How To Start A Money Lending Business In Nigeria

Every business is run by money for the purpose of making money. Money is to business what blood is to mankind. No business can be sustained without it. Most SMEs are usually confronted with the challenge of funds for business operations and expansion. Securing adequate funding is an ever present need for any business.  Given the cumbersome, and sometimes frustrating, process of obtaining bank loans, any budding entrepreneur faced with low capital would gladly welcome alternative lending options with less stringent requirements. Also, a good number of paid employees are often in need of extra cash to meet up with the prevalent high cost of living.
The financial services industry is indeed a broad industry. An aspiring entrepreneur who has considerable start-up capital and a good grasp of how the financial business works can successfully start a money lending business to address the financial challenge faced by most SMEs and employees. So, if you still brainstorming on the business to undertake, money lending business may be your best bet.
Definition of Money Lending
Money lending is the act or occupation of lending money at interest rates. Money lending business is not as heavily regulated as financial institutions like banks, insurance companies, etc. It is regulated by the Money Lending Law of the various States in Nigeria. A money lender as defined by Section 4 of the Money Lenders’ Law of Lagos State is a person who lends money at interest or who lends a sum of money in consideration of a larger sum of money being repaid.  This implies that any person who lends money for interest consideration is presumed to be a money lender until the contrary is proven. Such a person is subject to provisions of the Money Lenders’ Law. Money Lender’s Law is only applicable to persons who are carrying on the business of money lending and not to persons who lend money as incidental to business or to a few friends who are in need.
Licensed Money Lenders
Only persons licensed as money lenders by the relevant government authority are permitted to engage in that line of business.  In the event of default, a licensed money lender can successfully institute an action in Court to recover the principal loan as well as the accrued interests. An unlicensed money lender cannot institute a Court action as a money lender otherwise such an action will fail. He can only bring his action as an individual to recover the actual money borrowed. He will not be entitled to the accrued interest payable on the loan.
Procedure for Obtaining License

  1. Apply to any Magistrate Court having jurisdiction in the area in which you intend to run the business with the following supporting documents:


  1. A cover letter addressed to the Chief Magistrate on the Applicant’s letterhead.
  2. Certified True Copy of CAC Form 2.
  3. Certified True Copy of CAC Form 7.
  4. Memorandum and Articles of Association of the Company.
  5. Certificate of Incorporation.
  6. Tax Clearance of the Applicant.
  7. Police Clearance from the Commissioner of Police.
  8. Evidence of Maintenance of current account with a licensed Bank.

Upon the Application to the Chief Magistrate, the Applicant will be issued with a Letter and Forms B and C.
Please note the objects in your Company’s Memorandum of Association must include financial service or money lending business. Also, the share capital must not be less than N20, 000,000 (Twenty Million Naira).

  1. After obtaining the necessary Court documents, apply to the Ministry of Home Affairs and Tourism with the under-listed accompanying documents.


  1. Application letter.
  2. Money Lender Ordinance [Form B] 1938 – from Magistrate Court.
  3. Duly completed Form C- from Magistrate Court.
  4. Police Report from Commissioner of Police showing- fingerprints of individual Applicants/Directors/ Proprietors/.
  5. 3-year Tax Clearance Certificate, [including current year] / Development Levy for each individual Applicant/ Director/ Proprietor.
  6. Pay as You Earn [PAYE] Certificate, Tax Clearance of at least two (2) of its directors, and evidence of payment of Company taxes.
  7. Copy of Certificate of Incorporation and CTCs of Forms CAC 2 & 7.
  8. Evidence of payment of Application fees.
  9. Evidence of maintenance of a bank account with a licensed bank.


  1. The final stage is visitation and physical inspection of the intended office by the government officials. Upon visitation, if the company is already engaging in the business of money lending, the books will be inspected in addition to the office. If the company is yet to commence business, inspection of the office premises and officers of the company will suffice. If satisfied that the company has complied with perquisite statutory requirements, the Applicant shall be issued with the Money Lending License Certificate.

Like every other business, money lending can be demanding and risky at the same time. However, with a proper combination of good knowledge in the industry, detailed feasible study and other preliminary findings together with the necessary risk management mechanisms, money lending could be very profitable.
This article is provided for general information purposes only. It does not constitute legal advice or a legal opinion on any specific facts or circumstances. If you have any enquiries about this article or require further information, please contact the writer –