Business Loans

How to get Microfinance Loans in Nigeria

June 22, 2020 by Finance Writer Leave a Comment

Before the recommendation of microfinance institutions in Nigeria, many businesses under small and medium ventures have been represented poorly in the financial sector. They are denied easy access to funds which has affected their business and means of livelihood.

In a bid to address the funding requirements of the SMEs, the Central Bank of Nigeria set up a microfinance development fund with a seed capital of N220 Billion. The fund will be administered by the Central Bank of Nigeria and managed by licensed microfinance institutions.

What is Microfinance Lending Institutions

A Microfinance Bank (MFB) is an institution duly licensed by the CBN to perform the business of providing microfinance and other financial-related services. Microfinance services refer to loans, deposits, fund transfers and any other financial products targeted at low-income clients – just like the other microlending services in Nigeria.

Where can I get microfinance funds in Nigeria?

There are over 1000 microfinance banks (MFBs) in Nigeria, which include unit MFBs, state MFBs and national MFBs. Collectively MFBs are much smaller than other banks, with a total lending portfolio of up to N53 billion. The Central Bank of Nigeria (CBN) requires all MFBs to lend at least 80% of their loan portfolio to micro-enterprises.

How to get funding from microfinance banks

They play vital roles in poverty eradication, agriculture, increase in small scale businesses, etc.

We will concentrate on microfinance banks in Nigeria and how they grant loans. The following are steps to getting a loan from most microfinance banks in Nigeria:

Have A Genuine Plan or Project for the loan

Before approaching any microfinance bank, make sure you have a plan and a business plan to support your idea. This increases your chance for a favourable response from the micro-lending institution. Bear in mind that these microfinance institutions were established for the sole purpose of strengthening the economy. Because of this, they only grant loans that fall in the category of SMEs

Most microfinance banks grant loans for business purposes, asset procurement, agriculture, educational purposes, loans for salary earners, etc.

You might need proof

Showing the lenders proof of your business entity or plan can help you secure the funds you need from a microfinance bank. For example, if you are a trader, you might require proof of business ownership in the documentation of your business registration. You might also need bank statements or receipt of transactions showing that you have an operating business.

Open An Account With The Bank

After getting all the documentations right, the next thing is to open an account with the microfinance bank. When you apply for a loan in a microfinance bank, the first thing is to open an account with the bank. This is for data capturing as well as to show that you are serious and you are willing to show commitment to the bank.

Maintain The Account For some time

Some microfinance bank would require that you maintain an account with them for a period before you can be eligible for a loan. However, it is not common practice. It does not just end with opening an account with the bank, the account has to be active which involves paying and withdrawing money from the account constantly before you can be qualified to apply for a loan.

Get collateral to secure the loan

You may also need to present collateral when applying for a secured loan in a microfinance bank. However, it may not be applicable to small business loans for petty traders and individuals. Some microfinance banks do not need collateral. But, it will be necessary for business loans such as assets acquisition, agriculture and other loan application with a more substantial amount.

Conclusion

You need to be careful when opting for a microfinance bank. Some of these banks are not qualified financial service providers and often treat customers unprofessionally. Which makes one wonder if SMEs really need microfinance banks.

Be sure you understand the terms and condition as well as compare interest rates from other microfinance banks to get the best deals.

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What Are Non-Performing Loans?

May 27, 2020 by Finance Writer Leave a Comment

Non-performing loans NPL are loans in which the recipient is in default and has not remitted the monthly loan repayments for a specified period. Although the exact features of non-performing loans can vary depending on loan agreements, industry and type of credit granted. The terms “no payment” is usually defined as null payments of either principal or interest in a given period.

How Does A Non-Performing Loan Work?

When a loan is listed as non-performing, it is considered a default. The chances of recovering such loans from a debtor in full are extremely low. However, if the debtor resumes payments again, it becomes a reperforming loan, regardless of the status of the default payments.

In the banking sector, commercial loans are considered non-performing if the borrower has made no loan repayments within 90 days. On the other hand, for a consumer loan, 180 days without payments classifies it as a non-performing loan.

