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People believe that the application and securing approval for a government loan is not possible except that you belong to a certain class in society. Some of the reasons are the bottlenecks involved in the processes, the lack of know-how, insufficient record due to lack of proper or no record-keeping system, and others.

 

The knowledge and understanding of the requirements will solve the greater percentage of the challenges faced in accessing the loan facility from the Federal government.

 

The coronavirus (COVID-19) pandemic has led to unprecedented disruptions to global supply chains, sharp drop in global crude oil prices, turmoil in global stock and financial markets, massive cancellation of sporting and entertainment event, the lockdown of large swaths movements of persons in many countries, and intercontinental travel bans/restrictions across critical air routes across the world. These outcomes have had severe consequences on households’ livelihoods and business activities, resulting from a drop in global demand, declined consumer confidence, and the slowdown in production.

 

In this respect, the Central Bank of Nigeria (CBN) introduced the N50 billion Targeted Credit Facility (TCF) as a stimulus package to support households and micro, small and medium enterprises (MSMEs) affected by the COVID-19 pandemic.

 

 

  1. The broad objectives of the CBN’s N50 billion Targeted Credit Facility include:

 

  • Cushion the adverse effects of COVID-19 on households and MSMEs;
  • Support households and MSMEs whose economic activities have been significantly disrupted by the COVID-19 pandemic.
  • Stimulate credit to MSMEs to expand their productive capacity through equipment upgrade, and research and development.

 

  1. Eligible Participants
  • Households with verifiable evidence of livelihood adversely impacted by COVID-19;

 

  • Existing enterprises with verifiable evidence of business activities adversely affected as a result of the COVID-19 pandemic.

 

  • Enterprises with bankable plans to take advantage of opportunities arising from the COVID-19 pandemic.

 

  1. Eligible activities under the Scheme include:

 

  • Agricultural value chain activities

 

  • Hospitality (accommodation and food services)

 

  • Health (pharmaceuticals and medical supplies)

 

  • Airline service providers

 

  • Manufacturing/value addition

 

  • Trading

 

  • Any other income-generating activities as may be prescribed by the CBN.

 

  1. Funding

The Scheme shall be financed from the Micro, Small and Medium Enterprises Development Fund (MSMEDF).

 

  1. Participating Financial Institution

The eligible participating financial institution for the Scheme is NIRSAL Microfinance Bank (NMFB).

 

  1. Loan Limit

 

  • SMEs: The loan amount shall be determined based on the activity, cash flow and industry/segment size of the beneficiary, subject to a maximum of N25 million for SMEs;

 

  • Households: Can access a maximum of N3 million

 

  • Working capital shall be a maximum of 25% of the average of the previous 3 years’ annual turnover. (where the enterprise is not up to 3 years in operation, 25% of the previous year’s turnover will suffice).

 

  1. Interest Rate

The interest rate under the intervention shall be 5% p.a. (all-inclusive) up to 28th February 2021 and thereafter, the interest on the facility shall revert to 9% p.a. (all-inclusive) as from 1st March 2021.

 

  1. Loan Tenor
  • Working capital shall be for a maximum period of one year, with no option for rollover.

 

  • Term loan shall have a maximum tenor of not more than 3 years with, at least, one-year moratorium.

 

  1. Collateral Requirement

The collateral to be pledged by beneficiaries under the program shall be as may be acceptable by NIRSAL MFB, but may include any one or more of the following:

  • Moveable asset(s) duly registered on the National Collateral Registry (NCR).

 

  • Simple deposit of title documents, in perfectible state

 

  • Deed of Debenture (for stocks), in perfectible state iv. Irrevocable domiciliation of proceeds

 

  • Two (2) acceptable Guarantor

 

  • Personal Guarantee of the promoter of the business

 

  • Life Insurance of the Key-Man, with NMFB, noted as the First Loss Payee

 

  • Comprehensive Insurance over the asset

 

NOTE: The Central Bank of Nigeria (CBN) announced that households and SMEs applying for the N50 billion COVID-19 Targeted Credit Facility would not be required to provide guarantors before they can access the credit facility.

 

 

  1. Principal Repayment
    Repayment shall be made on an installment basis by the beneficiaries to the NMFB according to the nature of the enterprise and the repayment schedule/work plan provided at the application stage.

Modalities

 

 

  1. Households/MSMEs

 

  • Eligible households or MSMEs shall submit applications directly to NIRSAL Microfinance Bank (NMFB);

 

  • The application must, among others, contain BVN number, business registration (where applicable), and business plan with clear evidence of the opportunity or adverse impact as a result of the COVID-19 pandemic.
  • NMFB shall appraise and conduct due diligence applications.

 

  • Upon satisfactory appraisal of application, NMFB shall forward the applications to the CBN for final approval

 

  • CBN reviews applications and gives final approval for disbursement to NMFB.

 

b) Corporate Entity

 

  • A corporate entity shall submit an application to NMFB with clear evidence of the opportunity or adverse impact as a result of the COVID-19 pandemic.

 

  • NMFB shall appraise and conduct due diligence applications.

 

 

  • Upon satisfactory appraisal of application, NMFB shall forward the applications to the CBN for final approval

 

  • CBN reviews applications and gives final approval for disbursement to NMFB.

 

All inquiries may be referred to the Director, Development Finance Department Central Bank of Nigeria, Abuja.

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Chukwuemeka Ayogu

Chukwuemeka Ayogu is the founder and Lead Consultant at Countsystem, a service provider in accounting sector in Nigeria, bsiness systems and controller services. He is an Accountant Partner of Accounteer, a cloud based accounting software. He is an experienced service provider with diverse working experiences. He has worked in customer service at Regional Business Unit Nigerian Breweries Plc, Customer Service Representative at Diamond Bank Plc, Principal Partner at Prudential Auditors & Consultants, State manager at Chijgz Resources International and more.

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Post Author: Chukwuemeka Ayogu

Chukwuemeka Ayogu is the founder and Lead Consultant at Countsystem, a service provider in accounting sector in Nigeria, bsiness systems and controller services. He is an Accountant Partner of Accounteer, a cloud based accounting software. He is an experienced service provider with diverse working experiences. He has worked in customer service at Regional Business Unit Nigerian Breweries Plc, Customer Service Representative at Diamond Bank Plc, Principal Partner at Prudential Auditors & Consultants, State manager at Chijgz Resources International and more.

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