CBN (SMEs) Business loan: How to apply and Requirement

Last Updated on November 27, 2023 by admin

The Central Bank of Nigeria (CBN) SMEs Business Loan is a financial initiative designed to promote and support the growth of Small and Medium Enterprises (SMEs) in the country.

This loan scheme aims to address the challenges faced by SMEs in accessing affordable financing options, which often hinder their ability to expand and contribute significantly to the economy.

The CBN SMEs Business Loan offers eligible businesses access to funds for various purposes, including working capital, asset acquisition, and business expansion.

The loan features low-interest rates and longer repayment terms, making it more accessible and affordable for SMEs.

Furthermore, this loan scheme emphasizes inclusive financing by prioritizing sectors with high employment potential such as agriculture, manufacturing, creative industries, among others. It also encourages women-owned businesses through dedicated funding programs.

To improve access to finance by Nigerians, Increase output and generate employment, the Central Bank of Nigeria has approved the investment funds ranging from N200 BILLION Small and Medium Enterprises (SMEs) designed to meet dynamic business needs.

The loan facility is designed to Fast-track the development of the SMEs and manufacturing sector of the Nigerian economy and Improve the financial position of the deposit money banks.

The CBN (SMEs) loan will help to diversify the revenue base,increase foreign exchange earnings and provide inputs for the industrial sector on a sustainable basis, help to Set the pace for industrialization of the Nigerian economy and Increase the access to credit by promoters of SMEs and manufacturers

Also read: Keystone Bank: How to apply for CBN Creative Industry Financing Initiative Loan

The establishment of established of CBN Small and Medium Enterprises Credit Guarantee Scheme (SMECGS),is for promoting access to credit by SMEs in Nigeria.The activities covered under the Scheme are:
(i) Manufacturing
(ii) Agricultural Value Chain
(iii) Educational Institutions
(iv) Any other activity as may be specified by the Managing Agent from
time to time

The Participating Banks are All Deposit Money Banks and Development Finance Institutions (DFIS) and they shall give out grant credit facilities to SME Promoters at prime lending rate and it’s manage by Central Bank of Nigeria.


Who can Borrow from CBN (SMEs) loan?

According to CBN, A borrower shall meet the following criteria to be eligible:

1.Any entity falling within the definition of an SME
2. A wholly-owned and managed Nigerian private limited company registered under the
Companies and Allied
3.Matters Act of 1990.
4. A legal business operated as a sole proprietorship
5. A start-up company with satisfactory cash flows indicating a Fixed Asset cover ratio of 100: 150.

The borrower shall:

1. Utilise the funds for the purpose for which it was granted.
2. Insure the charged assets being financed.
3. Adhere strictly to the terms and conditions of the Scheme.
4. Make the project and records available for inspection/verification by
the CBN.

Loan Amount

Maximum Loan amount is N100 million which can be in the form of Working Capital, Term Loans for refurbishment/equipment upgrade/expansion, overdrafts, etc.

Read: How to apply for CBN Agricultural Business Small and Medium Enterprises loan

Interest Rate

The lending rate under this CBN (SMEs) Scheme shall be at Prime Lending Rate (PLR) of the participating Banks.

Loan Tenor

(i) Loans shall have a maximum tenor of seven (7) years and/or working capital facility of one year with provision for roll over.
(ii) The Scheme allows for moratorium in the loan repayment

Acceptable Collateral for cbn Loan

The security to be offered to a bank for the purpose of any loan under the
Scheme shall be one realizable and acceptable to the participating
bank(s) schedule.

Application procedure

1. All loan applications by SME promoters under the Scheme shall be made directly to the Participating Bank which comprises of commercial banks in Nigeria accompanied by the necessary documents as per normal loan processing requirement

2. Participating Banks should submit application for guarantee using a standard application form, on behalf of their clients to the Managing Agent .

3. The CBN has the right to reject a request from any Participating Bank if it contravenes any section of the Guidelines

4. The project shall be subject to monitoring by the Managing Agent (CBN) during the loan period

Benefits And Impact Of Cbn Smes Business Loan

The CBN SMEs Business Loan offers numerous benefits and has a significant impact on small and medium-sized enterprises (SMEs) in Nigeria. Firstly, this loan scheme provides access to affordable financing options for SMEs, enabling them to expand their operations, invest in new technologies, and increase production capacity.

By addressing the funding gap that often hinders the growth of SMEs, the loan promotes job creation and stimulates economic development.
Moreover, the CBN SMEs Business Loan encourages entrepreneurship and innovation by offering favorable interest rates, longer repayment periods, and reduced collateral requirements.

These flexible terms make it easier for SME owners to obtain funding without jeopardizing their personal assets or burdening themselves with excessive debt. Furthermore, this loan scheme promotes financial inclusion as it targets marginalized groups such as women entrepreneurs and individuals in rural areas who face limited access to traditional banking services.

Source: CBN

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