However, it is essential to note that there is a slight difference between a loan in arrears or default. A loan is in arrears when the principal or interest payments are delayed or completely missed. While a loan is in default when the debtor is unable to meet his obligations – the lender at this point considers the loan agreement to be broken by the debtor.

How Banks Handle Nonperforming Loans

Generally, non-performing loans are regarded as bad debts because the chances of loan repayments are quite minimal. As a result, having more non-performing loans in the Bank’s records affect it’s cash flows negatively. This could ultimately harm the Bank’s stock price. Therefore, they may have to take precise actions to enforce and ensure the recovery of the loans.

If it’s an asset-based loan, one action is taking possession of assets pledged as security for the loan. For instance, if the borrower uses his landed properties as collateral for the loan, the lender will take possession of the land. The Bank then puts the property up for sale to recover the amount owed by the borrower.

Banks may also redeem the right of the mortgage on homes where the borrower has failed to meet his mortgage obligations. This can only be done after the number of days due, as stated in the loan agreement has expired.

The lender also has the option to sell the non-performing loans to collection agencies to get rid of such loans from their balance sheet. The Bank will sell the non-performing loans at discounts, and the collection agencies will try to retrieve the defaulted loans. Alternatively, the Bank can also enlist the services of a collection agency to enforce the recovery of such credit. A small percentage is charged in exchange for their services.

Types of Nonperforming Loans

Debt can be regarded as “non-performing loan” in any of the circumstances stated below;

Loan repayment of principal and interest are at least 90 days due, and the lender now believes the borrowers will not honour their debt obligations. The loan is recorded as a bad debt in the books
Ninety days’ worth of interest payments is refinanced, delayed or capitalized due to adjustments in the loan agreement.
A loan in which the principal repayment date has matured, but some part of the loan remains outstanding.

Conclusion

The non-performing loans to Loans Ratio help ascertain the tension in a portfolio of varied loans. The higher the ratio, the more danger the lender is for having that portfolio.

The non-performing loan ratio is the ratio of the number of non-performing loans in a bank’s loan database to the total amount of outstanding loans the Bank holds.

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How does Asset Based Lending Work?

May 25, 2020 by Finance Writer Leave a Comment

There are several financing terms to be familiar with, and it’s possible to miss out on critical interpretations when we come across them in everyday use. Ones of such are Asset Based Loan/Lending (ABL). This form of lending is granted only to business entities and not consumers. It is often used by medium scale enterprises to cover short term cashflow demands.

What are Asset-Based Loans?

Asset-Based Loans are a type of business financing secured by company assets used as collateral. Asset-based loans may be secured by account receivables, inventory, or other property owned by a borrower. They are just loans based on the assets of the company, that are used as collateral.

This could also result in putting your future revenue on the line as a company to enjoy some money today.

How Asset-Based Loan Works

Many organizations often take out loans to meet scheduled cash flow obligations. For instance, a company might obtain a line of credit to make sure it can cover its monthly salary expenses even if there’s a slight delay in expected payments.

Upon seeking the loan, the business might be unable to show strong cash flow statements to cover a loan. The lender may propose to approve the loan with its assets as collateral. For example, a new bakery might be able to take a loan only by using its equipment to secure the loan.

The term and conditions of an asset-based loan usually depend on the type and value of assets offered as collateral. Lenders prefer highly liquid assets as collateral because that can be easily converted to cash if the borrower fails to meet its obligations.

Who Uses Asset-Based Lending?

Asset-based loans are often used by organizations that need equity capital to operate or grow. Usually, organizations that request for this line of credit have cash flow problems. The asset-based lending facility enables the business to manage its cashflow problems effectively as well as positioning the company for growth.

Who Qualifies For Asset-Based Loans?

Generally, asset-based financing is given to small and mid-sized organizations that are solid and have enough assets that can be funded. The company’s assets must not be put up as collateral to another lender. In a case where they are pledged to a different lender, the other lender must agree to relieve some of the right on such collateral to the new lender.

What Can Be Used As Collateral

The main collateral generally accepted for an asset-based loan is accounts receivable of the company. However, other loan security, such as inventory and equipment assets can also be used. These assets can later be used to recover non-performing loans in the event there’s a loan default.

