With $20 million in financing from the Islamic Corporation for the Development of the Private Sector (ICD) in 2018 and another $25million to support SMEs in September 2021, Jaiz Bank’s interest-free business loan products might be the choice of startups irrespective of religious sentiments in a few years.
Founded by Alhaji Umar Mutallab in 2003, Jaiz Bank is Nigeria’s first Islamic or non-interest bank, headquartered in Abuja.
Today, it has branches in Osogbo, Abuja, Ibadan, Kaduna, and Kano among others while it plans to expand across the country.
Its banking products cover personal, SME, and corporate banking services, and provide interest-free credit facilities to Nigerian entrepreneurs.
8 Types of Non-Interest Business Loan Products By Jaiz Bank
- Musharaka or Equity-based Finance
- IjarawaIqtina or Lease to Own Finance
- Export Finance or Murabaha
- Working Capital Financing or Murabaha
- Jaiz Ijara Service
- Import Finance or Murabaha
- Project Financing or Istisna’
- Bonds and Guarantees or Wakala/Kafala
Equity-based Finance
Also known as Musharaka, this product each party to a business will make an equity contribution to establish a new project or expand an existing one.
IjarawaIqtina
Known as Lease to Own Finance, the bank enables applicants to rent or lease assets from the bank and by the end of the contract, you can opt to buy the asset.
How it works: Jaiz purchases the asset for you while on your part, you are expected to make regular lease payments.
Murabaha
Also known as Export Finance, exporters of finished products from Nigeria can access this business loan at the pre and post-shipment stages.
Working Capital Financing
Islamically known as Murabaha, applicants can access this interest-free loan (if you’re qualified) for purchasing goods.
How it works: As a business owner, you go out there to source the goods and its cost, and you are expected to present to Jaiz Bank a proforma invoice, you can deploy an invoice generator for this purpose.
In turn, the bank makes direct payments to the supplier. Then you begin to make repayments based on T & C of the credit facility.
Ijara Service
This is designed for companies to pay workers’ salaries and other working capital expenses.
Import Finance
Also known as Murabaha, it’s designed for importers of goods to make payments with reduced risk.
Istisna’
This product is known as Project or Construction Financing which is designed for companies that undertake capital intensive projects like (e.g Dangote).
How it works: Jaiz bank agrees to construct and to sell the project in question which us usually on deferred payment terms.
In this situation, the bank’s selling price will be at “cost plus a profit margin” while the owner of the company can pay in full or in installments after successful delivery of the project
Bonds and Guarantees
Known as Wakala or Kafala, this is designed for businesses that can sufficiently demonstrate their creditworthiness, or their capacity to meet their contractual obligations.
How it works: Bank guarantee is issued by Jaiz Bank to the applicant for things like advance payment and performance bond among others.
Qualification Requirements:
All the above non-interest business loans have their specific eligibility requirements, but the general requirements are:
1) Your business must be profitable and have the financial capacity to repay.
2) Your business or company must have a good credit history, this is needed for an unsecured loan.
3) You must have evidence of business or company registration with the Corporate Affairs Commission (CAC). You can check how to register a sole proprietorship business at: https://infomediang.com/business-name-registration-nigeria
4) You must have a business or corporate bank account
5) Your business must be at least be a year old
6) You must be an active customer of Jaiz Bank
Our advice:
You have to carefully study and ensure you understand the terms and conditions that come with the one applicable to your business.
How To Submit Loan Application At Jaiz Bank
Even if there is an online application for you to fill, in most cases, you are expected to visit the nearest branch of the bank to get a full assessment.
In this case, the Business Risk Management team may advise you on a suitable loan for your business
In a case, where you are eligible, see below the details that may be required from you:
1) Completed and signed application form
2) Your company profile and address of directors
3) Business plan of how the loan will be utilised
4) Your business cash flow budget
5) At least 12-month bank statements of your business
6) The company must present audited financial accounts
7) Certificate of Incorporation from the CAC
8) Valid means of identification of directors or business owner
9) Valid proof of address
For SME loans:
To benefit from the SME interest-free business loan of$25,000,000 (as of September 5, 2021) from the Islamic Development Bank, you may have to visit the nearest branch to your location.