CBN NIRSAL COVID-19 Loan Application – The Central Bank of Nigeria ( CBN ) has made available 50 billion naira intervention loans for small and medium scale enterprises. However stakeholders who wish to be a part of this have to fulfill all the conditions set out by CBN.
The CBN came up with the N50bn Targeted Credit Facility as a stimulus package in order to lend a helping hand to households and Micro, Small and Medium Enterprises who have been affected in one way or the other by the COVID-19 pandemic. Not just that, guidelines to access the funds have been provided.
Interested persons will want to know the guidelines and steps to take so as to access the fund. CBN has to this effect made it clear that households or MSMEs qualified for this loan shall tender applications directly to NIRSAL Microfinance Bank.
There are certain information that this application must contain and they include, BVN number, business registration (where required) and business plan with clear evidence of the opportunity or adverse impact as a result of COVID-19 pandemic.
Proper care has to be taken in preparing this application as NIRSAL Microfinance Bank will thoroughly review and evaluate all applications that are tendered. If the NIRSAL Microfinance Bank after conducting due diligence is satisfied with the application, it shall then be pushed to the CBN for final approval and consequent disbursement of funds.
Note that eligible participants to this Credit facility are households and existing enterprises that are able to come up with substantial proof that their businesses have suffered loss because of the COVID-19 pandemic or enterprises that have bankable plans on how they can make the best out of the effects of the COVID-19 pandemic in the society.
Some of the activities that this facility will cover include agricultural value chain activities, hospitality (that is accommodation and food services), health (pharmaceuticals and medical supplies), airline service providers, manufacturing/value addition, trading, and any other enterprise that the CBN agrees to.
It has been stipulated that the authorised financial institution to participate in this scheme is the NIRSAL Microfinance Bank.
Bear it in mind that the amount of loan that an enterprise or a household will be eligible to are determined by a number of factors which includes the activity, cashflow and industry/segment size of beneficiary.
However there is a limit of 25 million naira for SMEs and 3 million naira for households.
The working capital would be a maximum of 25 per cent of the average of the previous three years’ annual turnover. However, in a situation where the enterprise was not up to three years in operation, 25 per cent of the previous year’s turnover would do.
More so, the interest rate under the intervention would be five per cent yearly (all inclusive) up to 28th February 2021 and thereafter, starting from 1st March 2021, the interest on the facility would then be nine per cent (all inclusive) starting from 1st March 2021.
In addition, working capital would be for a maximum period of one year, with no option for rollover, while term loan would have a maximum period of not more than three years with, at least, one year moratorium.
The issue of collateral was also handled as it was stated the beneficiaries of the facility has to provide collaterals that are acceptable by NIRSAL MFB, which includes moveable assets duly registered on the National Collateral Registry, simple deposit of title documents, in perfectible state as well as deed of debenture (for stocks), in perfectible state.
Other things required include irrevocable domiciliation of proceeds, two acceptable guarantors, personal guarantee of the promoter of the business, life insurance of the key-man, with NMFB noted as the first loss payee as well as comprehensive insurance over the asset.