Conclusion

Before offering a loan, the lending institution needs to do a thorough due diligence process on the borrower. While the process of due diligence is on, the lender determines the value of your collateral. The lender also identifies any complications on the collateral and inspects the accounting records of the organization. Lenders carry out onsite visit and probe further by interviewing relevant employees.

The due diligence process is often subjected to a charge which varies from time to time and across different organizations.

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Insurance Loans – Everything You Need To Know

May 24, 2020 by Finance Writer Leave a Comment

If you need quick cash and you have run out of options, the one place to look for such emergency loans is your insurance policy. Although it is important to note that you can only take out loans on permanent life insurance policies which is available either as a Whole Life Insurance or Universal Life Insurance

While taking a loan from a life insurance policy can be an easy way to get cash when you need it. There are some specifics to know before you decide to take up a loan on your insurance policy.

How Insurance Loan Works

The insurance loans work slightly different from a bank loan or credit card. Insurance loans do not affect your credit score, unlike other types of loans, and they eliminate the process of approval from the credit bureau since you are borrowing from yourself. When you take a loan on your insurance policy, you need not explain how you intend to use the money. You can use for anything, ranging from bills payment to vacation expenses or an emergency.

Also, tax authorities don’t recognise the loan as an income, and as a result, it is free from tax. However, it is expected that a policy loan will be paid back, and interest is also payable on insurance loans. Though the interest rates are usually much lower than the interest payable on bank loans, and there is no required monthly payment upon the borrower.

Paying Back the Loan

Even with all the accumulated benefits of taking out a loan on a life insurance policy, the loan needs to be paid back promptly. This is because of interest accrued on the loan amount on regularly, and it doesn’t stop your mandatory monthly obligation of premium payment. Interest is attached to the loan balance and accrues regardless of when bills are being paid either monthly or not. This could result in putting your loan at risk of exceeding the policy’s cash value. In the event the insurance policy lapses, you must pay taxes on the cash value.

Insurance companies would naturally provide many opportunities to keep the loan current and prevent the insurance policy from lapsing. In the event the loan balance is not paid back at the time of death of the borrower – then the loan balance plus interest will be deducted from the amount the beneficiaries are to receive from the death benefit.

Conclusion

In summary, you should keep the following takeaways in mind whenever you want to opt for a loan on your life insurance policy

Taking a loan on your life insurance policy can be an easy way to get an emergency fund when you need it.
You can only take out a loan on either permanent or whole life insurance policy.
Policy loans are always taken against the borrower’s death benefit, and the insured use the policy as collateral for the loan.
Insurance companies (the lender) will add interest to the loan balance, which accrues whether payment is made monthly or not.

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Buy Now Pay Later Loans

May 22, 2020 by Finance Writer Leave a Comment

A growing trend in retail now is the use of buy now and pay later schemes. Just as the scheme implies, it allows buyers to delay payment for a product they can take home immediately.

It’s an inviting deal that lets you get what you want now while you get the chance to pay for it over time. It sounds too good to be true, isn’t it?

So, how does buy now and pay later work?

Buy now and pay later are being used by anyone who enjoys using a product or service now to pay later. For example, a fashion retailer can allow buyers to get that new pair of jeans, dress, shoe or other desirable items that catch their fancy at the moment they see it. Instead of having to wait because they are unable to afford it at the moment.

Buy now and pay later is basically a short-term loan.

So how do you get buy now and pay later loans?

Getting a short-term loan under the Buy now Pay later scheme heavily depends on the person or organization granting the loan and the kind of business they operate. Regardless of the lender’s mode of operation, getting a loan from them would require some basic actions highlighted below;

Applying for the loan under this scheme will require the borrower to identify the product he wants to buy. This could either be a phone, electronic accessories, etc.
After picking out his product of interest, the borrower fills out an application for the loan amount, which is equivalent to the value of the item(s) selected
The lender after some background checks and due diligence on the borrower grants the loan by presenting the loan agreement to the borrower
If the conditions of the loan are suitable to the borrower, he signs off on it and then gets his product to be making payment in instalments till the loan amount is completely paid off

However, there are certain conditions that need to be met depending on the lender as mentioned earlier. Some creditors would require a part payment of the value of the product you want to buy, which is usually expressed as a percentage of the value of the product.

