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CBN: Guidelines On How To Access The CBN N50Billion Loan For Household And SMEs

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CBN CREDIT FACILITIES: Due to the outbreak of the COVID-19 pandemic in the world today many job losses have occurred and supply chains blocked. The prices of oil have been severely affected and there have been severe turmoil in the global stock and financial markets.

In view of this, the central bank of Nigeria known as CBN have issued directives on a N50billion targeted credit facilities that will come in form of loan.

The broad objectives of the CBN’s N50 billion Targeted Credit Facility include:

i. Cushion the adverse effects of COVID-19 on households and MSMEs;
ii. Support households and MSMEs whose economic activities have been
significantly disrupted by the COVID-19 pandemic.
iii. Stimulate credit to MSMEs to expand their productive capacity through
equipment upgrade, and research and development.
Central Bank Of Nigeria  cbn: guidelines on how to access the cbn n50billion loan for household and smes - IMG 20200618 090528 300x245 - CBN: Guidelines On How To Access The CBN N50Billion Loan For Household And SMEs

Central Bank Of Nigeria

Who are those Eligible for this loan?

The Eligible participants include
i. Households with verifiable evidence of livelihood adversely impacted byCOVID-19
ii. Existing enterprises with verifiable evidence of business activities
adversely affected as a result of the COVID-19 pandemic.
iii. Enterprises with bankable plans to take advantage of opportunities
arising from the COVID-19 pandemic.

Activities And Sectors that will benefit from the scheme include

i. Agricultural value chain activities
ii. Hospitality (accommodation and food services)
iii. Health (pharmaceuticals and medical supplies)

iv. Airline service providers

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v. Manufacturing/value addition
vi. Trading
vii. Any other income generating activities as may be prescribed by the CBN.

Funding

The Scheme shall be financed from the Micro, Small and Medium Enterprises
Development Fund (MSMEDF).

Loan Limit

– Small Medium Enterprises:
The loan amount shall be determined based on the activity, cashflow and industry/segment size of beneficiary, subject to a maximum of N25 million for SMEs
– Households
Households: Can access a maximum of N3 million

Working Capital

Working capital shall be a maximum of 25% of the average of the previous 3 years’ annual turnover. (where the enterprise is not up to 3 years in operation,
25% of the previous year’s turnover will suffice).

Interest Rate For The Loan

Interest rate under the intervention shall be 5% p.a. (all inclusive) up to 28th February 2021 and thereafter, the interest on the facility shall revert to 9% p.a. (all inclusive) as from 1st March 2021.

Loan Tenor

Loan Tenor(The length time to which the loan is due)
– Working capital shall be for a maximum period of one year, with no option for rollover.
– Term loan shall have a maximum tenor of not more than 3 years with, at least, one-year moratorium.

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Collateral requirements

For the loan, the collateral requirements is as follows
The collateral to be pledged by beneficiaries under the programme shall be as may be acceptable by NIRSAL MFB, but may include any one or more of the following:
i. Moveable asset(s) duly registered on the National Collateral Registry
(NCR).
ii. Simple deposit of title documents, in perfectible state
iii. Deed of Debenture (for stocks), in perfectible state
iv. Irrevocable domiciliation of proceeds
v. Two (2) acceptable Guarantor
vi. Personal Guarantee of the promoter of the business
vii. Life Insurance of the Key-Man, with NMFB noted as the First Loss
Payee
viii. Comprehensive Insurance over the asset

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How Repayment will be made

Repayment shall be made on installment basis by the beneficiaries to the NMFB according to the nature of enterprise and the repayment schedule/work plan provided at the application stage.

Here are the modalities on how loan application will go

For Household/MSMEs

1.. Eligible households or MSMEs shall submit applications directly to NIRSAL Microfinance Bank (NMFB);

ii. The application must, among others, contain BVN number, business registration (where applicable) and business plan with clear evidence of the opportunity or adverse impact as a result of COVID-19 pandemic.
iii. NMFB shall appraise and conduct due diligence applications.
iv. Upon satisfactory appraisal of application, NMFB shall forward the
applications to the CBN for final approval
v. CBN reviews applications and gives final approval for disbursement to NMFB.

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For Corporate Entities
i. A corporate entity shall submit application to NMFB with clear evidence of the opportunity or adverse impact as a result of COVID-19 pandemic.
ii. NMFB shall appraise and conduct due diligence applications.
iii. Upon satisfactory appraisal of application, NMFB shall forward the
applications to the CBN for final approval
iv. Central Bank Of Nigeria reviews applications and gives final approval for disbursement to NMFB.

Responsibility Of Stakeholders

– Central Bank Of Nigeria (CBN)
i. Provide the seed fund for the Scheme
ii. Release funds to NIRSAL MFB for disbursement to successful
applicants.
iii. Review the Guidelines of the Facility as may be necessary
iv. Receive and process periodic returns from NIRSAL MFB.
v. Monitor and evaluate implementation of the Scheme by NIRSAL MFB.

NISRAL Microfinance Bank

i. Validate the status and BVN of the applicants;
ii. Process and disburse funds to approved beneficiaries;
iii. Maintain records of all beneficiaries and disbursements;
iv. Forward periodic returns on the prescribed format on the Scheme to CBN;
v. Comply with the Guidelines; and
vi. Carry out any other duties as the CBN may prescribe from time to time.

The exit date of this Intervention is 31st December 2024. This framework shall be subject to review from time to time as may be deemed necessary by the CBN.

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