How To Get CBN Sponsored Loan Scheme

 

In a previous article about the CBN and its roles, one of such mentioned roles was that they enable Small & medium scale businesses to thrive through loans and grants. The CBN currently has a few schemes through which one can get loans or grants to finance their businesses. Some of these include:

• Micro, Small & Medium Enterprises Development Fund (MSMEDF)
• Commercial Agriculture Credit Scheme (CACS)
• Tertiary Institutions Entrepreneurship Scheme (TIES) etc.

Micro, Small & Medium Enterprises Development Fund (MSMEDF)

The CBN launched the MSME Development Fund on August 15, 2013, with a share capital of N220 billion. The Fund was established in recognition of the significant contributions of the Micro, Small and Medium Enterprises (MSME) sub-sector to the economy and the existing huge financing gap.

Ten (10) percent of the Fund has been devoted to developmental objectives such a grant, capacity building and administrative costs while ninety (90) percent commercial component will be released to Participating Financial Institutions (PFIs) at 2% for on-lending to MSMEs at a maximum interest rate of 9% per annum.

Eligible activities to be financed include agricultural value chain, services, cottage industries, artisans, trade and commerce and any income generating business as may be prescribed by the CBN from time to time

Objectives of the MSMEDF

The broad objective of the Fund is to channel low interest funds to the MSME sub-sector of the Nigerian economy through PFIs to:

• Enhance access by MSMEs to financial services.
• Increase productivity and output of microenterprises.
• Increase employment and create wealth; and
• Engender inclusive growth

Benefits of the MSMEDF to Some Stakeholders

• PFIs

The Developmental Components will be utilized for capacity building of staff of PFIs, research and provision of other financial services infrastructure

• MSMEs

Long term single digit loans at 9% p.a. This has resulted in reduced cost of borrowing which will impact positively on the earnings of the MSMEs

• Microfinance Sub-sector

The Fund will provide liquidity for the sub-sector and result in general improvement of the financial system stability

• General Public

Job creation

Eligible Activities under the MSMEDF

In line with the provisions of the Revised Microfinance Policy, Regulatory and Supervisory Framework for Nigeria, enterprises to be funded under the Scheme include:

a) Micro Enterprises

b) Small and Medium Enterprises (SMEs)

The following are eligible activities under the Fund:

Microenterprises

Agricultural value chain activities

Cottage Industries

Artisans

Services

Renewable energy/energy efficient product and technologies

Trade and general commerce

Other economic activity as may be prescribed by the CBN

Note: Only 10% of the Commercial component of the Fund shall be channeled to trade and commerce.

How Can I (Or My Company) Access The MSMEDF?

Prospective borrowers should approach Participating Financial Institutions (PFIs) of their choice and apply for the Fund.

What categories of entrepreneurs can apply for the Fund?

(a) Micro entrepreneurs (i.e borrowers seeking loans of less than N500,000) are to approach any of the four institutions:

* Microfinance Banks         

* NGO/Microfinance Institutions

* Financial Cooperatives   

* Finance Companies

(b) Small and Medium Enterprises (SMEs) (i.e. prospective borrowers seeking between N500, 000 and N50million) are to approach any of these institutions:

*Deposit Money Banks

*Bank of Industry (BOI)

*Bank of Agriculture

Commercial Agriculture Credit Scheme (CACS)

The Commercial Agricultural Credit Scheme initiated in 2009, is a collaborative Scheme between the Central Bank and the Federal Government, represented by the Ministry of Agriculture and Rural Development (FMARD) to provide financial assistance to Commercial Agricultural Ventures and businesses, a subcomponent of the Federal Government’s Commercial Agricultural Development Program.  The project will be financed by a N200Billion Naira three-year bond by the Debt Management Office (DMO).

 

Objectives of the Scheme

The Objectives of the scheme include:

1. To fast-track development of the agricultural sector of the Nigerian economy by providing credit facilities to commercial agricultural enterprises at a single digit Interest rate.
2. Enhance national food security by increasing food supply and effecting lower agricultural produce and product prices, thereby promoting low food inflation.
3. Reduce the cost of credit in agricultural production to enable farmers exploit the potentials of the sector; and
4. Increase output, generate employment, diversify the revenue base, increase foreign exchange earnings and provide input for the industrial sector on a sustainable basis.