While others restrict their lending services only to salaried employees to ensure prompt repayments. It is essential you understand the terms and conditions of the lender before opting for a loan under this scheme.

The Advantages of Buy Now and Pay Later?

Potential of paying no additional interest if payments are met on time before the loan period elapses.

The advantage of buying desired items on the go without missing out.

It lowers and removes buying hesitation for buyers

It increases the average order value for retailers since more buyers get to place purchase orders.

It leads to an overall increase in sales.

Generates a new stream of income through the loan interest.

Conclusion

Sometimes you have to look beyond the good offer of the buy now pay later schemes and avoid anything that will goad you into impulse buying. Usually, the loan amount under this scheme is relatively low and they don’t offer cash loans to customers.

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How to get car loans in Nigeria

May 21, 2020 by Finance Writer Leave a Comment

Applying for car loans here in Nigeria is not as complicated as it may seem. The process is seamless once you are eligible. In this article, we discuss all the steps involved in successfully getting your car loan.

Here are the requirements needed to get you a car loan in Nigeria. If for financial reasons, you cannot pay for a car at one, there are financial institutions that will offer car loans to get you that dream car of yours.

Requirements for a car loan in Nigeria

First, identify the car you intend to buy and how much it cost. It is easier if the car dealer you find already has car loan options. Some financing institutions already have car loan options available and also have an arrangement with car dealers. It makes the process easier.

Also, find out how and when it will be delivered after you’ve successfully paid for it. Do this with a proforma invoice. It is a draft invoice. Remember the financial institutions won’t finance the entire purchase of the car. They finance around 60% or 70% of it. For example, if your car cost 3m and the bank funds 60% of that, that’s 1.8m while you offset the remaining balance.

The financial institution would be interested in determining your credit rating before you’re qualified for a car loan. The following will determine:

Your monthly income

Your income will determine your financial strength. It is how financing institutions ensure you can pay back the car loan you intend to get. If you fall short of the required range, you may not get the car loan.

The consistent inflow of funds.

Usually, a period of three months to one year or two is the duration to check the overall inflow of your account, especially for salary earners to confirm how steady the inflow of funds is. So, to increase your chances of getting the car loan to ensure you have a consistent State of account. You’ll be required to provide all of these, and it’s part of the process required to verify your credit rating.

After this verification, your loan tenure is next. The loan tenure is the duration which the car loan will run for. Most car loans run for a term of four to five years. That is you have that long for repayment. You also have the option to pay off the amount before the stipulated period on the car loan agreement.

Considerations before a car loan

After you have observed all your options, consider the following factors before you proceed with the car loan.

Interest rates of the car loan

Make sure the interest rates on loan are favourable. Paying for a loan with high-interest rates is a disadvantage.

2. How affordable are the monthly payments for the car loan?

The affordability of the monthly payments should interest you because you don’t want changes that would cause a strain on your finances. Settle for charges that are within your income bracket. That way, you won’t feel the stress of repaying your car loan.

3. Upfront deposit required.

The upfront deposit required helps you determine the percentage of your car loan will cover for you.

Where can I get car loans in Nigeria?

A few banks and institutions offer car loans, and other car financing options in Nigeria are:

BetaCar.NG
AccessBank
Stanbic bank
Cheki.com.Ng
FirstBank
Cars45

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How To Get A Loan From Renmoney

May 20, 2020 by Finance Writer Leave a Comment

About Renmoney

Why Renmoney loans? Well, If you can’t stop dreaming about starting up that business then maybe you should act on it. You no longer need to rely on loved ones for the capital you need to start. There are loan institutions that are waiting for you to reach out to them. Let’s take Renmoney Nigeria, for instance. Renmoney is a microfinance bank that prides itself as Nigeria’s most convenient lending company with innovations that deliver outstanding service experiences. They grant both personal and micro-business loans ranging from N50,000 to N6 million.

Renmoney microfinance bank has a team of diverse executives with experience from multiple industries who work together to deliver the best to its customers.

Renmoney Loan App

Ratings –2.6-star rating with 48 reviews

Downloads – Over 5,000

App Size – 11mb

Version – 1.0.4

Offered By – Renmoney MFB

The Renmoney app fast-tracks loan applications and credit disbursements. It collects information seamlessly, verifies loan applications, and disburses money within 24hours. The app is available on Android only, and you can easily download Renmoney loan app from the play store.

