How to get a loan from the Central Bank of Nigeria

Have you ever thought about getting a loan from the Central Bank of Nigeria (CBN) for your business?

It may not be the first place that comes to mind, but the CBN offers a number of low-interest, flexible repayment schemes for MSMEs (micro, small, and medium-sized enterprises).

In this article, we’ll take a closer look at some of the CBN’s loan schemes and explain how you can apply for them. But first, let’s get a basic understanding of how CBN loans work.

What are CBN loans?https://getoze.com/download-sample-business-plan/

A CBN loan is like a helping hand for businesses of all shapes and sizes across Nigeria. It’s there to offer affordable financing so you can keep your business dreams rolling.

CBN loans are appealing to businesses because of their low-interest rates and the ample time you get to pay back what you borrow.

But here’s the thing: not all CBN loans are up for grabs. They come in different types, tailored to specific sectors and business sizes. So, you’ve got to pick the one that suits your business. 

Also, CBN doesn’t hand the loans to businesses directly. Instead, they pass the funds to Partnering Financial Institutions (PFIs) like banks and microfinance institutions, who in turn pass on the money to businesses like yours.

You can apply for a CBN loan to increase your working capital, buy new assets for your business, expand your business, or supercharge your marketing efforts.

So, when you think of CBN loans, think of it as that friendly neighbour who’s ready to help your business thrive.

Types of CBN loans 

Now that you understand what CBN loans are and how they can give your business a boost, let’s jump into the different types of CBN loans you can apply for. 

Agri-Business Small and Medium Enterprises Investment Scheme (AGSMEIS)

The Agri-Business Small and Medium Enterprises Investment Scheme (AGSMEIS) was set up to give a helping hand to the growth of the agricultural sector and businesses connected to it in Nigeria. 

Since its kickoff, the CBN has put in a substantial N136.13 billion into this scheme.

So, what does the AGSMEIS loan offer your business? Well, you can:

• Borrow up to ten million Naira, and you’ve got a 7-year window to pay it back
• Delay repaying the principal for 18 months and the interest for 6 months
• Enjoy a sweet low-interest rate of just 5% per year.

Now, you might be wondering if your business qualified for the AGSMEIS. Chances are, it does if you’re involved in:

• Handling agricultural storage, processing, production, or logistics.
• Running a small or medium-sized enterprise (SME) that’s connected to manufacturing, agriculture, modular ventures, mining refineries, or local ICT projects.

Anchor Borrower’s Programme (ABP)

The Anchor Borrowers Programme (ABP) was launched in November 2015 to link smallholder farmers (SHFs) with reputable companies (anchors) that produce and process key agricultural commodities.

Since then, the CBN has disbursed funds to over 4.2 million SHFs in Nigeria. Here’s the cool part: The program usually appoints anchor borrowers who act as go-betweens for the farmers and the banks. They’re like the friendly bridge that makes everything smoother.

Once a farmer gets the green light for an ABP loan, the PFI wires the cash into their account. The farmer can then use this money to buy the stuff they need from the anchor company.

When the growing season wraps up, it’s payday for the farmer. They sell their harvest to the anchor company at a price they both agreed on before. 

Then, like a true friend, the anchor company takes care of repaying the loan on the farmer’s behalf.

To be eligible for an ABP loan, farmers must:

• Be a member of a farmer group, such as a cooperative or association, or participate in an out-grower arrangement.
• Have a bank account with a participating financial institution (PFI).
• Have a valid Bank Verification Number (BVN).
• Not be a defaulting borrower.
• Have validated farmland.
• Provide a 10% minimum equity contribution.
• Not participate in multiple associations in one cropping season. 

Youth Entrepreneurship Development Program (YEDP)

The Youth Entrepreneurship Development Program (YEDP) is a loan program designed to assist young Nigerians in launching small and medium-sized businesses. 

Businesses of all types can apply, however, the program is focused on businesses in the following sectors: 

• Agricultural Value Chain (such as fish farming, poultry, and snail farming)
• Cottage Industry
• Mining and Solid Minerals
• Creative Industry (including Tourism, Arts, and Crafts)
• Information and Communications Technology (ICT)

Now, let’s delve into the loan details:

• You must be between the ages of 18-34 years
• Loan terms extend up to a maximum of 36 months, while working capital facilities have a 12-month term.
• The program offers a 3-month grace period for loan repayment.
• Individuals can apply for a loan of up to N3 million, while group projects jointly owned by 3-5 qualified beneficiaries can access up to N10 million
• The annual interest rate is at 9%, 
• NYSC Discharge Certificate is the required collateral for beneficiaries.
• Graduate beneficiaries need to also provide verified certificates from tertiary institutions as additional collateral.
• Artisans can use their School Leaving Certificate, Technical Certificate, or approved Proficiency Certificate from the National Board for Technical Education (NBTE).
• Third-party guarantors can also be used as additional collateral.

If you meet the requirements, you will be shortlisted to receive training from any of CBN’s Entrepreneurship Development Centers (EDCs). You will also be asked to bring: 

• A well-defined business plan outlining your financing plan and the expected economic benefits.
• A Statement of Affairs for startups and companies with less than 3 years of operation (if applicable)
• Copies of duly executed offer documents between the bank and the loan applicants
• Certificate of Incorporation or Business registration documents 
• A brief introduction of the company’s directors or partners
• At least one credit report for the promoter or entrepreneur
• A proposed schedule detailing fund disbursement and repayment
• Evidence of third-party guarantee that’s acceptable to the lending bank

Maize Aggregation Scheme (MAS)

The Maize Aggregation Scheme (MAS) was created to help feed millers, poultry farmers, silo and warehouse operators, and confectionery companies get easy access to affordable credit. 

