If you are preparing to start a new business or to keep an existing one running there is a time when you will need to take a loan to kick start the business or keep the business running, sometimes finding financial institutions to get these loans from at affordable rates becomes a daunting task as a Nigerian business owner. The CBN has various credit schemes and programmes to help you access credit facilities depending on the type of business you need the credit facility for. As a business owner, you need to know financial institutions that can offer you the loan you need to keep your business operating. In this guide, you will learn about CBN loans, what they entail, and how to apply for loans with the CBN.
The CBN is the Central Bank of Nigeria, it is the lender of last resort for the federal government of Nigeria. The CBN as the apex financial institution in Nigeria is in charge of the monetary policies of the country, the CBN also manages the foreign reserves of the country, the CBN also regulates the financial activities of all the banks of the federation. The CBN also issues legal tender currency in Nigeria and helps to maintain sound financial systems in the country.
Does CBN Give Loans
Yes, the CBN offers a wide range of loans and credit facilities for various economic schemes oftentimes to ramp up economic activities in the Nigerian economy. The loans given by the CBN are often disbursed using participating financial institutions that potential borrowers are required to have an account with. The CBN can provide loan facilities for as little as ₦500,000 and as much as ₦500,000,000, the loan amount you get is dependent on what you’re applying the loan for.
Types of CBN Loans
The Central Bank of Nigeria provides several types of loans in several categories depending on the needs of the country’s economy and sectors of the economy needing funding support from the apex bank or government of the day. Some of the types of loans given by the CBN include:
AGSMEIS Loan for SMEs and Agricultural Businesses
Businesses applying for this loan do not need to have collateral, this loan is open to SMEs and agricultural businesses. This loan allows you access to up to N10 million at an interest rate of 9%. This loan is disbursed by NIRSAL Microfinance Bank and other participating banks.
Accelerated Agricultural Development Scheme loan (AADS)
This loan is targeted at the youth to help engage them in agricultural production. To access this loan you need to be a Nigerian between the age of 18 – 35 years of age. You are required to sign an undertaking on the terms and agreements as directed by the CBN. You can get up to ₦1.5 million at an interest rate of 9%.
Micro, Small, and Medium Enterprises Development Fund MSMEDF Loan
This loan is targeted at SMEs, the instruction is that this loan should be given to available SMEs and micro-enterprises, to get this loan you need to be involved in any of these kinds of businesses: agriculture value chain, cottage. industries, artisans, services, renewable energy, trade and commerce, and or the businesses allowed by the CBN.
Anchor Borrowers Program Intervention for Agriculture (ABP)
This loan is offered to small farm owners engaged in producing specific commodities in the country. You need to be a member of 5 – 20 groups or cooperatives.
Creative Industry Financing Initiative Loan (CIFI)
The CIFI credit scheme was developed to boost job creation among young individuals in the creative and information technology (IT) industry. To get this loan Your business must be in the creative and information technology (IT) industry. A business can get this loan of ₦500,000,000.
CBN Healthcare Research and Development Grants
CBN provides this loan to businesses in the healthcare sector and research and development. Your business must be one of the eligible businesses for the loan. You can get up to 500,000,000.
Maize Aggregation Scheme (MAS)
The Maize Aggregation Scheme is a working capital loan facility provided by the CBN. This loan is of great benefit to maize farmers across the country, this loan is designed to help Agro-businesses purchase home-grown maize. Some of the businesses that are to benefit from this MAS fund scheme include Confectionery, Feed Millers, Poultry Farmers, Silo Operators, and Warehouse Operators. Businesses can borrow up to 2 billion Naira on this MAS fund at an interest rate of 9%.
Real Sector Support Facility (RSSF)
The main aim of this loan facility is for the following Real Sector Support Facility to increase output in the real sector of the economy, this loan will help to generate employment, diversify the revenue base of businesses, and provide inputs for the industrial sector sustainably for the sake of the economy. This loan is available to certain businesses such as Agro business l, Manufacturing, Mining, and Solid minerals. This loan is open to businesses that do not deal with simple trading activities that are not covered by this scheme.
CBN Loan Interest Rate
CBN loan interest rates vary depending on the sector of the economy the loan is intended to impact, this means that the loans given by the CBN are given at very low interest rates especially when the loan facilities are targeted at very critical sectors of the economy of Nigeria. The official lending interest rate of the CBN is 18.5%.
CBN Loan Eligibility
To be eligible for any loan provided by the Central Bank of Nigeria you need to have the following and more specific conditions:
- Your business has to be fully registered with the CAC this is because the CBN does not find or lend money to individuals
- You must have your BVN
- Your business needs to have an account in any of the participating financial institutions(PFIs)
Note the participating financial institutions include: microfinance banks, non-governmental organizations-microfinance Institutions (NGO-MFIs), financial cooperatives, finance companies, development finance institutions such as the Bank of Agriculture and Bank of Industry, and all fully licensed deposit money banks (commercial banks).
CBN Loan Application Process
Applying for any CBN loan requires you to visit any of the PFIs and fill in the required forms for the particular CBN loan you require. Your participating financial institution will then forward your application to the CBN and if you meet the criteria for the loan your loan amount will be disbursed into your PFI account when the loan is approved.
Pros & Cons of CBN Loan
There are advantages and disadvantages to getting loans from the CBN.
Pros Of CBN Loans
- The loan is accessible to everyone in any given sector the loan is targeted at.
- The CBN loan caters to the needs of businesses in various sectors of the Nigerian economy.
- The eligibility criteria for the CBN loans are not very stringent as is the case with deposit money banks( commercial banks).
Cons Of CBN Loans
- The CBN loan disbursement time is often long due to the enormous protocols involved in the process.
- The CBN loan application process can be cumbersome given the documentation and processes involved.
The Central Bank Of Nigeria loans form part of how the government of Nigeria in its full faith helps to keep the Nigerian economy working when there is the need for it, and businesses operating in the country approach the apex bank for loan facilities. Anyone can apply for the CBN loan and if you meet the criteria and your loan request is approved, you will receive the loan amount disbursed into your desired and filled bank with the CBN..