Beginner’s guide

How to get a microloan in Nigeria

Updated 2026 · About 12 minutes to read · English

Start with the right question

Before you look for a loan, most Nigerians would do well to ask a simpler question: what is the loan for, and can the repayment fit into your income? A microloan is usually a small loan, often for a few thousand to a few hundred thousand naira, repaid over a short period. Because microloans are short-term, the cost can add up quickly if you are not careful.

This guide walks you through the whole process step by step so that you can borrow safely and avoid the common mistakes that push people into debt. It goes together with our first-loan checklist and our guide to interest rates.

Choose a licensed lender

The single most important step is choosing a lender that is licensed and regulated. In Nigeria, loan providers fall into two main groups:

• Microfinance banks (MFBs): these are licensed financial institutions that offer small loans, often with branches you can visit. Examples of well-known MFBs include LAPO MFB and AB Microfinance Bank.
• Approved digital lenders: online and app-based lenders that have been vetted and given approval by the CBN to operate. Renmoney, Carbon, FairMoney and Branch are digital lenders of this kind.

You can verify a lender’s status using the CBN’s published lists of licensed microfinance banks and approved digital lenders. Our lender directory lists well-known institutions with links to their official websites so you can check them yourself. If you cannot confirm that a provider is licensed, treat it as a strong warning sign. See how to spot loan sharks for more.

Prepare your documents

What you will be asked for varies by lender, but in most cases licensed lenders ask for a few standard things:

• Proof of identity. This is usually done through your Bank Verification Number (BVN) or your National Identification Number (NIN).
• Proof of income. A regular salary, business records, or evidence of your trading or business income.
• A bank account. Lenders usually want to see your account history so they can confirm you receive income and make repayments.

Understand the agreement before you sign

Before you accept any loan, make sure you can answer these questions from the offer:

• How much exactly will I receive, and when?
• What is the total amount I must repay?
• How is the interest calculated — on the full amount, or on the balance I still owe? (This matters a lot.)
• Are there any fees besides interest — processing fees, insurance, late fees?
• What is the repayment schedule, and what happens if I miss a payment?

This is also where our loan comparison framework helps, because it forces you to look at total cost and tenure, not just the headline numbers.

Only borrow what you can repay

Sensible borrowing means the repayment should fit comfortably inside your monthly income. A useful habit: set aside the repayment amount from each income you receive before you spend on anything else. If an unexpected expense is likely, borrow less rather than more. Taking loans from several apps at once to cover each other is one of the fastest routes into a debt trap, so avoid it.

Know the difference between being fast and being safe

Digital loan apps are popular because they are fast. You can often get an approval decision within minutes and money in your account the same day. That speed is genuinely useful in an emergency. But speed is not the same thing as safety. A legitimate app will still give you a clear contract, show you the total cost, and let you read the terms. If an app pressures you to accept immediately, refuses to show the numbers, or demands access to your contacts list before you can see the terms, you should stop and read our guide to loan app permissions and privacy.

Microfinance banks are usually slower, but they are regulated institutions you can visit in person, ask questions face to face, and complain to if something goes wrong. For a first-time borrower, the extra few days of waiting can be worth it. The choice between the two is covered in detail in our guide on loan apps vs microfinance banks.

Watch out for hidden costs and pressure

Some lenders advertise an attractive headline figure and then add processing fees, insurance premiums, or late payment charges that are not mentioned clearly. Always ask for the total cost before you sign: the full amount you must repay, not just the interest percentage. If a lender cannot or will not tell you the total cost in naira, treat that as a serious warning sign.

Pressure is another warning sign. A licensed lender will give you time to read and think. If anyone pushes you to sign quickly, calls your emergency contacts before you have a loan, or threatens you during the process, that behaviour is typical of a loan shark. See how to spot loan sharks for the full list of red flags.

What to do if you are rejected

Being turned down is not the end of the road. Lenders reject thin-file borrowers — people with little credit history — all the time. Instead of trying several apps at once (which can hurt your chances and your credit record), work on the things lenders look at:

• Keep a single, active bank account that shows regular income.
• Give your account a few months of consistent transactions.
• Start with a small loan and repay it on time to build a record.
• Check your own details are correct and consistent across applications.

Our guide on improving your chances of approval goes deeper into this.

A note on your credit record

When you borrow from a licensed lender, your repayment behaviour can be reported to a credit bureau. That is not a threat — a strong repayment record makes it easier and cheaper to borrow later. The danger is the other direction: late or missed repayments can mark your record, which can affect your ability to get credit for years. If you are struggling, talk to your lender early rather than disappearing. See what happens if you default.