A number of financial institutions in Nigeria have been employed by the federal government over the years to participate in funding and provide loans to SMEs, MSMEs and other business enterprises with interest rates as low as 9% yearly.
SMEs and MSMEs who are interested in getting loans for their business can consider applying to the Central Bank of Nigeria, CBN or Bank of Industry, BOI. These two are most significant in business funding in Nigeria.
Both options will grant funds for these basic reasons; starting a new business, managing expenses and expanding a business.
Funding options available to business enterprises in Nigeria
Loans by the BOI and the CBN are mostly funding schemes run by the Federal Government of Nigeria.
The banks only provide SMEs and MSMEs that operate within the manufacturing and processing industry or similar sectors with loans. BOI provides loans to SME seeking N5 million and above.
The CBN funding is available to small enterprises and SMEs seeking loans between N500,000 to N50million.
However, the amount an enterprise gets depends greatly on the size as well as on years of operation (two years minimum).
How to qualify for business loans or funding in Nigeria
Only enterprises or companies with full registration documents can get funding from the CBN not individuals or groups of persons.
The same applies to the BOI but with some added requirements and priority for certain industries like the Agro-industries.
The requirements for borrowing for business are;
- Business Plan
- Collateral Documents
- Legal Documents
- Financial Documents
Securities with sufficient coverage including legal contracts on real estate or similar are acceptable by the banks to fund a business.
Before settling for the CBN MSME fund or the BOI intervention fund, consider the loan terms and annual percentage rate for each of the options available and choose the lowest option.