Getting loans is one of the challenges faced by Small and Medium Enterprises (SMEs) in Nigeria. However, there are some funds available to be accessed by entrepreneurs. There are six important lifelines offered by the government and private sector.
Development Bank Fund (DBN): As a wholesale bank, the DBN will lend wholesale to microfinance banks and deposit money banks which will lend medium to long-term loans to Micro, Small and Medium Enterprises (MSMEs). The most basic criteria to benefit from DBN loan are:
- you must apply through your bank
- the loan sought for must be long-term
- you should have reasonable book keeping
- your bank (microfinance or commercial) must run a due diligence and qualify you.
At the commencement of the disbursement exercise in October, 2017, in Abuja, the DBN disbursed N5bn to three microfinance banks (LAPO Microfinance Bank, Fortis Microfinance Bank and NPF Microfinance Bank). The PFIs were the first set to meet the criteria to access the loan. However, DBN has signed more PFIs. They are Wema Bank, Ecobank, Sterling Bank, Diamond Bank and Fidelity Bank; these are the commercial banks.
For the microfinance banks, the new ones are Microcred Microfinance Bank Nigeria Ltd., AB Microfinance Bank Nigeria Ltd. and Infinity Microfinance Bank Ltd. In its first full year of operation, the bank targeted to lend N5bn to 20,000 MSMEs on a sustainable basis.
CBN Micro, Small and Medium Enterprises (MSME) Fund: MSMEs resident in Abuja can access this fund by applying to the Abuja Enterprise Agency (AEA). According to the Managing Director of AEA, Mal. Muhammad Tukur Arabi, in a recent interview, there are no stringent requirements for the disbursement of these loans. Mal Arabi said, “All the client requires is to come with an application, fill a form and return it and bring two guarantors that we can certify. So long as your guarantor says he/she will stand for you in case of any default; that is all. There are no securities attached to it.”
The loan, which is disbursed through the FCT Microfinance Bank, ranges from N50,000, which is the minimum, to N5m, which can be given to a client depending on the viability of the business and the commitment of the client and his/her capacity to pay back. Business owners can access the funds and pay back, depending on the sector, in three years minimum, that is for those that are in other businesses.
But for those in agriculture, it is being extended to up to five years. The former has a moratorium of six months before you start paying, while with the latter, repayment starts after one year; that is those that are to access the funds for agriculture.
Bank of Industry (BoI) Funds: The Bank of Industry (BoI) has a number of funds that entrepreneurs of all levels can access. First is the Graduate Entrepreneurship Fund (GEF), which is meant for serving members of the National Youth Service Corps (NYSC). Candidates are allowed to submit their business ideas, which are then reviewed by a team of experts. The NYSC members whose ideas are marketable and bankable are then selected, trained for four weeks and then given between N500, 000 and N2m.
There are also the Cottage Agro Processing (CAP) Fund for small and medium agro processors; Nolly Fund for players in the Nollywood, as well as Fashion Fund for designers and other players in the value chain.
Tony Elumelu Foundation Fund (TEF): The Tony Elumelu Foundation (TEF) has $100 million for 10,000 African entrepreneurs. This will continue to be available for another seven to eight years. If you are in agriculture, fashion and design, light manufacturing, ICT, solid minerals, among others, then apply for the ongoing TEF Fund. You can be lucky to be one of 1,000 entrepreneurs to be shortlisted. Through the TEFn Fund, Momarr Mass Taal, the CEO of Tropingo Foods in The Gambia, who got $5,000 seed capital in 2015, turned his enterprise into a $1.2m revenue business.
Lagos State Employment Trust Fund: Lagos State has N25 billion to support SMEs. The fund is divided into two categories; micro and small businesses. Under the micro, businesses can access up to N500, 000 loan with an interest rate of five per cent and a tenor of one year. For the small business category, businesses can get up to N5m for a tenor of three years. The criteria for accessing the fund include: membership of a business organisation, which will recommend the business for the loan; Lagos State tax receipt for at least six months and Lagos State residency card. This takes three weeks to process.
FG Social Intervention Fund: A total of N6 billion was allocated under the Social Intervention Fund. The criteria for accessing the fund include membership of a business organisation. The fund is for artisans and owners of micro businesses. The artisans or business owners can only access a maximum of N100,000 at three per cent interest rate on a year tenor.
Source: Daily Trust