Microfinance bank is likewise know as Micro-credit, were established by central Bank of Nigeria CBN to assist individuals (salary earners), petty traders and small businesses in securing loans.
The aimed of Microfinace bank in Nigeria is to stimulate local production and boosting non-oil export for economic development,
Microfinance Bank “SME Loan” is a credit product designed specifically to support Small and Medium Scale Enterprises (SMEs) operators in Nigeria. Irrespective of the sector your enterprise is operating.
At an affordable interest rate, Nigerian SMEs can now maximize their potentials with the SME Loan for the expansion of their businesses.
For the purpose of this content you will understand how to apply for microfinance bank loan in Nigeria and list of approved mfb by central bank of Nigeria.
You can also read: Full Lists Of Commercial Banks In Nigeria
Who can access MFB Loan
For a potential client to qualify to be targeted by a microfinance bank loan, it should have the following qualities.
1. For Small and Medium Scale Enterprises, business must also be active for at least one year and operating from the same location for at least six months.
2. Petty traders and individuals should able to provide Guarantors who must be financially stable and at least 25 years old. It is the duty of the Guarantors to ensure that the loan is paid back when due.
Because where there’s a default in repayment by the customer, the Guarantor will be required to repay the loan amount.
The documents required for a Microfinance loan include:
1. Loan application form
2. Excellent Business Proposal (for SMEs)
3. Letter of Application (for individuals)
4. Valid means of identification (National I.D card, International Passport, Driver’s License)
5. Copy of recent utility bill
6. 4 recent passport photographs
7. Evidence of business location
Access to funds for business expansion
Access to other loan products
Flexible repayment structure
Training on basic financial management, business planning and customer relations
Low interest rate
Expert financial advice available
The number of microfinance banks licensed in the country by the Central Bank of Nigeria stood at 940 as of February 13, 2020.
How to apply for microfinance bank loan
To apply for a microfinance bank loan, follow these steps:
1. Research and choose a microfinance bank: Look for a reputable microfinance bank that offers loan products suitable for your needs. Consider factors such as interest rates, repayment terms, and eligibility criteria.
2. Assess your loan requirements: Determine how much money you need, the purpose of the loan, and the repayment period you can manage. This will help you find a loan product that fits your needs.
3. Gather necessary documents: Typically, microfinance banks require various documents to process your loan application. These may include identification documents (such as passport or national ID), proof of address, bank statements, business plan (if applicable), and income proof (such as pay slips or tax returns).
4. Meet eligibility criteria: Ensure you meet the eligibility criteria set by the microfinance bank. This may include factors such as age, income level, credit history, and business viability (if applicable).
5. Prepare a loan application: Complete the loan application form provided by the microfinance bank. Provide accurate and complete information, ensuring that it aligns with the supporting documents you have gathered.
6. Submit your application: After completing the application form, submit it along with all the required documents to the microfinance bank. Ensure that all documents are properly arranged and organized for ease of processing.
7. Wait for approval: The microfinance bank will review your loan application and assess your eligibility. This process may involve verifying your documents, conducting credit checks, and evaluating your ability to repay the loan.
8. Attend an interview or meeting (if required): Some microfinance banks may require an interview or meeting to discuss your loan application in detail. Be prepared to answer questions about your financial situation, the purpose of the loan, and your repayment plan.
9. Receive loan offer: If your loan application is approved, the microfinance bank will provide you with a loan offer. Review the terms and conditions, including the interest rate, repayment schedule, and any associated fees.
10. Accept the loan offer: If you are satisfied with the terms, sign the loan agreement to accept the loan offer. Make sure you understand all the terms and obligations before signing.
11. Receive the loan disbursal: After accepting the loan offer and completing any necessary paperwork, the microfinance bank will disburse the loan amount to your designated bank account.
Remember to repay the loan as per the agreed-upon schedule to maintain a good relationship with the microfinance bank and improve your chances of accessing future loans.