Central Bank of Nigeria Loan Explained

Sep 13th, 2020

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A loan is one way to get temporary relief from financial burdens. If you have a good plan on ground to repay it, many financial institutions are more than willing to help. One of the largest institutions that offers this is the Central Bank of Nigeria. With a loan and proper strategy, you can finally take your business to the next level with Central Bank Loans.

In this article, we would consider loans that you can get from the Central bank of Nigeria.

About the Central Bank of Nigeria

The house of representatives of Nigeria found the Central Bank of Nigeria in 1958. From then to date it remains the Central Bank and apex monetary body of the country. It is 100% owned by the government. According to CBN’s official release, their functions include:

  1. To ensure monetary and price stability.
  2. Issue legal tender currency in Nigeria.
  3. Maintain external reserves and safeguard the international value of the legal tender currency.
  4. Promote a sound financial system in Nigeria.
  5. Act as a banker and provide economic and financial advice to the federal government.

Pros and Cons of The Central Bank of Nigeria Loan

Pros

  1. Accessible by everyone.
  2. It caters to the needs of businesses in different sectors of the economy.
  3. Less stringent eligibility criteria.

Cons

  1. Loan disbursement time is usually long due to the numerous protocols in place.
  2. Loan application involves a lot of documentation and processes.

The maximum and minimum amount of Loan from The Central Bank of Nigeria?

This depends on the type of loan in question. Generally, there are loan options as small as N500,000, and as high as N500 million or more.

Features of The Central Bank of Nigeria Loan

The Central Bank of Nigeria currently offers the following loans:

  • AGSMEIS Loan for SMEs and Agricultural businesses without collateral: this loan is available for SMEs and agricultural business owners.  

Features:

  1. You can access up to N10 million.
  2. Interest rate of 9%.
  3. Disbursed by NIRSAL Microfinance bank and other banks.
  • Accelerated Agricultural Development Scheme loan (AADS): the objective of this loan is to engage youths in agricultural production.

Features:

  1. You must be a Nigerian youth between the ages of 18 to 35.
  2. You must sign an undertaking on the terms and agreements from CBN.
  3. Up to N1.5 million loan is accessible.
  4. Interest rate of 9%.
  • Micro, Small, and Medium Enterprises Development Fund MSMEDF Loan: this loan service is strictly for SMEs and micro-enterprises.

Features:

  1. Only available to SMEs and micro-enterprises.
  2.  Your business must be involved in one of the 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 available to small farm owners engaged in producing specific commodities in the country.

Features:

  1. You must belong to between 5 and 20 groups or cooperatives.
  2. It is available to businesses that intend to become anchor or farm product suppliers.
  • Creative Industry Financing Initiative Loan (CIFI): the CIFI was developed to boost job creation among young individuals in the creative and information technology (IT) industry.

Features:

  1. Your business must be in the creative and information technology (IT) industry.
  2. Loan of up to N500 million.
  • CBN Healthcare Research and Development Grants: CBN developed this loan for the healthcare sector and research and development. It is accessible to institutions, pharmaceuticals, research and development of drugs, vaccines, herbal medicines, etc.

Features:

  1. Your business must fall under one of the categories listed above.
  2. Up to N500 million in loan.

Note that the loan services listed above have elaborate requirements and application processes. Visit the CBN official website at www.cbn.gov.ng to access the full information.

Are there any additional fees?

No. There are no additional fees to the CBN loan application and disbursement.

How quickly are funds released for a Central Bank of Nigeria loan?

Because of the many processes and protocols in place, CBN loans are not often disbursed quickly. It could take months or up to a year to receive the loan after approval. Because of things, we cannot put a duration on how quickly loan funds are disbursed.

What is the Central Bank of Nigeria Loan repayment terms?

The CBN only repayment terms are the pre-agreed interest rates. These interest rates are usually between 5 to 10% or more, depending on the specific loan in question. During the loan application, however, important details like the rates would be specified. After you exceed the stipulated time for payment, applied interest grows in successions.

Are there any Restrictions?

The only restrictions to Central Bank Loans are the eligibility requirements. If you qualify and have all the documents, then you can apply. Asides that, there are no other restrictions.

Conclusions

The Central Bank loans are one of the ways through which the government of Nigeria aims to improve the economy. The loan offers services to SMEs and individuals across different sectors of the economy, especially those in certain lagging areas.

 If eligible, apply to enjoy the full benefits of the government for growing your business today. 

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