If you are looking forward to starting a finance company, this guide will walk you through the process of securing an online money lending company license in Nigeria with the relevant regulatory bodies.
Over the years, there has been a rapid increase in people seeking short-term loans online to cover their financial deficits. This has given rise to numerous lending companies to meet this demand.
Gone at the days when people need to visit the bank physically to secure as little as short-term loans for SMEs. And due to the bureaucratic nature of securing loans, this problem lingered for a long while.
Online lending companies saw this gap in the lending ecosystem and capitalized on it by providing a smart way of securing loans efficiently with just your mobile phone without landing to step a foot out of your house.
A new study conducted by SBM Intelligence reveals that 27% of Nigerians across different income categories now resort to loan apps. This means there is a high demand for loan apps to satisfy the needs of over 200 million Nigerians.
Overview of Online Money Lending License in Nigeria
Finance companies that wish to engage in short-term borrowings at interest are mandated to register and secure a digital lending license in Nigeria (If the lending activities take place online) with the right authorities.
The lending license gives exclusive rights and full permits to companies to issue loans at interest.
Regulatory Bodies for Digital Lending in Nigeria
The following regulatory bodies regulate money licensing in Nigeria
- State Government Agencies: Usually, the Ministry of Home Affairs handles licensing.
- Magistrate Court: Provides initial clearance before the Ministry issues a license. In some states, the court performs both functions
- Corporate Affairs Commission (CAC): Responsible for the initial registration of companies
- Federal Competition & Consumer Protection Commission (FCCPC): This agency oversees digital lenders’ business activities and protects borrowers
- Nigerian Data Protection Commission (through NDPC): Enforces data privacy regulations.
- Central Bank of Nigeria (CBN): Sets general financial rules and guidelines that can apply to bigger entities licensed by the CBN, such as Microfinance Banks
Steps to Get an Online Money Lending Company License in Nigeria
Below are the stages you need to take to secure a state money lending license (For Lagos State)
- Register your company with CAC and secure all necessary documents
- Once you have secured your CAC documents, write to the Chief Magistrate within the magisterial jurisdiction where the business will be carried out.
- Submit all required documents in the process
- Upon receipt of the application by the Chief Magistrate, you will be given a letter and Forms B and C.
- Once your application to the Chief Magistrate is approved, you will be required to make another formal application to the Ministry of Home Affairs and Tourism with the relevant documents attached.
- Proceed to make payment of the official fee into the account of the Lagos State Government.
- Make payment for the Application Form, and a receipt evidencing payment.
- Once you have completed the above steps, the money lending officials under the government agency will visit your office for physical inspection
- Once the government officials are satisfied that the company has fully complied with the statutory requirements, you will be issued a Money Lenders License to start operations
Application For State Police and Tax Clearance
While obtaining the money lending license with the Chief Magistrate court, you will be issued a form to fill. Form B and C.
These 2 forms require you to also apply for State Police and a tax clearance certificate
- The Police Clearance Certificate can be applied for with a minimum of 2 directors and must be part of the company. Other verifications such as fingerprinting and biometrics will be done.
- Tax Clearance Certificate is issued by FIRS to companies registered with CAC. It covers 3 years
Share Capital Thresholds for Lending Licences
Companies willing to engage in lending and secure a license must be registered with a share capital of not less than ₦20,000,000 (Twenty million shares)
Documents Required For Money Lending Company License in Nigeria
Before applying for a money lending license in Lagos, ensure to meet these document requirements.
- CAC Certificate of Registration
- Status Report Document (Form C02 and C07
- Statement of Issued Share Capital
- Memorandum and Articles of Association
- Tax Clearance Certificate
- Police Clearance Certificate
- Tax Identification Number (TIN)
- Bank reference letter (from your company’s bank)
- Proof of paid application/license fee
- Business address verification (some states may inspect your office)
- Payment fees
Cost of Getting a Money Lending License in Nigeria
The cost of getting a digital money lending license can be broken down into these steps
- Application to Magistrate Court
- Securing Police clearance certificate
- Affidavit fees
- Professional Fees
In summary, the fee for getting a lending license, factoring in the above applications, should cost between ₦300,000 to ₦700,000
Renewal of Money Lending License
The license is valid for only one year and is subject to renewal.
