Types of loans available through the Federal Government of Nigeria 2021

Federal government business loans can be a viable option for Nigerian entrepreneurs who want to start or grow a business.

The Nigerian government has several initiatives that are helping both small and large businesses with funds, although they focus on smaller businesses.

The government concentrates on little and medium-sized enterprises (SMEs) for a variety of reasons. one of the most reasons being, that the SME sector may be a key ingredient for a healthy market economy. SMEs consist of the majority of the overall number of companies in Nigeria. Accordingly, they create huge contributions for additional value and employment.

The FGN helps businesses finance through various government-supported organizations or agencies, including:

  • Bank of Agriculture (BOA)
  • Bank of Industry (BOI)
  • Central Bank of Nigeria (CBN)
  • Development Bank of Nigeria (DBN)
  • Nigerian Export-Import Bank (NEXIM)
  • Small and Medium Enterprises Development Agency of Nigeria (SMEDAN)

Depending on the agency and the loan product offered, FGN loans come with different interest rates and repayment plans.

Types of loans available through the Federal Government of Nigeria.

– Central Bank of Nigeria (CBN).

The Central Bank of Nigeria, through a series of development finance operations, provides a variety of business loans across the country. Some of the CBN products and services include:

  • Anchor Borrower’s Programme (ABP)
  • Commercial Agriculture Credit Scheme (CACS)
  • Creative Industry Financing Initiative
  • Credit Support Scheme For The Healthcare Sector
  • Maize Aggregation Scheme (MAS)
  • Micro, Small, Medium Enterprises Development Fund (MSMEDF)
  • Non-Oil Export Stimulation Facility (NESF)
  • Paddy Aggregation Scheme (PAS)
  • Real Sector Support Facility (RSSF)

– Bank of Agriculture (BOA)

The Bank of Agriculture is government-sponsored. Provides credit and other forms of finance to farmers and related agricultural businesses.

Some of BOA‘s products and services include:

  • Agro-Processing Facility
  • Direct Credit Product
  • Equipment Leasing Product (ELP)
  • Export Finance Facility
  • Grow and Earn More (GEM)
  • Haulage Credit Facility
  • Hides and Skin Revival Credit Facility
  • Input Procurement Credit Facility
  • Inventory Credit Facility
  • Large Credit Product
  • Ranching Development Credit Facility
  • Sugar Revival Credit Facility
  • Youth Agricultural Revolution in Nigeria (YARN)

– Nigerian Export-Import Bank (NEXIM)

The Nigerian Export-Import Bank is responsible for helping facilitate the export of goods and services from Nigeria. Companies engaged in exportrelated activities are eligible for a NEXIM loan.

Some of the NEXIM products and services include:

  • Direct Lending Facility
  • Foreign Input Facility
  • Local Input Facility
  • Nigerian Creative Arts and Entertainment Industry Loans
  • Small and Medium Enterprise Export Facility (SMEEF)
  • Stocking Facility (SF)
  • Women and Youth Export Facility (WAYEF)
  • Export Development Facility (EDF)
  • Nigeria-Africa Trade and Investment Promotion Program (NATIPP)
  • Rediscounting and Refinancing Facility (RRF)
  • Export Credit Guarantee Facility
  • Export Credit Insurance Facility

– Bank of Industry (BOI)

The Bank of Industry aims to provide longterm financing to the industrial sector of the Nigerian economy. Areas of interest include agriculture, agro-processing, information and communication technologies, oil and gas, solid minerals, and the creative industry. Some of BOI‘s products and services include:

  • ASM Fund
  • Bottom of Pyramid
  • Fashion and Beauty Product
  • Light Manufacturing
  • Food and Agro Commodity Processing
  • Graduate Entrepreneurship Fund
  • Nollyfund
  • On-Lending to Commercial Banks
  • Solar Energy
  • Youth Entrepreneurship Support (Yes) Program
  • Youth Ignite Program
  • BOI/CBN Intervention Fund
  • Cassava Bread Fund
  • Cement Fund
  • Cottage Fund
  • FGN Special Intervention Fund for MSME (NEDEP)
  • NADDC Fund
  • National Program on Food Security (NPFS)
  • Rice and Cassava Intervention Fund
  • Sugar Development Council Fund
  • BOI/State Matching Funds
  • BOI/Dangote Foundation Matching Funds

– Small and Medium Enterprises Development Agency of Nigeria (SMEDAN)

SMEDAN‘s mission is to stimulate, monitor, and coordinate the development of SMEs in Nigeria. As part of its missions, SMEDAN also helps SMEs access credit and other forms of financing.

