Central Bank Nigeria’s Collateral-Free Loan for Small Businesses

Did you know about Central Bank Nigeria’s Collateral-Free Loan for Small Businesses?

In order to drive the initiative of economic sustainability and employment generation by supporting government policies for the promotion of agricultural businesses, Micro, Small and Medium Entreprises (MSMEs); the Central Bank of Nigeria has introduced a scheme called CBN Agric-Business/Small and Medium Enterprises Investment Scheme (AGSMEIS).

To further explain, the objectives of the scheme are to:

  • Improve access of Agri-businesses, Micro, Small and Medium Enterprises (MSMEs) to affordable and sustainable financing.
  • Create more employment opportunities in the country, and
  • Boost the managerial capacity of agri-businesses and MSMEs to grow the enterprises into large corporate organizations in accordance with the Federal Government’s growth agenda.

What Types of Businesses Does The Scheme Cover?

The scheme covers businesses within these areas:

  • The agricultural value chain, covering production, inputs supply, storage, processing, logistics and marketing.
  • MSMEs in the real sector including manufacturing, mining and petrochemicals.
  • MSMEs in the service sector including information and communication technology (ICT) and the creative industry.

What Are the Procedures That Exists?

Financing under the Scheme is generally for start-ups, business expansion or revival of ailing companies and must be in compliance with provisions of BOFIA (1991) as amended The terms of the loans shall be as follows:

  • Loan limit: N10,000,000
  • Interest: 5% per annum
  • Tenor: Up to 7 years (depending on the nature/gestation period of the project)
  • Moratorium: Maximum of 18 months for principal and 6 months on interest.

What Are the Eligibility Criteria?

  • All interested applicant must have been trained by an Entrepreneur Development Institute (EDI)
  • All interested applicant will apply for loan via an EDI
  • The applications will then be sent to CBN for processing
  • All applicants will be called for an interview regarding his/her business.
  • Applicants who’ve qualified will be contacted and given the loan.
  • Fill clearly the new form with all the details required, sign and get them authenticated by EDC.

AGSMEIS LOAN SCHEME THROUGH CBN EDIs Documentation Requirements

For Micro, Small and Medium Enterprises:

  • Your duly completed application form
  • Your bank Verification Number (BVN)
  • Your certificate of Training from recognized Entrepreneurship Development Institution (EDI) or evidence of membership of organized private sector association. e.g of EDI, Lagos Business School, House of Tara, Fate Foundation, Thrive Agric etc to access the loan.
  • A Letter of Introduction from any of the following: Clergy, Village Head, District Head, Traditional Ruler, senior civil servant, etc. (for individuals/micro enterprises only).
  • An evidence of registration of business name or certificate of incorporation and filing of annual returns (where applicable) in compliance with the provisions of the Companies and Allied Matters Act (1990).
  • Your tax Identification Number (TIN) and current Tax Clearance Certificate (TCC) Where applicable

What Is the Application Process

For Micro, Small and Medium Enterprises:

  • Enrol with a CBN certified EDI for a one-week training
  • Eligible applicants shall pick-up and submit a completed application form to the EDIs
  • The EDI shall collate, appraise and submit applications to CBN.
  • CBN shall consider the application and invite applicants for interviews
  • Upon approval, CBN shall approve the loan and disburse to necessary vendors as applicable

Read more about CBN’s policy backing economic growth here.

Find out the contact details of the CBN EDCs here.

Read also: All You Need To Know About The Coronavirus

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