How to Sell Your Loan Products

Before we go any further, let us look at what the Law says about selling your loan products. We will be referring again to the Moneylenders Law of Lagos state. Keep in mind however that the Laws for the different states are very similar and follow the same format but be sure to confirm details for whatever state in which you’re setting up your business.

In our posts on getting your lending business up and running, we mentioned that the next step after creating your loan products was to invite borrowers to view and apply for them. In this post, we will be talking a bit about that process, which is really all about “selling” your loan products. In that post, we also mentioned that using a Lending Platform like Lendsqr makes this process easier because the platform ensures that things run smoothly, from the time you put your products up on offer to when your borrower repays your money. Some platforms allow potential borrowers to view and apply for your loan products while others allow you to be more selective in deciding who sees or has access to them.

Section 16 of the Moneylenders Law of Lagos state, states that a moneylender is prohibited from employing canvassers or agents to solicit for borrowers (Eja & Bassey, 2011), neither can the moneylender make the borrower pay a commission to anyone who links the borrower to the lender. What this means is that you can’t send your “guys” out to harass people on the streets like Agbèrò or all those boys that used to be in Téjúosó market screaming you wan buy jeans in your face and practically stuffing the said jeans down your throat. There’s only one response to that type of business strategy: STOP IT! Don’t even go there. Not only is it very unprofessional and nothing short of harassment, it is also against the law, so be warned. Also remember that even though you might not require a Moneylenders License to run your business as a side-hustle, you are still bound by the Laws that govern moneylending in the state in which you run your business. And really, what we’re trying to achieve with these posts is to help you set up a legit, responsible and profitable business. If you’re going to do this at all, you might as well do it right, and with some dignity too. Remember that you have the potential to help people who would otherwise not have access to traditional loan sources with your business. Exploiting them or taking advantage of them should be far from your mind.

Now that we’ve talked about how not to live your life and sell your loans, let’s talk about how to do it right. The first and the most obvious way to sell your products is by word of mouth. You will surely come across people in your circles who will need funds for some venture or the other from time to time, or even for emergencies. Lending to people that you already know, and trust is a good way to start. It makes the assessment process easier and faster, plus you know where to find them if they don’t pay back on time. This method of selling your loan products is however a double-edged sword. I’m sure that you know (maybe even from bitter experience) that mixing money with family and friends can sometimes go wrong-side-up. Discretion is very key in this case.

Some Lending Platforms take this step out of your hands completely and they throw your loan products open to the public. In this case, you aren’t too involved in the “selling” process and all you have to do is create your loan products on the platform; the platform links the borrowers to you. This comes with advantages and disadvantages. On the one hand, you don’t have to worry about your uncle’s sister’s daughter’s husband’ friend’s niece taking advantage of your relationship and refusing to pay back. It also saves you from the temptation of hiring some Agbèròs to walk the streets of Lagos, calling passengers onto your Lending Dánfó. On the flip side, you lose all control of the selling process and all you’ve got to go by with making a decision on who you lend to is what information they provide on their application.

Some platforms allow you to have control over who views and applies for your loan products while still providing you with a layer of protection from over-familiar friends and family members. These platforms allow you to invite people that you know (and hopefully trust enough with your money) onto the platform. Once they receive an invitation from you, they get access to the platform and your products. However, going through the platform creates a subconscious air of formality to the whole lending process. It removes some of the familiarity that a more direct/personal interaction brings and people are more inclined to honor a formal contractual agreement. Also, since every aspect of your transactions with them passes through the platform, they have fewer chances of defaulting on their loans. For example, if your platform provides direct-debit functionalities, then you know that at set dates, payments will be made automatically. And let’s face it, having your cousin make a card payment online is way less awkward than having to ask him/her about your money at your sister’s wedding while everyone is trying to pose for the wedding pictures.

References

1. Eja, E.E. & Bassey, E.E. (2011). Money lending law and regulation of consumer credit in Nigeria. Nnamdi Azikiwe University Journal of International Law and Jurisprudence, Vol 2 (2011). Retrieved from here
2. The Moneylenders Law, SLS 1990. Retrieved from here