Renmoney loan calculator

The best part about applying for loans nowadays is the fact that you can do the maths first to determine the interest you’ll get on the loan. You can understand this first even before applying for your loan through the Renmoney loan calculator. It is free to use, and when you do, this doesn’t mean that you have committed to taking the loan. It’s best to use this to know exactly how much you’ll pay back, the interest charged and the duration in which the payment is to be made. Once you’re up for it, you can go ahead and apply for the loan.

Renmoney Loan Requirements

Renmoney covers a variety of loans to suit each individual’s needs. The loans can be for school fees, smartphone funding, point of sale and loan at work. It is open to self-employed and employed individuals. It orders to qualify for the loan, and you must meet some criteria some of which include

You must fall within ages 22-59 years.
You must have an existing and active bank account with a commercial bank in Nigeria.
Must be well paid as an employee or own a thriving business
Both the employee and business owner must verify their monthly income and must have a clean credit bureau.
Your statement of account for up to six months is required, and there must be no issues of a returned cheque.
Have a recent passport photo and an identity card to prove that you’re a staff of your organisation.

If you’re certain that you meet the above criteria and more which are available on their website, you can fill the Renmoney loan application form, upload your document and submit. It is most likely that your loan request will be granted, but you must wait for this approval, and it usually happens within 24hrs.

Renmoney Loan Repayment

Paying back a loan is never as exciting as getting the loan request granted. Most people would struggle at this point, especially if their investments or business venture with the loan yielded zero to no returns. Regardless of your emotions, once you receive a credit from RenMoney, you also choose a process for repayment. You can choose to repay in a month, or you can spread the loan across 12 months.

Your Renmoney interest rate varies with the choice of loan repayment. The longer the duration for repayment, the more the interest rate. For instance, a full year repayment can attract up to 33.9% interest rate, but this will be lesser if the loan is paid back within 3-6 months. It is probably a method used to make its customers eager to pay back their loans.

Renmoney Customer Care

If you’re all set to get that loan but need more guidance, you can reach to their customer care representatives through these Renmoney contact numbers 0700 5000 500 or 0700 73666639.

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How Mortgage Loans Work In Nigeria

May 19, 2020 by Finance Writer Leave a Comment

Mortgage loans are important these days. Like most people, we all dream of becoming a homeowner, but very few of us get to achieve this dream. If culture permits it, becoming a homeowner can be said to be a part of the “Nigerian Dream.” Learning a thing or two about how mortgage works will set us on the straight path to achieving this dream.
Mortgages provide the option of paying for a house in instalments. With the Nigerian landscape in view, it is essential to understand the process of getting a mortgage loan. We have explained the process involved in becoming a homeowner with a mortgage below;

How To Get Mortgage Loans In Nigeria

Save a deposit: Have in mind you’ll need to put down a deposit if you are looking to buy a home with a mortgage. The percentage deposit will vary depending on the property owners or the financing institutions.
Seek out house buying schemes: It will be of better advantage if you employ the services of house buying schemes like the NHF (National Housing Fund) or private house buying schemes popularly know as ‘developers’. They know the best deals and offers along with better financing solutions for home owning.
Plan for the long term: Mortgages require long-term commitments. You should make a budget with your mortgage payments in mind. Your mortgage payments should not be more than one-quarter of your income. Structure your monthly expenses from your income and see how much you can pay in for mortgages monthly. You can use the services of mortgage calculators.
Search for a home: After preparing your deposit and weighing several mortgage offers. It’s time to look for a home with mortgage payment plans. You might likely have this sorted after employing the inquiry the services of house buying schemes.
Obtain a mortgage loan: With a deposit in place and your budget structured. Now the formal talks can begin and signing off necessary documents for your new home. Obviously, after you must have done the essential research in the right places.

Who can apply for Mortgages in Nigeria?

Anyone can apply for mortgages in Nigeria, provided you’re gainfully employed or earning an income.

Here is what Mortgage Lenders are interested in:

Your monthly income and expenditure
Your debt profile
The value of the property you want
Determine if the mortgage is something you can afford.

