In a powerful move to support Nigeria’s small business ecosystem, Sterling Bank has partnered with the Lagos State Government (LASG) and the Bank of Industry (BOI) to roll out collateral-free loans for small businesses. This new initiative aims to provide thousands of entrepreneurs across Lagos with access to credit—without the traditional barriers that often prevent them from scaling up their businesses.
The inability to offer collateral has long blocked many small and medium-sized businesses (SMEs) from securing desperately needed funding. However, this strategic alliance is now removing that barrier.
During a press conference in Lagos, Sterling Bank announced the loan program and highlighted its emphasis on enabling microbusinesses and startups, which form the foundation of the Nigerian economy. By providing credit to marginalized populations, particularly women and young entrepreneurs, the bank aims to promote a more inclusive financial sector.
The program tackles one of the most enduring issues facing business owners. This is often about obtaining funding without worrying about collateral or unaffordable interest rates.
With more than three million MSMEs operating in Lagos, their contributions to GDP and employment remain indisputable. However, strict financial requirements have kept the majority of them from obtaining loans.
Sterling Bank, BOI, and the Lagos State Government formally launched the LASMECO program by signing a Memorandum of Understanding (MoU).
Under the agreement, SMEs can access loans of up to ₦10 million, with repayment terms of two to three years and an attractive interest rate of 9%.
Business owners will secure loans through registered cooperatives, which provide collective guarantees instead of requiring physical collateral.
Sterling is backing all MSMEs in the program with a 50% loan assurance, which ensures full loan access for eligible participants and eliminates collateral concerns.
“This kind of corporate commitment to social impact, while still achieving business goals, sets an example for other financial institutions,” Governor Babajide Sanwo-Olu said during the LASG–BOI–Sterling Bank MSME Fund launch. He also praised Sterling Bank’s ‘tremendous vision and confidence’ in supporting the state’s entrepreneurial engine.
“That means that millions of our citizens wake up every day as owners of small shops and stalls, company founders, operators of factories and restaurants, service providers, and craftspeople,” he added. These industrious men and women collectively employ the majority of our workforce and support countless families.
This program directly addresses a major issue for small business owners by eliminating the collateral requirement. For years, banks and lenders have demanded physical assets like equipment or property titles as loan guarantees. That demand effectively excluded thousands of promising businesses from obtaining financing.
Sterling Bank, BOI, and LASG are now demonstrating that responsible lending can be inclusive. They plan to support loan recipients not just with financing but also with mentorship, training, and business development resources to promote sustainable growth.
Industry observers believe this action could establish a new benchmark for SME financing in Nigeria. One financial expert noted, “This isn’t just a loan scheme; it’s a blueprint for empowering Nigeria’s next generation of entrepreneurs.”
Sterling Bank, LASG, and BOI have reached a critical milestone in Nigeria’s pursuit of broader financial access. By offering collateral-free loans to small businesses, they are creating avenues for innovation, growth, and job creation.
For additional information, interested businesses should contact the Lagos State Ministry of Commerce, Cooperatives, Trade, and Investment.