Follow this guide to renew
- Apply again to the Magistrate for a fresh Form B.
- Provide your tax and police clearance certificates.
- Submit updated documents to the Ministry with your renewal fee.
- Await inspection or document review before receiving a renewed license.
The renewal fees vary.
How Long Does It Take to Get a Money Lending License in Nigeria?
Applying and getting a money lending license in either Lagos or Abuja should take about 5 to 10 weeks.
Other Lending Registrations
Securing a money lending license is not the end of the road.
You will also need to register with the following agencies to ensure full lending compliance:
Registration With NDPC
The Nigerian Data Protection Commission is an agency that was established to strengthen the legal foundations of the national digital economy and guarantee the participation of Nigeria in the regional and global economies through the beneficial and trusted use of personal data.
The NDPC protection law allows companies to
-
- Appoint or engage a licensed Data Protection Compliance Organization (DPCO)
- Conduct a data protection audit
- File a privacy impact assessment
- Obtain and publish a privacy policy on their digital platforms
FCCPC Registration
FCCPC is the foremost regulatory agency of the Federal Government, statutorily empowered to provide speedy redress to consumer complaints.
The agency stands on the demand side of the economy, while sector regulators operate from the supply side
Lending companies are required with the agency and obtain a license to operate by providing
- Company CAC documents
- Privacy policy document
- Terms and conditions
- Customer complaint procedures
- Data protection audit reports
State Money Lending License vs CBN License
| Feature | State Money Lending License | CBN License (e.g., MFB, Finance Company) |
|---|
| Regulator | State High Court / Ministry of Home Affairs | Central Bank of Nigeria (CBN) |
| Coverage | Operates only in one state | Operates nationwide (or by CBN-approved scope). |
| Suitable for | Small lending businesses, individuals, and loan apps | Larger financial institutions, digital banks, Fintechs |
| Capital Requirement | Low (varies by state, often ₦1M–₦20M) | High (e.g., ₦100M–₦200M+ for finance companies or MFBs) |
| Compliance | Simple reporting to State | Strict regulatory compliance with CBN |
| Examples | Local loan companies, cooperative lenders | FairMoney, Carbon, Renmoney (licensed by CBN) |
Which One of Best for You?
If your goal is to run a small to medium-scale money lending business within a specific state, you only need the state-issued Money Lender’s License.
But if you’re building a digital loan app, fintech product, or want to lend nationwide, then you’ll need a CBN-regulated license, such as a Finance Company License or Microfinance Bank License
Best States in Nigeria to Register a Money Lending Company
Based on the rising demands for short-term loans and growing Nigerian population, the following states are viable for money lending companies to thrive
- Lagos
- Abuja
- Rivers
- Ogun
- Oyo
- Osun
Frequently Asked Questions (FAQs)
Q: Can a company operate nationwide with a state money lending license?
A: No. According to Lendsqr, a company cannot operate nationwide in Nigeria with just a state-level money lending license. A state license restricts operations to that specific state.
To operate nationally, a company would need either a federal license like a Microfinance Bank or Finance Company license from the Central Bank of Nigeria (CBN) or separate licences for each state where they intend to operate.
Q: Is CAC registration enough for a money lending business?
A: No. CAC is just the first stage of registration. The company will also need to register with NDPC, FCCPC and CBN (Where applicable)
Q: Can foreigners own a money lending company in Nigeria?
A: Yes. However, companies with foreign participation must be registered with a share capital of 100 million
Q: How much capital do I need to start a money lending business?
A: Excluding Cost for CAC registration, you will need roughly ₦300,000 to ₦700,000
Q: What’s the penalty for operating without a license?
A: Severe litigation and even jail term
You can also see how Nigerians staying overseas can invest in Nigeria
Conclusion:
If you are looking forward to starting a loan company in Nigeria, securing a money lending license for your company is not just an obligation but an investment into your brand’s reputation.
