Export Finance: Best Options to Raise Capital for your Non-Oil Export Business

export finance

This is a sequel to our earlier published agro-export business guide. Because every exporter or would-be exporter contends with the problem of export finance at one point or other in their business cycle, I will show you the best options to raise capital for your export business. Let us put that matter to bed once and for all.

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This article will cover how to approach a bank for export loan, reasons your loan application could be denied and how to avoid that. Lastly, we will look at better options for new exporters to raise money for export business without taking bank loan.

Previously, we looked at how you can start your own agriculture commodity export business from scratch. On a bigger picture, we highlighted 50 very lucrative agriculture business ideas you can start in Nigeria to build your wealth. If you missed any of those I encourage you to go take a look, there must be something there to interest you.

Nigeria’s export industry remains largely underutilized because we are still waking up from our oil-induced slumber and government is making every effort to promote economic diversification through non-oil exports. This is a golden opportunity for the smart entrepreneur to key in and prosper. Yes, export business is very profitable and the earning potentials will only increase in the coming years

Whenever the issue of export finance is raised people mostly think about export loan. However, banks deny more loan applications than they approve. This usually leads to frustration and creates a perfect excuse for the exporter to abandon the business.

Why do banks deny export finance loan applications?

Yes, banks provide export loan facilities to exporters to strengthen the non-oil export sector of the economy. In fact, the Central Bank of Nigeria (CBN) recently unveiled a N500 billion low-interest rate non-oil export facility in June, 2016, as part of efforts to boost activities in the non-oil sector of the economy. The fund is managed and issued by the Nigeria Export-Import Bank (NEXIM). You can check it out right now and commence your own application process.

Banks approve loans all the time. Good examples are NEXIM Bank and Access Bank.

However, if you are new to export business it would be very difficult, almost impossible, for any bank to give you export loan. The reason is simple: you don’t lend money to someone who has no business experience. The business could go bust and your money would go with it.

For this reason, bank loan is more suitable for business expansion than for business takeoff. Export business is no different. Before you approach a bank for loan, you should strive to carry out a minimum of 2-3 export cycles with your own money, no matter how small. Not only will you gain vital business experience, you will be able to show the bank that you know what you are doing and your chances for success are good.

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Bankers’ concerns on export loans

Here are some questions banks expect you to answer before you apply for export loan:

  1. Have you done this before? How many times? What is your level of experience? It is difficult to give money to someone who has no experience.
  2. Do you have a buyer?
  3. Do you have a payment guarantee?
  4. Are you aware of the risks involved and how do you plan to mitigate them? Export business, like any business, carries some risks such as: transportation, fraud at the farm gate, delivery risks, post-shipment risks, documentation risks, etc. Banks would want to know if you are aware of these risks.
  5. Do you have the right quality for the commodity you plan to export?

If a bank is not satisfied with your answer to any of the above questions, it might be difficult to give you the loan assistance you seek.

How to get bank loan for your export business

Here are some basic requirements for export loan in any bank:

  1. Export license: you need to have an export license; you cannot be in export business without one. You will find requirements and procedure to get your own export license in the e-book below.
  2. Business feasibility plan: you need a business plan to show the long/short term feasibility of the business.
  3. A certified true copy of Certificate of Incorporation
  4. A valid export contract: This is to show that, yes, you have a buyer for the commodity you intend to export.
  5. Acceptable payment instrument: A payment instrument is a guarantee that you will get your money at the end of the transaction. Among the various payment instruments available, Letter of Credit is more acceptable.
  6. Bank financial statements
  7. Evidence of previous exports

To recap, for you to apply for and get export loan, you must have been in the export business for a while. But how do you raise money for your very first export trade?

The best way to raise money for your first export trade is your personal savings. It is your commitment to your own business and in the event of a loss, you only lose your own money as opposed to being neck deep in debt.

For your first time, you have better chances with micro-finance banks, cooperative societies and angel investors than commercial banks. There are so many of them. Just look around you or do a simple search on google. This article show you 5 places you can locate angel investors.

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There are other options available for you to source capital, like family and friends, partnerships, joint venture, etc. Export business is much like any other business. It is very lucrative but it is not a stroll in the park. Read this article to learn how to raise capital to start your business.

Start your own profitable export business with ease [export business e-book]

agricultural exportation business ebook

If you are serious about starting your own export business, this is the only e-book you will ever need.

One thing I realize from experience is, sometimes an article, no matter how long, does not do enough to cover the depth of information beginners need to launch their own business in some difficult areas.

When such becomes the case, it calls for something much more revealing and informative than just an article. That is what I have done in presenting this e-book on exportation and international trade in Nigeria. Every bit of information you will ever need to start your own export business is contained in this 71-page information guide.

Here are some of what to expect when you get a copy

  • A step-by-step approach to exportation – from export planning to getting your money in your bank
  • How to get export license certificate with ease
  • Action points – things you can do at the end of each chapter to solidify your knowledge
  • How to plan your export business to not only get best results but also convince banks and lenders to raise capital for your business
  • A breakdown of all the documentation you will need
  • How to find buyers for your export produce
  • Top 10 trade websites and portals around the world where you will find serious buyers
  • How to negotiate an export contract with a buyer to avoid being cheated
  • Top 10 banks and organizations who are willing to give you export capital to boost your business
  • Top places around the world where you can export to and what you can export there
  • Plus so much more…

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  1. tnks for this..
    i currently hv an export order thats bigger dan my capacity ,so am in need of capable exporter that is willing to partner with me in order to fulfill the order. its going to be mutually profitting .its my first order and its in containers worth millions. so pls in nid of seriously exporters capable of exporting container.; pls contact me asap on my watsapp
    +2347030755495 emiratata@gmail.com . tnk u

  2. […] If you are taking your first baby steps in exportation, taking a bank loan is not the best way to go. For a bank to grant you loan access, you must prove that you are already in the business and you can get back their money. If you are already an exporter and would like to get bank loan to expand your business, here is an article on how to get export finance loan for your non-oil export business. […]


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