You Don’t Need Land to Get That Bank Loan: Business Financing in Nigeria

Every member of the board of Directors at Cherrington Company knows that 7:30am meetings on a Monday morning meant one thing:

Emergency.

“What is the emergency this time?” They asked each other as they walked briskly to the conference room.

Within minutes, everyone had gathered at the long mahogany table. The Chairman’s agenda was simple yet important: how to raise money to finish a multi-million-naira project that had to be completed in 6 months.

The company needed to position itself as a global player among competitors to secure recognition in the U.S. market.

The finance director had tried everything from approaching banks, pitching to investors to exploring partnerships. Every time, the same question came up:

“What land or building are you bringing as collateral”.

Everyone was quiet. Even the ticking sound of the Chairman’s watch could be heard. Cherrington had no land. They had trucks, heavy machinery, receivables, contracts but no landed property.

For weeks, the board believed there was no way out. In Nigeria, everyone knows and understands when it comes to bank loans; it’s a “no land, no loan” policy.

Then, their lawyer who just got hired at the beginning of that week leaned forward and said:

“Gentlemen, you don’t need land to get that loan. There’s another way global companies have been using for decades and you already own everything you need to make it work.”

“I mean, if we were financially buoyant to own land, would we still be looking for this amount of loan?”

That revelation got the Board’s attention. That “other way” was about to become their secret weapon to get past their brick wall; a financing tool that most companies including Cherrington had been ignoring.

The Hidden Wall Nigerian Companies Keep Hitting

If you’ve tried to scale a business, you know this particular wall.

You’ve built capacity, secured contracts, supplied demand. But when it’s time to expand, open a new factory, import raw materials, or take on a major project, financing  it becomes a problem.

And then comes the usual land myth.

In Nigeria, almost every business owner believes this: only land or buildings matter as collateral. Banks have used it as their anthem for loans. Investors too agree. Founders often without knowing the truth say it to themselves.

Yet, this myth has consistently been stealing away opportunities.

Just think about it. How many young, fast growing companies own land? How many tech startups, logistics firms, or fast-moving consumer goods businesses begin life with a registered title deed? Very few.

Some of the most valuable companies in the world scaled without a single plot of land. How?

That’s the part most Nigerian businesses never hear about.

The Smart Financial Tool: All Asset Debenture

Cherrington Company’s lawyer revealed something that sounded almost unbelievable:

You can pledge all your company’s assets; not just land as security for a loan.

This is done through an All Asset Debenture (AAD).

Think of it as giving the lender a single pass that lets them see the full scope of your company’s finances covering both your current and future assets rather than tying them to just one piece of collateral. What are these assets?

• Receivables (what clients owe you)
• Inventory or stock
• Plant, equipment, and vehicles
• Intangible rights like trademarks, software licenses or life insurance. Under the new Nigerian Insurance Industry Reform Act (NIIRA) 2025, Sections 72–73, a life insurance policy can be assigned to a bank or lender as collateral.

What this this means is that if you or your key directors hold valid life insurance, you can legally transfer (or “assign”) the policy to a lender.

Once the insurer receives notice of the assignment, the lender is protected and can claim the payout if you default.

• Future assets (movable and immovable) including land

The lender is then assured that if you default, they can recover value from these assets.

And because it’s registered at the Corporate Affairs Commission (CAC), it’s legally enforceable under Nigerian law.

Global companies use this routinely. They don’t wait to buy or own land before getting financing opportunities.

They just pledge their operating assets and future possibilities of owning one, raise funds from it, and keep growing.

Meanwhile, in Nigeria, this financial tool has remained hidden for long and has been ignored by businesses who still believe in “the land” myth.

The Nigerian Legal Structure

If this sounds too good to be true, it isn’t. The law has long allowed it.

Under CAMA 2020 (Companies and Allied Matters Act), Nigerian companies can create charges or debentures over all assets (movable and immovable which includes land).

However,  not owning land or immovable property doesn’t stop you. The law doesn’t state you must own land compulsorily.

Once it is registered at CAC:

The lender’s interest is then protected and therefore enforceable.

