How to Access the CBN COVID-19 N50 Billion Naira Credit Facility

By Oluchi Johnson-Achibiri | 2 min read
9th April 2020
How to Access the CBN COVID-19 N50 Billion Naira Credit Facility

The corona virus (COVID-19) pandemic has led to unprecedented disruptions to global supply chains, sharp drop in global crude oil prices, turmoil in global stock and financial markets, massive cancellation of sporting and entertainment event, lockdown of movements of persons in many countries, and intercontinental travel bans/restrictions across critical air routes across the world. These outcomes have had severe consequences on households' livelihoods and business activities, resulting from drop in global demand, declined consumer confidence and slowdown in production. 

In this respect, the Central Bank of Nigeria (CBN) introduced the N50 billion Naira Targeted Credit Facility (TCF) as a stimulus package to support households and micro, small and medium enterprises (MSMEs) affected by the COVID-19 pandemic. 

Highlighted below are the operational modalities for the Scheme:

1. The broad objectives of the CBN's N50 billion Targeted Credit Facility include:

  • Cushion the adverse effects of COVID-19 on households and MSMEs;
  • Support households and MSMEs whose economic activities have been significantly disrupted by the COVID-19 pandemic.
  • Stimulate credit to MSMEs to expand their productive capacity through equipment upgrade, and research and development.

2. Eligible Participants

  • Households with verifiable evidence of livelihood adversely impacted by COVID-19;
  • Existing enterprises with verifiable evidence of business activities adversely affected as a result of the COVID-19 pandemic.   
  • Enterprises with bankable plans to take advantage of opportunities arising from the COVID-19 pandemic. 

3. Eligible activities under the Scheme include:

  • Agricultural value chain activities  
  • Hospitality (accommodation and food services)
  • Health (pharmaceuticals and medical supplies)
  • Airline service providers  
  • Manufacturing/value addition
  • Trading
  • Any other income generating activities as may be prescribed by the CBN. 

4. Funding

The Scheme shall be financed from the Micro, Small and Medium Enterprises Development Fund (MSMEDF).  

5. Participating Financial Institution

The eligible participating financial institution for the Scheme is NIRSAL Microfinance Bank (NMFB). 

6. Loan Limit

  • SMEs: The loan amount shall be determined based on the activity, cashflow and industry/segment size of beneficiary, subject to a maximum of N25 million for SMEs;
  • Households: Can access a maximum of N3 million
  • Working capital shall be a maximum of 25% of the average of the previous 3 years' annual turnover. (where the enterprise is not up to 3 years in operation, 25% of the previous year's turnover will suffice).

7. Interest Rate

Interest rate under the intervention shall be 5% p.a. (all inclusive) up to 28th February 2021 and thereafter, the interest on the facility shall revert to 9% p.a. (all inclusive) as from 1st March 2021.  

8. Loan Tenor

  • Working capital shall be for a maximum period of one year, with no option for rollover.
  • Term loan shall have a maximum tenor of not more than 3 years with, at least, one-year moratorium. 

9. Collateral Requirement

The collateral to be pledged by beneficiaries under the programme shall be as may be acceptable by NIRSAL MFB, but may include any one or more of the following:

  • Moveable asset(s) duly registered on the National Collateral Registry (NCR).  
  • Simple deposit of title documents, in perfectible state  
  • Deed of Debenture (for stocks), in perfectible state
  • Irrevocable domiciliation of proceeds 
  • Two (2) acceptable Guarantor  
  • Personal Guarantee of the promoter of the business
  • Life Insurance of the Key-Man, with NMFB noted as the First Loss Payee
  • Comprehensive Insurance over the asset  

10. Principal Repayment 

Repayment shall be made on installment basis by the beneficiaries to the NMFB according to the nature of enterprise and the repayment schedule/work plan provided at the application stage.

Modalities

a. Households/MSMEs

  • Eligible households or MSMEs shall submit applications directly to NIRSAL Microfinance Bank (NMFB);
  • The application must, among others, contain BVN number, business registration (where applicable) and business plan with clear evidence of the opportunity or adverse impact as a result of COVID-19 pandemic.
  • NMFB shall appraise and conduct due diligence applications.
  • Upon satisfactory appraisal of application, NMFB shall forward the applications to the CBN for final approval.
  • CBN reviews applications and gives final approval for disbursement to NMFB.

b. Corporate Entity

  • A corporate entity shall submit application to NMFB with clear evidence of the opportunity or adverse impact as a result of COVID-19 pandemic.
  • NMFB shall appraise and conduct due diligence applications.
  • Upon satisfactory appraisal of application, NMFB shall forward the applications to the CBN for final approval
  • CBN reviews applications and gives final approval for disbursement to NMFB.

All enquiries may be referred to the Director, Development Finance Department Central Bank of Nigeria, Abuja.

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Oluchi Johnson-Achibiri
Oluchi Johnson-Achibiri has a background in Management Consulting and is passionate about lending her experience to help entrepreneurs start and scale their businesses.
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