

Cost Plus (Murabahah) Import Finance

This import finance facility, is perfect for businesses engaged in buying things from overseas — such as raw materials, finished goods, equipment, machinery and more. Here, TAJ can issue a letter of credit (LC) in favor of an exporter (the beneficiary). This letter of credit, is a commitment from the bank — to pay for goods in compliance with the terms of the LC. Payment is typically made, upon receipt of shipping documentation.

Project / Construction / Manufacturing (Istisna) Finance

Istisna or project finance — is a contract utilized for construction, manufacturing or development projects. Under the terms of this arrangement, TAJ will facilitate and deliver such projects on behalf of your business. The bank then sells (cost plus profit margin) the delivered project to you — on deferred payment terms. This facility can be used to fund the construction of real estate (residential and commercial), industrial buildings and more.

Bonds & Guarantees (Kafalah)

TAJBank provides this service to companies that need to give their clients, or trading partners guarantees. In essence, these guarantees either demonstrate your creditworthiness or your ability to meet contractual obligations. Guarantees can come in the form of bank guarantees, advance payment guarantees, performance bonds, bid bonds and more.

Partnership (Musharakah)

Musharakah or partnership, is a facility that can be used to fund short to long-term contracts, or other commercially viable ventures. Here, TAJ and a business enter into a partnership contract, that sees each party contribute equity or capital — to establish a new project or expand an existing one. The risks and rewards of the venture are shared, in proportion to the underlying terms of partnership.

Cost Plus (Murabahah) SME Finance

With this finance product — the funding requirements of small and medium-sized enterprises (SMEs) are met. Here, TAJ puts small businesses (e.g. traders, farmers etc.) in cooperative clusters, and finances their working capital needs. Each cluster cooperative cross guarantees another — ensuring good performance across the board. TAJBank directly buys the goods (or assets) required, and sells them to the SMEs — using the cost plus profit model, on deferred payment terms. SMEs can choose to repay in installments or as a lump sum.

Qualifying for a TAJBank business loan

TAJ provides a mix of different business financing products. Some of these products are only appropriate for certain types of businesses. For example, some products are only useful for SMEs — while some cater to large companies, with international operations. Accordingly, each product will have its own eligibility or qualifying requirements.

However, like with most banks in Nigeria, there are a few fundamental lending criteria — that apply to all credit facilities on offer.

No matter what, your company must generate regular cash flows, and have a good credit history — in order to secure any form of financing from TAJ. Credit history, in particular, is vital. If you have defaulted on one of your past debt obligations, having another loan request approved, will be extremely unlikely — unless you are able to pledge valuable assets as collateral.

Further general lending criteria 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

Only registered companies, are able to get business financing with TAJBank. Unregistered businesses, will have to seek alternative options — one of which is getting a personal loan and using it for business purposes. TAJ does also offer salary advance and other personal loan products.

Another option is to apply for a loan with SukFin. SukFin can give you several alternative business financing solutions.

How to apply for a TAJBank business loan

Once you are aware of the different finance products on offer, and have identified some that may be suitable for your needs — you will be ready to make a loan application.

Loan applications can be made at a TAJBank branch. There, you would meet with a loan adviser — to discuss your requirements further, and subsequently fill in an application form. On this form — you will give details of your company, its trading history and the loan purpose.

As part of any application, you may be asked to provide relevant supporting documentation. This documentation, the application form and any other information in the public domain — are what TAJ will use in deciding whether to fund your business or not. Lending decisions, will be taken in line with TAJBank lending guidelines.

A successful application, will result in an offer letter being issued — outlining the steps you are required to take before loan disbursement.

A checklist of important documentation, often asked for 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 credit facility in question, determines the actual documents you will need to provide.

Frequently asked questions (FAQs)

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

Each credit facility, will have its own processing and approval timeline. Generally, smaller unsecured loan requests are approved and disbursed the quickest.

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

TAJ can tailor any repayment period — according to your business needs. Funds can also be advanced for both — short and long-term needs.

How much can I borrow from TAJ Bank?

The amount of money you can borrow from TAJ, is in line with your capacity to repay i.e. your company turnover.

What is a non-interest bank?

TAJBank is a non-interest or Islamic Bank. This simply means that TAJ does not give or receive interest. Also, the bank cannot finance “Haram” things such as alcohol, gambling and tobacco. Further, TAJ is unable to take part in very speculative transactions.

Does TAJ Bank require collateral?

Some loan products do require collateral, while others do not. As a general rule, when borrowing large sums of money — you will almost always be asked for some form of collateral.

As collateral, the bank may accept things like:

  • 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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