In the case of default, that is, where the borrower fails to repay the loan, a receiver or manager can recover the debts via the company’s assets.

A receiver is someone appointed to step in if the borrower can’t repay the loan, by taking control of their assets and ensuring the lender recovers what is owed.

This is exactly how global finance works. Only that Nigerian companies had yet to realized it.

Inside Cherrington’s Breakthrough

When Cherrington’s Lawyer explained the AAD, hope was restored. The CFO immediately mapped out their assets:

₦500 million worth of machinery

₦200 million in receivables

A fleet of distribution trucks

A warehouse full of stock

The company’s intellectual property

On paper, these seemed scattered. But with an AAD, they became a combined all in one Loan Agreement.

Here’s what happened next:

1. The Agreement: A debenture was drafted, capturing all current and future assets.

2. Registration: Filed at CAC, putting the world on notice that the lender had a legal interest.

3. Disbursement: The bank, now secured beyond land, released the loan.

Fast forward to 18 months after, the delayed project was completed; their revenue doubled.

The real win wasn’t just money. It was freedom from the land myth that had held them up for a long time.

Why Most Companies Get It Wrong

If AADs are so powerful, why isn’t everyone using them?

Three reasons:

1. The popular Land Myth: Many founders don’t know better and assume land is mandatory as collateral for a loan.

2. Fear of Losing Control: Owners are often worried and fearful that the lender might take over their company. But in reality, the risk only arises if they fail to repay.

3. Poor Documentation: Even where AADs are available, it could have been poorly drafted or not registered at the Corporate Affairs Commission (CAC) which then renders the AAD weak. At the end, it may later end up in legal disputes.

But the reality is that the more they allow fear to hold them down, the more their contemporaries are seizing opportunities to expand effortlessly.

What Your Company Can Learn

Here’s how Nigerian companies with over ₦10 million share capital can leverage their balance sheet safely:

Step 1: Evaluate All Assets

List everything: receivables, vehicles, equipment, intellectual property, software. Determine their  fair market value and note any legal issue that may be arise from any of the assets. You can do this through an asset valuer.

Step 2: Engage Legal Experts

Business lawyers ensure your debenture is enforceable and protects shareholders. Poor drafting can leave your company exposed.

Step 3: Negotiate Terms

Explain repayment terms, interest rates, and collateral coverage. Clear communication prevents surprises.

Step 4: Draft Protective Clauses

Include:

Indemnity clauses: Protect shareholders from personal liability

Priority ranking: Determines lender repayment order where there are more than one lender.

Default conditions: Define breach and remedies.

Step 5: Execute the Debenture Agreement

Ensure all stakeholders involved; the lender, the company (the borrower) and the security trustee company all sign the agreement.

Step 6: CAC Registration

Register the transaction. Registration ensures enforceability against third parties and protects directors.

Skip any step, and you risk personal liability, lost assets, or failed financing.

Growth Lessons from Cherrington Company

1. Your Balance Sheet Is Collateral. Don’t dismiss machinery, contracts, receivables, or stock. They’re a your company’s treasure that could be leveraged.
2. Insurance Can Be Collateral Too. Life insurance policies, if properly assigned, can unlock credit without land.
3. Speed Matters. While others buy land, you can finance projects in months.
4. Growth Loves Leverage. An AAD lets you expand boldly without waiting for perfect conditions.
5. Understand that the Law Is on Your Side. Nigerian corporate law already supports this practice.

Don’t Leave Growth to Chance

Too many Nigerian companies are stranded because their minds and beliefs are still attached to the wrong idea of collateral.

Only land used as collateral for loan when they can leverage other assets.

If your business has ever delayed expansion because you “don’t have land,” this is your reality check. You don’t need land to get that loan. You need to structure what you already own.

At Charis Legal Practice, we help companies Draft and structure All Asset Debentures and even review them.

Because your company’s growth and expansion should never have to wait for land. If you need to understand better on how to get started, you can book a consultation session with us here.

If you have any questions, you can type them in the comments section. We will be glad to answer them. Happy reading!