Why is it challenging to Get mortgages in Nigeria?

Life is all about risk, and as with money, the riskier it gets. Several factors make it challenging to apply for mortgages.

Such as:

Poor debt profile/profiling: With poor debt profiling, lenders are unable to predict and ascertain how well a loanee can keep up with payments each month. While a person with a poor debt profile will not qualify for a mortgage loan

Insufficient deposit: not having sufficient deposit directly affects the mortgage you can apply for and the house you can buy.

Lack of collateral for the loan you wish to apply for.

Poor knowledge and understanding of how a mortgage works.

Conclusion

You might want to consider how much to deposit to get a mortgage before going into it. However, there isn’t a particular limit to the amount of deposit; it all depends on the borrowers’ objectives. A smaller deposit means that you’ll have to seek a mortgage cover that covers a high percentage of the property’s worth.

Few mortgages cover high percentage properties because of the risk involved. Also, they come with unattractive fees and interest rates. It is advisable to save as much money as possible in deposit to get the best mortgage offers.

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Why You Should Invest In Consumer Loans As A Retailer

April 16, 2020 by Finance Writer Leave a Comment

Why You Should Invest In Consumer Loans As A Retailer

Introduction

Consumer loans revolve around the lifestyle of an average person, and this has made it a popular demand, especially in developing countries like Nigeria. Regardless of how you may feel about loans, they have continued to form part of the components that shape the economy of the nation.

Given the above, there are lots of underlying investment opportunities in investing in consumer loans in Nigeria.

The process of investing in consumer credit is quite different from stocks or mutual funds. This is because of its flexibility and risk to market fluctuations.

Consumer loans are loans given to consumers to fund specific types of expenditures. Examples include mortgage loans, credit cards, auto loans, student loans and personal loans.

These loans could either be secured (backed with collateral) or unsecured (which is not supported by the assets of the borrower)

Investing in consumer loans can be a winner for the investor and here are some reasons why.

High Spending Power

Consumer loans can enhance sufficient demand by activating consumer spending and consumption. Increased consumption will automatically increase production, employment opportunities, improve the standard of living, etc.

The Rise Of Fintech

The rise of the fintech industry has contributed immensely to the growth of consumer loans in Nigeria. The Central Bank of Nigeria in its bid to encourage financial inclusion enabled a favourable playing ground for emerging fintech companies, and it has been paying off so far. The fintech institutions have influenced the competition of the financial sector to think more on a micro-level of operation than a macro.

Large Market Share, More Investment Opportunities

The number of consumer loans moved from 3m in 2014 to 4m in 2015, which is more than 30% growth in a year. The stimulation of credit to consumers has created more investment opportunities in consumer loans.

The market is only getting bigger. This exponential growth can help reduce the risk involved in investing in consumer loans

Regulatory Support

While the Central Bank of Nigeria continues to create a healthy competitive financial industry, they have also issued favourable policies to enable micro-lending in Nigeria. A good example is the introduction of Bank Verification Number, which has allowed the policies of the CBN to be more productive on a micro-level.

How Investing In Consumer Loans Work

Individuals submit their loan applications for approval to a lending institution. The loan amount varies depending on the limit set by each lender.
The lender crosschecks all applications with their listing criteria
The lender now checks to confirm the information provided by the borrower
Upon confirmation, the investor gets to buy a portion of the loan disbursed to borrowers.
And earn interest based on the contractual agreement between the investor and the lender.

However, it is important to note that the borrower is liable to pay the interest in full to the lender. This includes the principal amount borrowed.

Bottom Line

Challenge the old, and embrace the new – Everything is changing in the world of today, with fast, small and effective being the new form of doing things. Money is no different. The loan sector is embracing these new developments through technologies fast, and it evolves almost daily.

If you want a relatively reliable and quick form of investment that will keep your cash flow healthy as a retailer, then you should consider investing in consumer loans.

Investing in consumer loans allows investors to maximize their return on investment. This is done by minimizing idle cash which does not earn interest and negatively impact returns.

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How To Get Agric Loans In Nigeria

April 14, 2020 by Finance Writer Leave a Comment

The Nigerian government has continued to foster an enabling environment for the farming sector. In recent times the emergence of the agrotech industry has extended the opportunities of agriculture to more people who are willing to invest in the agricultural sector.

