Nigerian digital lenders to access ₦1 billion capital via Lendsqr’s on-lending initiative

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October 14, 2024
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4 min read
fintech
  • Lendsqr, a Nigerian fintech startup offering loan management software for banks, microfinance institutions (MFIs), and digital lenders, has introduced an on-lending initiative to enhance lenders' capacity to extend credit to their customers. 
  • This new initiative provides a capital pool of up to ₦1 billion for lenders with State Moneylender or Cooperative licences, empowering them to access sustainable capital for growth and expansion.
  • Per Joy Bello, Head of Sales at Lendsqr, the on-lending initiative is open to all lenders who provide loans online. Whether you are an SME lender, microfinance bank, or commercial bank, if you offer digital lending services, you qualify to use Lendsqr's software, which is essential for accessing the on-lending capital. 

Adedeji Olowe, CEO of Lendsqr, explains the reason behind the initiative: “For a long time, we believed that providing top-tier lending technology was enough to help lenders scale. But technology alone cannot scale a loan business without adequate capital. That’s why we decided to go a step further and solve this critical need.”

The number of approved digital lenders in Nigeria has surged by 79.77% since April 2023, fuelled by a rising demand for credit among Nigerians. 

This trend is reflected in a substantial 329.28% year-on-year increase in personal loans, reaching ₦7.52 trillion by March 2024, according to the Central Bank of Nigeria (CBN). By September 2024, the number of licensed digital lenders had grown to 311, up from 173 in April 2023.

This growth in consumer credit is largely attributed to the increasing popularity of loan apps amid high inflation, which stood at 32.15% in August 2024.

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Consequently, Lendsqr’s on-lending model is designed to support digital lenders who face challenges in accessing loan capital, enabling them to obtain credit at reasonable rates. This initiative bridges the gap between technology and capital, helping lenders meet the increasing demand for loans while staying competitive.

The on-lending capital structure offers overdraft loans, allowing lenders — no matter their size — to access credit while only paying interest on the amount they use, rather than facing high fixed payments.

“This initiative promotes financial inclusion by enabling even the smallest digital lenders to participate in the market,” Bello highlights. 

Borrowers also benefit from a dashboard that provides real-time updates on loan usage and repayment amounts, enhancing their ability to manage repayments effectively.

Lendsqr positions itself alongside established on-lending capital providers in Africa, such as Lendable, the Nigerian Bank of Industry, and the African Finance Corporation. 

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By offering direct loan capital to digital lenders, the fintech aims to support lenders in promoting financial inclusion and driving growth within the SME sector. 

This initiative not only addresses immediate funding gaps but also lays the foundation for long-term partnerships across the financial industry. By enabling lenders to reach more customers and explore new markets, Lendsqr plays a crucial role in stimulating local economies and strengthening Nigeria’s financial services landscape.

Eligibility and application process

Lendsqr’s on-lending initiative is available exclusively to Nigerian lenders, with interested parties encouraged to apply via the Lendsqr Capital Portal.

To qualify for the programme, lenders must meet certain criteria:

  • Be duly registered with the Corporate Affairs Commission (CAC).
  • Provide documentation regarding directors and shareholders.
  • Possess a valid lending licence.
  • Have up-to-date tax documentation, including tax clearance certificates.
  • SME lenders may also need a state moneylender licence or cooperative registration.
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Once all required documentation is submitted through the application portal, Lendsqr’s risk team conducts a thorough review. Their risk assessment system evaluates the information provided to determine eligibility.

“If approved, lenders receive an offer letter, and the funds are disbursed immediately for existing lenders,” Bello explains. 

However, Lenders who haven't engaged in lending activities through their Lendsqr account for the past three consecutive months will have their line of credit approved but must actively use their account for three months before accessing and utilising the funds. 

“This approach allows us to gain valuable insights into the new lender’s business activities before disbursing funds,” Bello notes, likening the process to approaching a bank for a loan without an existing relationship.

Flexible loan amounts and interest rates

First-time applicants can apply for loans ranging from ₦1 million to ₦15 million, with interest rates determined by a risk assessment of the lender’s profile. There is no fixed deadline for applications, as the initiative aims to empower as many lenders as possible to provide credit to those in need.

Lenders can apply for the amount they believe they qualify for. However, if the credit team assesses that a lender qualifies for less than the requested amount, they will initially receive the lower figure. Future increases in loan amounts are possible, based on the lender’s performance.

Lendsqr’s on-lending initiative marks a significant development in Nigeria’s lending ecosystem, providing smaller financial institutions with a reliable source of capital while promoting financial inclusion.

By supporting digital lenders of all sizes, this initiative aims to deepen financial inclusion, stimulate local economies, and contribute to a more robust and competitive financial services sector in Nigeria.

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She's autistic and interested in mental health and how technology can help Africans with mental disorders. Find her on Twitter @latoria_ria.
She's autistic and interested in mental health and how technology can help Africans with mental disorders. Find her on Twitter @latoria_ria.
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She's autistic and interested in mental health and how technology can help Africans with mental disorders. Find her on Twitter @latoria_ria.

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