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The coronavirus (COVID-19) pandemic has no doubt resulted in disruptions to households and businesses all over the world. In Nigeria, households and Micro, small and medium enterprises (MSMEs) are prone be hardest hit by the impact of the pandemic. #Thread
SMEs constitute about 90% of all the businesses in Nigeria. In March, 2020, the Central Bank of Nigeria (CBN), as part of the Federal Government’s intervention policy during COVID-19, released Guidelines for the Implementation of the N50 Billion Targeted Credit Facility
(the Scheme) aimed at providing succour to households and MSMEs that have been particularly hit by COVID-19. We shall be answering popular questions about the Scheme in this #Thread
What are the objectives of the Scheme?
With the introduction of the Scheme, the CBN intends to:
What are the objectives of the Scheme?
With the introduction of the Scheme, the CBN intends to:
http://i.Support households and MSMEs whose economic activities have been significantly disrupted by COVID-19; and
ii.Stimulate credit to MSMEs to expand their productive capacity through equipment upgrade, and research and development.
ii.Stimulate credit to MSMEs to expand their productive capacity through equipment upgrade, and research and development.
iii.Cushion the adverse effects of COVID-19 on households and MSMEs;
Who is eligible to participate under the Scheme?
Eligible participants under the Scheme are:
1. households (with verifiable evidence of livelihood adversely impacted by COVID-19);
Who is eligible to participate under the Scheme?
Eligible participants under the Scheme are:
1. households (with verifiable evidence of livelihood adversely impacted by COVID-19);
2. existing enterprises (with verifiable evidence of business activities adversely affected as a result of COVID-19) and;
3. enterprises with bankable plans to take advantage of opportunities arising from COVID-19.
3. enterprises with bankable plans to take advantage of opportunities arising from COVID-19.
How is the Scheme funded/financed?
The Scheme is financed from the Federal Government’s Micro, Small and Medium Enterprises Development Fund (MSMEDF).
The Scheme is financed from the Federal Government’s Micro, Small and Medium Enterprises Development Fund (MSMEDF).
Who are the Stakeholders under the Scheme?
The CBN, a Participating Financial Institution (PFI) and the borrower/beneficiary are the major stakeholders under the Scheme.
The CBN, a Participating Financial Institution (PFI) and the borrower/beneficiary are the major stakeholders under the Scheme.
Who is the Participating Financial Institution under the Scheme?
The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) Microfinance Bank.
The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) Microfinance Bank.
Is there a limit to the loan that can obtained under the Scheme?
For households, the loan limit is N3 million. For MSMEs, the loan limit is N25 million determined based on the activity, cashflow and industry/segment size of the beneficiary.
For households, the loan limit is N3 million. For MSMEs, the loan limit is N25 million determined based on the activity, cashflow and industry/segment size of the beneficiary.
Where the purpose of obtaining the loan is working capital, the limit is a maximum of 25% of the average of the previous 3 years’ annual turnover of the enterprise or business applying.
Where the enterprise or business is not up to 3 years in operation, 25% of the previous years’ turnover will suffice.
What is the interest rate applicable to a loan under the Scheme?
The applicable interest rate is 5.0% p.a (all inclusive) up to 28th February 2021. Interest shall thereafter revert back to 9% p.a (all inclusive) as from 1st March 2021.
The applicable interest rate is 5.0% p.a (all inclusive) up to 28th February 2021. Interest shall thereafter revert back to 9% p.a (all inclusive) as from 1st March 2021.
What is the Tenor of the Loan?
Working capital shall be for a maximum period of one year, with no option of rollover while the term loan shall have a maximum tenor of not more than 3 years with at least, one-year moratorium.
Working capital shall be for a maximum period of one year, with no option of rollover while the term loan shall have a maximum tenor of not more than 3 years with at least, one-year moratorium.
Is any collateral required to obtain the facility?
The collateral to be pledged by borrowers/beneficiaries under the Scheme shall be as may be acceptable by NIRSAL Microfinance Bank
The collateral to be pledged by borrowers/beneficiaries under the Scheme shall be as may be acceptable by NIRSAL Microfinance Bank
The collateral may include 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.Irrevocable domiciliation of proceeds;
iv.Two (2) acceptable guarantors;
i.Moveable asset(s) duly registered on the National Collateral Registry (NCR);
ii.Simple deposit of title documents, in perfectible state;
iii.Irrevocable domiciliation of proceeds;
iv.Two (2) acceptable guarantors;
v.Personal guarantee of the promoter of the business;
http://vi.Life insurance of the key-man, with NIRSAL Microfinance Bank noted as First Loss Payee;
vii.Comprehensive Insurance over the asset.
http://vi.Life insurance of the key-man, with NIRSAL Microfinance Bank noted as First Loss Payee;
vii.Comprehensive Insurance over the asset.
How is the interest and principal to be repaid?
The interest and principal repayment shall be made on instalment by the borrowers to NIRSAL Microfinance Bank according to the nature of the enterprise and the repayment schedule/work plan provided at the application stage.
The interest and principal repayment shall be made on instalment by the borrowers to NIRSAL Microfinance Bank according to the nature of the enterprise and the repayment schedule/work plan provided at the application stage.
How to apply for the loan
Eligible households, MSMEs and corporate entities are to submit applications directly to NIRSAL Microfinance Bank. The application must, amongst others contain BVN Number, business registration (where applicable)
Eligible households, MSMEs and corporate entities are to submit applications directly to NIRSAL Microfinance Bank. The application must, amongst others contain BVN Number, business registration (where applicable)
and a business plan with clear plan of the opportunity or adverse impact as a result of COVID-19. NIRSAL Microfinance Bank will appraise the application, conduct due diligence and forward the application to CBN upon satisfactory appraisal of the application.
CBN will review the application and give final approval for disbursement to NIRSAL Microfinance Bank and onward disbursement to the applicant.
How will the loans be monitored?
Periodic joint monitoring of activities financed under the Scheme will be conducted by NIRSAL Microfinance Bank.
Periodic joint monitoring of activities financed under the Scheme will be conducted by NIRSAL Microfinance Bank.
What is the responsibility of NIRSAL Microfinance Bank under the Scheme?
NIRSAL Microfinance Bank is mandated to validate the status and BVN of the applicants; process and disburse the funds to approved beneficiaries; maintain records of all beneficiaries and disbursements;
NIRSAL Microfinance Bank is mandated to validate the status and BVN of the applicants; process and disburse the funds to approved beneficiaries; maintain records of all beneficiaries and disbursements;
forward periodic returns on the prescribed format on the Scheme to CBN; comply with the Guidelines and carry out any duties as the CBN may prescribe from time to time.
What is the deadline for the availability of the Scheme?
The Scheme shall be available until 31 December 2024.
The Scheme shall be available until 31 December 2024.