Target areas under the scheme:

Key Agricultural commodities to be covered under the Scheme are:

• PRODUCTION:

• Cash Crops: Cotton, Oil Palm, Fruit Trees. Rubber, Sugar Cane, Jatropha Carcus and Cocoa.
• Food Crops: Rice, Wheat, Cassava, Maize/Soya, Beans/Mill Coco, Tomatoes and Vegetables
• Poultry: Broilers and Eggs Production
• Livestock: Meat, Dairy and Piggery
• Aquaculture: Fingerlings and Catfish
• PROCESSING: Feed mills Development, Threshing, Pulverisation and Other forms of transmutation for value addition.
• STORAGE: Commodities, Agro-Chemicals and Warehousing
• FARM INPUT SUPPLIES: Fertilizers, Seeds/Seedlings, Breeder Stock, feeds, Farm equipment & Machinery.
• MARKETING: Agricultural commodities under the focal investment areas.

How to Apply:

All money deposit banks have been approved by the CBN to participate in this scheme. For one to apply for loan under thus scheme, such enterprise should for loan to any participating banks under the scheme and meet all their requirements for a loan alongside a few other requirements highlighted below:

• For Corporate and Large-Scale Commercial Farms/Agro-Enterprises

The borrower shall:

1. Be a limited liability company with asset base of not less than N100 million and having the prospect to grow the net asset to N250 million in the next three years and complies with the provision of the Company and Allied Matters Act (1990.
2. Have a clear business plan
3. Provide up-to-date record on the business operation if any.
4. Have out growers programmed, where appropriate
5. Satisfy all the requirements specified by its lending bank

• For Medium Scale Commercial Farms/Agro-Enterprises

To participate in the Scheme the borrower shall

1. Be a limited liability company with asset base of not less than N50 million and having the prospect to grow the net asset to N150 million in the next three years and complies with the provision of the Company and Allied Matters Act (1990)
2. Have a clear business plan
3. Provide up-to-date record on the business operation
4. Have out growers programmed, where appropriate
5. Satisfy all the requirements specified by its lending bank

Tertiary Institutions Entrepreneurship Scheme (TIES)

The scheme through which the grant comes is known as the Tertiary Institutions Entrepreneurship Scheme (TIES). It is a scheme aimed at reducing underemployment & unemployment among university graduates by providing capital or fund for expansion and growth of businesses. It seeks to push attention away from seeking white collar jobs toward entrepreneurship and job creation to foster economic growth.

It is worthy of note that trading activities will not be supported under the scheme and not all kinds of business would get this supposed grant as there are specific areas of entrepreneurship which the scheme aims to enable. These are:

1. Agribusiness – Production, Processing, Storage & Logistics.
2. Information Technology – Application/Software development, business process outsourcing, robotics, data management.
3. Creative Industry – Entertainment, artwork, publishing, culinary/event management, fashion, photography, beauty/cosmetics.
4. Science and Technology – Medical innovation, robotics, ticketing systems, traffic systems, renewable energy, waste management, and
5. Any other activity as may be determined by the CBN from time to time.

NB: Priority will be given to innovation entrepreneurial activities with high potentials for export, job creation & transformational impact.

Eligibility:

As was mentioned prior, this scheme is having University/Polytechnic Graduates as its core focus.  The requirements for eligibility include:

1. First Degree Certificate (B.Sc., HND or its equivalent)
2. NYSC discharge or exemption certificate
3. Certificate of Participation issued by Polytechnics and Universities, evidencing entrepreneurship training and
4. Not more than 7 years post – NYSC

The top performing institutions in the application will get funds according to how they rank.

1	First place	N250.0 million;
2	Second place	N150.0 million;
3	Third place	N100.0 million;
4	Fourth place	N75.0 million;
5	Fifth place	N50.0 million.

How to apply for the grant:

1. Visit https://cbnties.com.ng
2. Fill the online application form and relevant documents requested
3. Wait for communication from program management on your application status.

You wouldn’t need to be told that your business or company should fit one or more of the categories outlined somewhere above in this article if you want to stand a chance to get this grant.

Other less renowned schemes include:

1. Agricultural Credit Guarantee Scheme Fund (ACGSF) which was established in 1977
2. Agricultural Credit Support Scheme (ACSS) which is yet to commence.

The above are some schemes funded or backed by the CBN to enable and foster economic growth in Nigeria especially in the areas of innovation, Technology, production, and export. You can visit the CBN website for further information and opportunities www.cbn.gov.ng