How To Apply for CBN MSMEDF Loan – Guidelines

In any country, the importance of the Micro, Small, and Medium Enterprises cant be underestimated to the extent that the Federal Government of Nigeria in Conjunction with CBN had to launch Micro, Small, and Medium Enterprises Development Fund (MSMEDF) to help them continue to provide significant contributions.

Before the introduction of CBN MSMEDF Loan, not much support around for SMEs which invariably affected performance. In return, it led to an increase in poverty and unemployment, poor economic growth, etc. The addition of CBN MSMEDF has no doubt improves the chance of business owners in Nigeria in getting funds to keep their business going.

ABOUT CBN MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT FUND (MSMEDF)

The CBN launched the MSME Development Fund on August 15, 2013 with a share capital of N220 billion. The CBN MSMEDF Loan provides the needed working capital for the business to keep operating without any interference.

However, the SMALL AND MEDIUM ENTERPRISES DEVELOPMENT FUND (MSMEDF) is only available to agricultural value chain, services, cottage industries, artisans, trade and commerce, and any income-generating business as may be prescribed by the CBN from time to time.

The Central Bank of Nigeria has devoted 10% of the fund to developmental objectives which include administrative costs, grants, and capacity building while the remaining 90% will be released to Participating Financial Institutions(PFIs) at a 2% interest rate. Thereafter, they can lend to MSMEs at a maximum interest rate of 9% per annum.

Micro-enterprises can get up to N500,000 with up to a one-year repayment plan. Small and medium businesses can access up to N50,000,000 from Micro, Small and Medium Enterprises Development Fund (MSMEDF) with up to 3-year tenor. The maximum interest rate that Participating Financial Institutions (PFIs) can charge on CBN MSMEDF Loan is 9% per annum.

60% of the loan will be reserved for enterprises owned by women: 2% for people living with disability and 10% for start-up businesses.

WHAT ARE THE OBJECTIVES OF THE MSMEDF?

  1. MSMEDF aims to increase employment and create wealth.
  2. The MSMEDF fund helps businesses to improve productivity.
  3. Provides micro, small and medium enterprises with the funds to survive harsh conditions.
  4. Helping SMEs in improving the economic situation in Nigeria.

BENEFITS OF THE MSMEDF FUND

  1. The MSMEDF Fund will provide funds for all MSMEs which will result in general improvement and stability.
  2. By providing funds to the business, it will also lead to an increase in job opportunities.
  3. The reduced cost of borrowing will impact positively on the earnings of the Micro, Small, and Medium Enterprises (MSMEs).

ELIGIBLE BUSINESSES QUALIFIED THE MSME DEVELOPMENT FUND

The following are eligible business activities that can receive MSMEDF Loan:

  1. Agricultural value chain activities
  2. Cottage Industries
  3. Artisans
  4. Manufacturing
  5. Services
  6. Renewable energy/energy efficient product and technologies
  7. Trade and general commerce
  8. Other economic activities as may be prescribed by the Central Bank of Nigeria (CBN).

BANKS THAT GIVE SMALL AND MEDIUM ENTERPRISES DEVELOPMENT FUND (MSMEDF)

1. Commercial banks

These are banks that provide banking services such as deposits and withdrawals of money, provide personal and business loans, and also offer business advice.

There are considerable numbers of commercial banks in Nigeria and they include Access bank, Gtbank, UBA, First Bank, Zenith Bank, Union Bank, Wema Bank, Sterling bank, etc.

2. NGO – Microfinance Bank

Microfinance Non-Government Organization (“MF-NGO”) is a non-stock and non-profit financial institution duly registered with the Securities and Exchange Commission (SEC) with the main motive of carrying out strategies that may improve micro-businesses and also providing microfinance programs, products, and services such as small loans and savings low-income individuals.

3. Finance companies

Finance companies are financial institutions that provide loans to individuals and businesses. Unlike commercial banks, which provide various products and services such as money deposits and withdrawal.

Finance companies loan to micro, small, and medium enterprises at a higher interest rate compared to the interest rates that banks charge their clients.

Some of the finance companies you can go for Small And Medium Enterprises Development Fund are First Marina Trust Limited, Aquila Leasing Limited, Capital Bancorp Limited, Capri-martins Finance Limited, Cfs Financial Services Limited, Consumer Investment Limited, Dignity Finance And Investment Limited, etc

4. Development finance institutions

Development Finance Institutions (DFIs) are government-owned financial institutions that provide all forms of financial assistance to households, SMEs, and even larger private corporations in the form of loans, underwriting, investment and guarantee operations, and promotional activities-economic development.

Development Finance Institutions can be said to be another national owned establishment that promotes economic growth and supports social development.

Development Finance Institutions are Bank of Agriculture (BOA), Bank Of Industry, Development Bank Of Nigeria Plc, Federal Mortgage Bank Of Nigeria, Nigeria Export-Import Bank, And The Infrastructure Bank.

5. Cooperatives

Cooperatives are an independent association of persons who come together to achieve their common economic, social, and cultural needs and aspirations through a jointly-owned business with no interference from external bodies.

The following are some of the cooperatives in Nigeria Consumer cooperatives, Agricultural/Farmers’ cooperatives, Credit cooperatives, Housing cooperatives, Multipurpose cooperatives, etc.

6. Microfinance banks

Microfinance bank is a micro-credit institution that provides finance to low-income individuals and MSMEs who otherwise will find it difficult to get credit elsewhere.

In Nigeria, there are now several microfinance banks that are willing to give out loans to deserving borrowers to help them become self-sufficient or sustain their enterprises.

Go to any microfinance bank nearest to you to apply for CBN MSMEDF Loan.

HOW TO GET MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT FUND (MSMEDF)

  • To get CBN MSMEDF Loan, visit any of the Participating Financial Institutions (PFIs) in your neighbourhood.
  • Indicate your interest in CBN MSMEDF Loan.
  • The PFI will now appraise the applications to know if it is viable.
  • The Participating Financial Institutions (PFI) shall forward applications to the Central Bank of Nigeria (CBN) through State SPV.
  • The Central Bank of Nigeria will now assess the application and if the applicant is qualified for the CBN MSMEDF Loan, it will approve and disburse to the PFIs’ correspondent bank accounts.

To know more about CBN MSMEDF Loan, Click here to download the pdf file.

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