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CBN SETS CRITERIA TO ACCESS N50bn COVID-19 INTERVENTION LOANS

CBN criteria to access 50bn intervention

The APEX Bank in the country has stated its set criteria for stakeholders interested in benefiting from the N50bn intervention loans for small and medium scale enterprises approved by the Federal Government.

The Central Bank of Nigeria introduced the N50bn Targeted Credit Facility as a stimulus package to support households and Micro, Small and Medium Enterprises affected by the COVID-19 pandemic. The targeted recipients are to go through an application process to be considered for the intervention funds.

The guidelines to access the funds includes meet the criteria for eligibility. Interested stakeholders are to submit applications directly to NIRSAL Microfinance Bank and the application must contain the following, BVN number, business registration (where applicable) and business plan with clear evidence of the opportunity or adverse impact as a result of the COVID-19 pandemic. NIRSAL Microfinance Bank shall appraise and conduct due diligence applications; upon a satisfactory appraisal of application, NMFB shall forward the applications to the CBN for final approval; and CBN reviews applications and gives final approval for disbursement to NMFB.”

The bank stated that eligible participants are households and existing enterprises with verifiable evidence of business activities adversely affected as a result of the COVID-19 pandemic; and enterprises with bankable plans to take advantage of opportunities arising from the COVID-19 pandemic. Activities covered under the guidelines include agricultural value chain activities, hospitality (accommodation and food services), health (pharmaceuticals and medical supplies), airline service providers, manufacturing/value addition, trading, and any other income-generating activities as may be prescribed by the CBN. It stated that the eligible participating financial institution for the scheme was NIRSAL Microfinance Bank.

The CBN said the loan amount would be determined based on the activity, cash flow, and industry/segment size of the beneficiary, subject to a maximum of N25m for SMEs; and households could access a maximum of N3m. It stated that working capital would be a maximum of 25 per cent of the average of the previous three years’ annual turnover (where the enterprise was not up to three years in operation, 25 per cent of the previous year’s turnover would suffice). It added that interest rate under the intervention would be five per cent per annum (all-inclusive) up to 28th February 2021 and thereafter, the interest on the facility would revert to nine per cent (all-inclusive) as of 1st March 2021. The regulator stated that working capital would be for a maximum period of one year, with no option for rollover, while term loan would have a maximum tenor of not more than three years with, at least, one-year moratorium.

It was also reiterated that the collateral to be pledged by beneficiaries under the program must be acceptable by NIRSAL MFB, but may include any one or more of others which are moveable assets duly registered on the National Collateral Registry; simple deposit of title documents, in perfectible state; and deed of debenture (for stocks), in perfectible state. Others were 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; and comprehensive insurance over the asset.

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