Some of SMEDAN‘s products and services include:

  • Automotive (Component Parts Fabrication) Empowerment Scheme
  • Commercialization, Empowerment Initiative (for ICT)
  • Conditional Grant Scheme (CGS)
  • Enterprise Network Initiatives
  • Financial Empowerment for MSMEs
  • Garment and Textile Cluster Growth Support Scheme
  • Hewlett Packard – Learning Initiative for Entrepreneurs (HP – Life)
  • Leather Cluster Enterprises Scheme
  • MSME Market Linkage Initiative
  • One-Local Government-One-Product (OLOP)
  • SMEDAN Cloud for MSMEs
  • Waste to Wealth Cluster Development and Enhancement Scheme
  • Young Business Owners in Nigeria (Y-BON)

– Development Bank of Nigeria (DBN)

The Development Bank of Nigeria is a wholesale financial institution. The DBN aims to expand access to credit for micro, small and medium enterprises (MSMEs).

Some of the DBN products and services include:

  • Wholesale lending
  • Partial credit risk guarantees
  • Capacity building — the DBN Entrepreneurship Training Program

How to Qualify for a Nigerian Federal Government Loan?

Anyone in Nigeria is eligible for a loan from the Federal Government of Nigeria, as long as they have a business or wish to start one.

Depending on the loan you are applying for, your business does not have to be registered with the Corporate Affairs Commission (CAC) to be eligible. However, if your business is not registered, you will usually need to register under the funding program or initiative in question.

Additionally, depending on the type of business or commercial enterprise you have, you want to be registered with the National Agency for Food and Drug Administration and Control (NAFDAC), the Nigerian Export Promotion Council (NEPC), and the Standards Organization of Nigeria (SON).

Limited liability companies and registered business names are eligible for an FGN loan. Typically, the amount you can claim as a limited liability company is much higher.

For some government loans, your business must have a trading history and credit score. i.e you must have been up and running for a while. Other FGN loans do not have this requirement, so startups are encouraged to apply.

Federal government loans are managed and provided by various government agencies. Each agency will have its specific loan requirements or criteria.

Therefore, your business may not be suitable for all funding programs and initiatives managed by the FGN. For example, if your business does not export goods or services, you cannot get a NEXIM loan.

Likewise, if your business is not involved in farming, then a BOA loan is out of the question. And so on.

Depending on the line of credit in question, government loans can be used for a variety of things such as equipment rentals, stock purchases, or simply as a startup loan.

Loans for things like buying real estate are not normally covered.

How to Apply for a Nigerian Federal Government Loan?

Applying for a government loan involves researching and researching a product that you are both qualified for and suitable for your business needs.

Since most loans are managed by specific government agencies, you will need to go directly to those agencies or apply through a participating commercial bank.

Some applications can be submitted online, but most of the time you will need to visit an appropriate office or branch to apply in person.

The suitability of your business and the purpose of the loan would be assessed, according to the guidelines of the line of credit or financing program in question.

If your funding request is approved, funds will be advanced to you, according to the terms of any approval letter.

No matter which agency, line of credit, or fundraising initiative you are applying for, there are generally some basic documents required. A checklist of what you might need includes:

  • Completed application form
  • Company profile
  • Business plan
  • Cash flow budget
  • Bank statements (12 months)
  • Audited financial accounts
  • Certificate of Incorporation
  • Valid means of identification (driving license, passport, voters card)
  • Proof of address
  • Details of collateral offered

This checklist does not highlight a complete or even mandatory set of documents. For example, if you are a startup, you might not need audited financial accounts or a certificate of incorporation. On the other hand, if you are a large limited liability company, you might need additional things like a clearance certificate and more.

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