The key features of the Maize Aggregation Scheme are: 

• Low, single-digit interest rates (just 9% all-in, at most)
• A maximum loan amount of two billion Naira 
• Only locally grown maize is eligible for financing 
• Repayments can be maid after 12 months 

Who’s this scheme for? You qualify for the MAS scheme if you are a:

• Feed miller
• Poultry farmer
• Silo operator
• Warehouse operator
• Confectionery company

Micro, Small, Medium Enterprises Development Fund (MSMEDF)

The CBN rolled out the MSME Development Fund in 2013, with a clear mission in mind – to make it easier for those small and medium-sized businesses (MSMEs) to get their hands on financial services. 

Now, this fund isn’t limited to just one thing; it covers a wide range of eligible activities, such as:

• Agricultural value chain activities
• Cottage Industries
• Artisans
• Services
• Renewable energy and energy-efficient products and technologies
• Trade and general commerce
• Any other economic activities prescribed by the CBN from time to time

Now, let’s dive into the finer details of this loan:  

• The loan has an annual interest rate of 9%
• Micro enterprises can tap into this facility for a maximum of one year
• SMEs, on the other hand, have a bit more breathing room with loan terms ranging from one to five years. And, if they need it, there’s the option for a extending the loan repayment period. 

CIFI: Creative Industry Financing Initiative

The Creative Industry Financing Initiative (CIFI) is an amazing chance for creative entrepreneurs to get long-term, low-interest loans for their projects.

These loans are designed specifically for people who work in different creative fields, such as fashion, IT (including student software development), movie production, and music production and distribution.

Here’s a quick overview of the loan details:

• If you’re in the IT business, you can access loans of up to three million Naira, with a maximum payback period of three years.
• Movie Production businesses can access loans of up to thirty million Naira,  with a maximum payback period of ten years.
• Movie Distribution ventures can access loans as high as five hundred million Naira, also with a maximum payback period of ten years

To qualify for the Creative Industry Financing Initiative, you and your business must: 

• Belong to the creative industry (fashion, music, movies, or IT)
• Be registered with the Corporate Affairs Commission
• Submit a comprehensive business proposal
• Maintain a clean Credit Bureau Report with no unpaid obligations.
• Ensure a satisfactory CRMS (Credit Risk Management System) report for owners, sponsors, and directors. 

Tertiary Institutions Entrepreneurship Scheme (TIES)

The Central Bank of Nigeria (CBN) teamed up with universities and polytechnics to form the Tertiary Institutions Entrepreneurship Scheme (TIES) for graduates. 

So if you’re a university or polytechnic graduate with dreams of starting your own business, you can tap into this loan program. 

The TIEF loan has a 9% annual interest rate, starting at 5 million Naira if you are a solo entrepreneur or 25 million Naira if you are a partnership. But here’s the catch, you’ve got five years to pay it back.

You also have a high chance of getting picked if your business falls under these sectors:

• Agribusiness (production, processing, storage, and logistics)
• Information technology (application/software development, business process outsourcing, robotics, data management)
• Creative industry (entertainment, artwork, publishing, culinary/event management, fashion, photography, beauty/cosmetics)
• Science and technology (medical innovation, robotics, ticketing)

To be eligible for this loan, you must provide the following documents:

• Your bank verification number (BVN)
• Your first-degree certificate (BSc/HND or equivalent)
• Your Verified National Youth Service Certificate (NYSC) discharge or exemption certificate
• Your entrepreneurship training certificate from a polytechnic or university 
• A signed Global Standing Instruction (GSI)
• A third-party guarantee from a senior federal/state civil or public servant, clergy, recognized traditional ruler, or a confirmed employee of established companies.
• Business registration documents ( Corporate Affairs Commission  documents (CAC), Incorporation documents, etc).

How to apply for a CBN loan 

At this point, you are probably wondering how you can apply for a Central Bank of Nigeria, no collateral loan for your business. 

To secure a CBN loan, all you need to do is reach out to your preferred Participating Financial Institutions (PFIs), which are basically banks, microfinance folks, and other finance institutions given the CBN’s stamp of approval to hand out these funds.

The specific requirements may vary depending on the chosen PFI. However, you can generally expect to be asked for:

• Your business registration documents 
• Your business plan 
• Proof you operate in a field related to the loan 

Having the required documents is just a part of the process. To apply for the loan: 

• Contact a participating financial institution (PFI) to inquire about the eligibility requirements and application process.
• Gather the required documentation, such as your business plan, financial statements, and tax returns.
• Submit the application to the PFI.
• The PFI will forward your application to CBN to review your application 
• If your application is approved, the PFI will disburse the funds to your business account.

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Conclusion 

By offering low interest rates and flexible repayment terms, CBN loans are a great loan choice for all types of businesses in Nigeria. 

Applying for a CBN loan is not hard; all you have to do is make sure you apply for the right loan, contact a Participating Financial Institution (PFI) and provide the necessary documents. 

So, don’t hesitate to explore the opportunities that CBN loans can bring to your business. Your dreams are just a loan away.