CBN LOANS AND FG INTERVENTIONS FOR SME BUSINESSES AND HOW TO APPLY FOR THEM

The Central Bank of Nigeria (CBN) is Nigeria’s apex financial authority and one of its objectives is to promote the development of MSMEs in the country. In the light of this developmental objective, the CBN initiated several intervention schemes.

While some of these schemes provide beneficiaries with loans, others release substantial funding needed for business growth. Importantly, we have conducted thorough findings on the various CBN-initiated loan opportunities targeted at businesses, particularly agricultural businesses and SMEs.

Reading this article further, you’ll find out the top CBN-initiated loan and/or fund schemes for SMEs and the links to their application guidelines.

1. CBN Non-Interest Accelerated Agricultural Development Scheme (AADS)

Riding on the Federal Government’s mission of reducing Nigeria’s unemployment rate through agriculture, this CBN-initiated scheme aims to engage at least 370,000 Nigerian youths. While AADS will last over a three-year period, it engages Nigerian youths (between 18 and 35 years of age) for them to contribute to agricultural production in the country.

Click here to find out more about AADS

2. CBN Anchor Borrowers Programme (ABP) Intervention for Agriculture

ABP was developed with the objective of providing financial support for businesses and for farmers producing certain commodities. Notably, businesses (applying for ABP) are required to serve as inputs suppliers and large-scale private integrated processors.

You can find out more about ABP here

3. CBN Agri-Business/Small and Medium Enterprise Investment Scheme (AGSMEIS) Collateral-Free Loan

With the intent of supporting the Federal Government’s provision of financial support for small/medium enterprises and agricultural businesses, the Bankers’ Committee partnered with the Central Bank of Nigeria (CBN) in the establishment of this loan scheme. Specifically, AGSMEIS is targeted at owners of SMEs and agriculture-related businesses and such people can each obtain as much as #10 million (loan) carrying only a 9% annual interest rate.

Find out the application procedure for AGSMEIS by clicking the link here

4. CBN Healthcare Sector Research and Development Intervention Scheme (HSRDIS)

Being a healthcare-specific grant scheme, HSRDIS is an initiative intended to promote Nigeria’s public healthcare system. Basically, HSRDIS is targeted at research institutes, institutions and pharmaceutical companies. Therefore, the scheme provides the necessary funding for research and development concerned with the provision of diagnosis and vaccination for infectious diseases in the country.

Click the link here to learn more about HSRDIS

5. CBN Loan for the Creative Industry Financing Initiative (CIFI)

With the intent of promoting the idea of job creation among Nigerian youths (people considered the driving force of the country’s creative industry), the Bankers’ Committee joined hands with the CBN in the establishment of CIFI.

While CIFI is targeted at investors and entrepreneurs in the country’s IT sub-sectors, the initiative favourably boosts its beneficiaries’ access to long-term affordable financing.

To learn more about CIFI and its application process, you should click here

6. CBN Micro, Small and Medium Enterprises Development Fund (MSMEDF Loan)

MSMEDF is a CBN initiative established with the intent of promoting the development of micro, small and medium enterprises (MSMEs) in Nigeria. Notably, CBN’s establishment of MSMEDF was necessitated by the need to minimize the massive financial gap hampering the growth of MSMEs in Nigeria.

A sizeable number of Nigeria’s MSMEs are eligible for this loan scheme and importantly (and provided by the Revised Microfinance Policy, Regulatory and Supervisory Framework for Nigeria), such MSMEs should include any of the following:

1. Artisans
2. Cottage industries
3. Trade and general commerce enterprises
4. Service-based businesses
5. (Businesses contributing to) agricultural value chain
6. Businesses concerned with energy-efficient technologies and products
7. Businesses/enterprises concerned with other CBN-recommended economic activities

Click here to find out the application process for MSMEDF.

7. NIGERIA YOUTH INVESTMENT FUND (NYIF)

NYIF –an empowerment scheme funded by the Central Bank of Nigeria (CBN) –is intended to equip Nigerian youth-owned businesses and young Nigerians with substantial investment loans. Fully pronounced as Nigeria Youth Investment Fund, NYIF is a brainchild of the Federal Ministry of Youth and Sports Development (FMYSD) and it is simply understood as a #75 billion naira empowerment project for youth entrepreneurship.

NYIF is accessible to youth-owned CAC-registered businesses and individuals or non-registered businesses. Notably, the accessible investment loan carries a 5% yearly interest and runs for a 5-year period. While youth-owned registered businesses can each obtain as much as #3 million, individual or non-registered businesses are each allowed the maximum loan amount of #250,000.

Eligibility Requirements for NYIF

• Applicants (applying as sole proprietors or individuals) must possess active businesses located in Nigeria
• NYIF stipulates the age requirement of 18-35 years for applicants
• Applicants’ past 10-year record of financial activities must not involve any criminal conviction
• Every applicant is mandated to present an authentic Bank Verification Number (BVN)
• Applicants with youth-owned enterprises are mandated to present their business plans as well as evidence of business registration with the Corporate Affairs Commission. Additionally, such applicants are required to present the following:
  • Training certificates duly obtained from any recognized FMYSD Entrepreneurship Development Institute
  • Tax Identification Number (TIN)

How to Apply for NYIF

For a successful NYIF application, you should comply with the instructions below:

