Every diligent business owner has at one point considered getting a loan to start or grow their business to a point where they can at least meet their overhead cost, break-even, and even make a profit. In support of this trend, there are different big and small financial organizations in Nigeria offering various loan packages with varying eligibility criteria. More so, the government of Nigeria has also keyed into this and the Central Bank Of Nigeria (CBN) remains the main government organization that has steadfastly churned out billions of naira as loans to Nigerians for different business purposes.
What Do The CBN Loan Categories Cover?
CBN loans which are normally low-interest loans with flexible loan repayment periods are given to eligible individuals or businesses to boost their activities and expand their scope of growth in their line of trade. One can assess loans in the Micro, Small, and Medium Enterprises, the Agriculture loan, and most recently the N50 billion CBN Covid-19 intervention fund for SMEs. A detailed look at each of these loan categories will show you which one you are best suited for.
1. Micro, Small, and Medium Enterprises Development Fund (MSMEDF)
This fund can be assessed by entrepreneurs who are either Small and Medium Enterprises (SMEs) or Micro-entrepreneurs. The SMEs usually tend to borrow funds between N500,000 to N50 million whereas micro-entrepreneurs seek loans of less than N500,000. The activities that can be financed under the fund include:
- Agricultural value chain activities
- Manufacturing & Cottage Industries
- Renewable energy or energy-efficient products and technologies
- Trade and general commerce and any other income-generating projects as prescribed by the CBN.
2. The CBN Covid-19 Intervention Fund for SMEs
To combat the impact of the Covid-19 pandemic on the Nigerian economy, CBN introduced an N50 billion Targeted Credit Facility (TCF) as a stimulus package. This has a sole aim to support households and micro, small and medium enterprises (MSMEs) that are affected by the coronavirus pandemic.
Every affected home and MSME who wishes to get started on the process of getting the COVID-19 intervention fund can visit their portal. At the bottom of the page, choose the package you are applying for that is whether it’s for households, microenterprises, or SMEs.
3. The CBN Agsmeis Loan
Agric-Business Small and Medium Enterprises Investment Scheme (AGSMEIS) is a federal government intervention funding scheme through CBN that promotes Agric businesses as a vehicle for sustainable economic development and employment generation.
The set of people eligible to apply for this loan include all those in Micro, Small, and Medium Enterprises in the Agriculture sector, those in Education, Manufacturing, Service Sectors, as well as those that work in Information and Communication (ICT) and the Creative Industry.
This loan also comes with various features which include:
- Interest Rate: 5% per annum
- Tenor: 7 years
- Moratorium: Maximum of 18 months on Principal and 6 months on Interest
Once you have agreed to comply with the features of this loan, you need to adhere to provide the major requirements for application which include:
- Duly completed application form
- Bank Verification Number (BVN)
- Certificate of Training from a recognized Entrepreneurship Development Institution (EDI) or evidence of membership of organized private sector. You will fill a form with them which they will forward to CBN.
- Tax Identification Number (TIN) and current Tax Clearance Certificate TCC) where applicable.
- Evidence of registration of business name or certificate of incorporation and filing of annual returns.
- Letter of Introduction from any of the following: Clergy, Traditional Ruler, Village Head, District Head, senior civil servant, etc.
Note that once all these requirements have been met, CBN will ask banks to verify your account details before proceeding to conduct its own assessment.
Steps To Apply For A CBN Loan
Although there is a good chance that any applicant for a CBN loan will get it, there are however steps, if adhered to that can give an applicant edge in the application process:
- Have Entrepreneurial Training– the first step that will help your CBN loan application is to identify the nearest CBN-certified Entrepreneurship Development Center (EDC), register with them, attend their training so as to gain enough insight on how to run a successful business.
- Apply For Loan – apart from learning how to run a business The Entrepreneurship Development Institute (EDI) is there to give you full training on the right steps to get the loan. Once you have mastered this skill, submit an application for the appropriate CBN loan you desire.
- Have a Functional Bank Account to Receive Funds – those who meet all requirements will receive a loan which will be paid into their bank account directly.
What Requirements Are Needed To Take A Loan From CBN?
To have access to any of the loans provided by the CBN one has to have business in Nigeria or the intent of starting one in Nigeria. However aside these other important requirements include;
- Having a clear business plan
- Have a functional bank account
- Provide a current record of your business operations (for already existing businesses)
- Applicants must have no delinquent loans with any financial institution
- Have a good repayment plan
- Be of legal age and have good mental health
- Have acceptable collateral (where necessary)
- Provide valid utility bill
- Have about 2 recent Passport photographs
- Provide valid I.D cards
Can I Apply For A CBN Loan Without Collateral?
It is possible to apply for a CBN loan without collateral depending on how much one intends to borrow. In an instance of asset acquisition, naturally, the asset acquired becomes the collateral and must be registered with the National Collateral Registry (NCR). For a Working Capital Loan of N500,000 and below the collateral is the Personal Guarantee of the borrower.
What Financial Institutions Can One Access CBN Loan From?
Even though the CBN remains the manager for all their loans, one can access and apply for their loans through all Development Financial Institutions (DFIS) and Deposit Money Banks in Nigeria. However, for micro-entrepreneurs, the easiest ways for them to access available CBN loans are via:
a. Microfinance Banks
b. NGO/Microfinance Institutions
c. Financial Cooperatives
d. Finance Companies
For the Small and Medium Enterprises (SMEs) who are prospective borrowers seeking between N500,000 and N50million, they are to approach any of these institutions:
a. Deposit Money Banks
b. Bank of Industry (BOI)
c. Bank of Agriculture