Despite government efforts as well as improved investment opportunities in the agricultural sector, many farmers and investors still have challenges accessing agricultural loans in Nigeria. Given this problem, we have highlighted a few ways you can access agric loans in Nigeria below.

FEDERAL GOVERNMENT LOANS

CENTRAL BANK OF NIGERIA (CBN)

CBN provides loans for existing and intending farmers at a low annual interest rate. In the last decade, the CBN has injected over 100b into the agricultural sector and has made the fund available to all states through the Bank of Agriculture and other commercial banks

These are the kind of loans the CBN offers to the farmers and investors alike

THE COMMERCIAL AGRICULTURE CREDIT SCHEME

The Commercial Agriculture Credit Scheme was established in 2009 to speed up the development of the agricultural sector; enhance national food security; reduce the cost of credit in agricultural production. Many commercial banks have access to this scheme and give loans at a maximum of 9% interest rate. The fund is also available to state governments for on-lending to farmers.

To be eligible for the loan, you’ll have to partake in this produce:

livestock, Cash crops, food crops, poultry, aquaculture, processing, marketing, storage of agrochemicals, and supplies of farm input.

REAL SECTOR SUPPORT FACILITY

This is another initiative of the Central Bank of Nigeria. The Facility will support large enterprises for startups and expansion financing needs of N500 million up to a maximum of N10. 0 billion.

One of the real sectors being targeted is the agricultural sector, and farmers and investors can take advantage of that.

The tenure of the loan is up to 15 years, and the interest rate is quite low. The basic requirements to access this type of loan are;

A business plan
Certificate of incorporation
Apply formally
Memorandum and Article of Association

MICRO SME DEVELOPMENT FUND

On August 15, 2013The CBN launched the MSME Development Fund on, with a share capital of N220 billion. 90 % of the fund was made available to Participating Financial Institutions-PFIs- at 2% for on-lending to MSMEs at a maximum interest rate of about 9% per annum.

One of the eligible beneficiaries of this fund is farmers and investors in the agricultural sector. So if you need a credit facility to expand your agri-business, this could help.

Bank Of Agriculture (BOA)

Formerly Nigerian Agricultural Bank and incorporated in 1972, The Bank Of Agriculture has evolved over the years in its service to the agricultural sector. The federal government of Nigeria owns it while the Federal Ministry of Finance CBN are investors.

To get access to this loan, you’ll need the following essentials:

Present a complete plan for your business
Have available, a 20% partial payment of the loan.
You should have at least a six-month relationship with the bank in terms of making payments into your account no matter how small
You should provide evidence of a physical collateral

BANK OF AGRICULTURE PRODUCTS

Micro Credit loans
Grow and earn more-(gem)
Loan application for SME (Individuals)
Loans from commercial banks:

Private And Non-government Organisation Commercial Banks

Another source funding is from commercial banks, and they can offer you loans based on your preference. They have for long, short and medium-term loans infused into different products. These loan products have different criteria, and some are unique to the institutions offering them. Examples of such banks include First Bank, Access Bank, Stanbic IBTC, Union and UBA.

The basic requirements for obtaining a loan from any commercial banks may vary, and they include the following but not limited to;

You should have an existing account with any of them.
You’ll be required to apply and then present an application for the loan
You should have made a 10% partial payment of the loan.
Collateral will have to be presented.
Present a complete plan of your business along with a business’ viability study.

Agricultural Co-operative Societies

If you are part of any co-operatives, there is a great chance of receiving grants provided by some banks.

Here are the requirements:

Be a member of one of the co-operatives
Apply to the bank with the letterhead of the co-operative which appended by one of its representatives
Present a viability study on the business plan

If you don’t know which co-operative to join, here are some:

All Farmers Association of Nigeria (AFAN);
Youth Empowerment in the Agricultural Program (YEAP);
FADAMA

Farmers and Agricultural SMEs also have access to lenders focused on agricultural loans to help take their business to the next stage.

Conclusion

These ways to get access to agric loans in Nigeria will be perfect for Nigerians that want to either start up a business in agriculture or expand their existing operations.

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