• • Click the link here to visit the NYIF official portal on your mobile phone
  • After landing on the homepage of the portal, tap the Apply Here button to begin your application –Note that the NYIF application form contains 5 sections all of which you must fill entirely to complete your application
  • Subsequently, supply your personal information in the appropriate fields. Such personal information should include your full name: first name, middle name and last/surname name
  • Input your Bank Verification Number in the required field and then, tap the Next button
  • Following the verification of your BVN, you’ll have to fill in more personal details including your gender, email address and mobile number
  • With the above correctly done, you’ll then have to input your residential details –your residential address as well as your state of residence and Local Government Area (LGA)
  • Tap the Next button to proceed to the next section (or fourth section) of the application form
  • Now, you should specify your geopolitical zone. This should be any of Nigeria’s 6 geopolitical zones: North East, North West, South East, South West, South-South and North Central

• • Subsequently, specify your state of origin and the LGA you hail from in that state
  • In the field titled “Educational Level”, specify the highest academic level that you have attained
  • Following that, tap the Next button to proceed to the last section of the application form

• In this section (precisely the fifth section), you’re expected to specify your desired centre (location) for NYIF free 5-day online training. Also, this section requires you to put in a brief statement of how you got to “hear about NYIF”
• After filling in the necessary details for this section, complete your application by ticking the box indicating “I hereby declare …” and then hit the Submit button beneath.

⇒Small and medium scale enterprises in Nigeria-How startups can leverage SMEs to Scale

Small and Medium Scale Enterprises, otherwise known as SMEs are the major backbone of every developing and developed economy, and the case is so true for Nigeria.

According to the Nigeria SME Survey, conducted and published by PricewaterhouseCoopers, SMEs account for a staggering 96% of all businesses in Nigeria and contribute 48% of the nation’s Gross Domestic Product. The report also states that 84% of Nigerians in employment are working for one SME or the other.

It does not even take a survey by a multinational consulting firm to realize the above facts about SMEs in Nigeria. Trek a few meters away from your home anywhere in Nigeria, and you will discover vibrant battalions of enterprises, conducting businesses in the way they know best.

These range from foodstuff vendors to food hawkers, wandering shoe shiners to static barbing saloons, provision shops, airtime sellers, phone battery charging spots, and car washes.

Besides this booming small business economy in Nigeria stands a booming tech startup ecosystem that has severally been recognized as one of the most vibrant in the continent. Young people, with big ideas, are busy working on disrupting entire industries or creating new ones in different sectors ranging from finance to healthcare.

A senior Cisco executive recently averred that “SMEs need technology support for growth”, and I agree with him. Partnership (or you can call it collaboration) between SMEs and startups could prove to be the proverbial match made in Heaven, unfortunately, this is something that is rarely even discussed talk more of being implemented. It is not late, however. Tech startups can build products that can enable SMEs to sell more of their goods. The end result is that startups get to solve the nagging problem they are always on about, and SMEs make more money and have the best experience selling their goods and services.

The following discusses the different ways startups can grow by solving the plentiful needs of the huge number of SMEs in Nigeria.

1. Build products that enable SMEs cut down costs

Startups should build products that enable SMEs cut down their cost of operation in the way of rent, generator maintenance cost, and internet data cost.

A second-hand cloth dealer going into business in an expensive city like Abuja might not be able to pay millions upfront to rent a shop in their chosen location. This kind of situation is not one that is too difficult for startup founders to handle.

An eCommerce platform where Abuja residents can search and order their choice of second-hand clothes could be the ultimate solution. Renting out a single shopping space to a number of second-hand clothing dealers could be another wonderful idea of a startup founder that could drastically reduce the cost the dealers individually incur at the end of the end.

Startups can also provide a cheaper and more reliable power source to SMEs, boosting their productivity and sales while also moving their own ministries.

2. Build products that enable SMEs to reach their customers easily

Small services providers, like shoemakers, lead a hazardous, every-mobile lifestyle, with most wandering from one street to another in search of customers for a significant part of their working hours. Startup founders can change this, and change their own stories while changing the lives of these small service providers for good.

A SaaS product that enables people within an area to call the service of a nearby cobbler by pushing a button on their smartphone is not impossible and could be commercially viable.

Such a product would mean that the cobbler won’t need to wander around in search of a client he might never see. He just has to stay at a select location and wait to be called to deliver his service.

The app could charge the users a small percentage of the transaction, thus earning money to sustain itself while solving society’s problem that the founders are out to solve.

3. Offer loan facilities to SMEs

Fintech startups in particular can leverage the huge number of small and medium scale enterprises in Nigeria to grow.

You are wondering how?

They can offer loan facilities to these businesses that often cannot tick all the boxes required by traditional lenders, like banks, so cannot get the loans they need to grow their businesses. SMEs are as hungry for growth as big businesses. And going by the fact that SMEs account for a whopping 96% of businesses in Nigeria, you realize that this is a whole lot of untapped markets and an opportunity to scale a startup.

Engineering a product for this hugely underserved section of the economy means startups stand a better chance of even upstaging their traditional counterparts in a very short period.

I know, that lending to small, majorly undocumented and unbanked businesses comes with very high risks, but this is not a problem that startups cannot find their way around.

Away from providing loan facilities, startups can also build accounting products for SMEs, come up with products to help perishable foodstuff sellers preserve their products, and build a more efficient and cost-effective SME supply chain.

Conclusion

We hope the information above has helped you find out the leading CBN-initiated loan opportunities for SMEs and how you can apply for them.