The coronavirus pandemic has brought unprecedented disruption to global supply chains, a sharp drop in global crude oil prices, turmoil in global stock and financial markets, the lockdown of vast movements of people in many countries, between others. Following this and many other disruptions, the Central Bank of Nigeria (CBN) unveiled the targeted N50 billion credit facility as a stimulus package to support affected households and micro, small and medium enterprises. by the COVID-19 pandemic. Below are probable questions and answers about the application process for this installation.
1. Which financial institution should I go to to access the targeted lending facility provided by the Central Bank of Nigeria?
Applications for the Targeted Lending Facility should be made only to NISRAL Microfinance Bank, an entity owned by the Central Bank of Nigeria, the Board of Bankers and the Nigerian Postal Service. The bank has been designated as the only financial institution through which applications for the Targeted Credit Facility Stimulus Program (COVID 19) are to be processed by the Central Bank of Nigeria.
2. Who can apply for this targeted credit facility?
(a) Households with verifiable evidence of livelihoods that have been affected by COVID 19;
(b) Existing businesses with verifiable evidence of business activities adversely affected by COVID 19;
(c) Companies with bankable plans to take advantage of opportunities arising from the COVID 19 pandemic.
3. What business activities will be considered eligible for the loan:
The following activities will be considered as eligible opportunities to take advantage of crises;
(a) Agricultural value chain activities;
(b) Hotel industry (accommodation and catering services)
(c) Health (pharmaceuticals and medical supplies)
(d) Air service providers;
(e) Manufacturing / value added services;
4. How much of these 50 billion nairais can I access?
The CBN through guidelines, in particular the CBN guidelines for the implementation of the N50 billion targeted credit facility, stipulated the following threshold as the maximum loan amount that an individual borrower can access:
(a) Households can access a maximum of NOT3 million.
(b) SMEs can access a maximum of NOT25 millions. This will, however, depend on the proposed activity, cash flow and the size of the borrower’s industry.
5. If my application is accepted, what interest rate (s) are applicable to the loan amount?
An all-inclusive initial interest rate of 5% per annum will be applicable from the time the loan is disbursed until the 28th.e February 2021. Subsequently from 1st March 2021, the interest rate will be 9%.
6. Can you provide information on the duration of these loans?
The length of the loan depends on the demand. Loans disbursed for working capital are for a maximum period of one year with no possibility of renewal. In contrast, term loans have a maximum term of three years with a moratorium of at least one year.
7. What is the nature of the repayment of these loans?
Repayment of disbursed loans will be made by installments. The beneficiary and the participating financial institution, during the application process, must have established the terms of the repayment schedule.
8. What is the application process?
The application process is simple and straightforward to allow for a rapid resolution of applications in these difficult times:
(a) Applications are submitted online, directly to NISRAL Microfinance Bank.
(b) Requests are accompanied by the following:
– BVN of the borrowing entity;
– company registration number (if applicable);
– business plan with clear evidence of the opportunity or the negative impact caused by the pandemic. (optional)
(c) Once the documents are submitted, NISRAL will assess and perform due diligence.
(d) If the applicant’s documents are found to be satisfactory, NISRAL will forward them to CBN for final approval.
(e) CBN will review and return to NISRAL with final approval of disbursement.
9. Does my business have to pay a fee to apply for this loan?
No. Neither CBN nor NISRAL charge a fee as a processing fee when applying for this loan. With this in mind, the CBN issued a disclaimer on 13e of April 2020 asking members of the public to disregard requests for payment of any amount as a processing fee for this loan.
10. When should applicants expect NISRAL to start disbursements?
NISRAL issued a statement on 04/15/2020 that disbursements to successful applicants for the TCF loan will begin in the week of 04/20/2020.
11. How long should the application process take?
CBN and NISRAL have indicated that applications should be processed expeditiously and applicants should expect a decision on their applications as soon as possible. We will assume that times will vary based on several factors including completeness of documentation and others.
12. When will I receive the approved funds?
NISRAL has indicated its intention to start disbursements in the week of 04/20/2020. Successful applicants should then begin to receive approved funds.
13. Is the requirement to provide a business plan in the application process mandatory?
No. The requirement for a business plan is no longer mandatory and the payment requirement between 5,000 and 10,000 N for a business plan approved by the bank has been abolished. Applicants can now submit loan applications without a business plan. NISRAL noted, however, that including a business plan in an application will speed up the application process for beneficiaries.
14. Will I be required to provide security for the loan?
Yes. The guarantee to be pledged by the beneficiaries under the program may include the following elements:
(a) movable property duly registered in the National Register of Guarantees; The National Collateral Registry of Nigeria is an initiative of the Central Bank of Nigeria aimed at improving access to finance, especially for micro, small and medium enterprises (MSMEs). The Collateral Registry complies with Part III of the Regulations of the Central Bank of Nigeria on Registration of Collateral in Movable Property by Banks and Other Financial Institutions (Regulation No. 1, 2015). It is currently operational and used by borrowers and lenders. Simply put, the Collateral Registry is a web-based system that allows lenders to determine any prior collateral, as well as register their collateral on movable property provided as collateral. It facilitates the use of movable / personal assets as collateral that remain in the possession or control of borrowers and thus improves access to secured finance. The registry can be accessed through ncr.gov.ng.
(b) simple deposit of title deeds, in perfectible condition;
(c) act of obligation (for actions), in perfectible condition.
(d) irrevocable domiciliation of the product;
(e) two acceptable guarantors;
(f) personal guarantee from the promoter of the company;
(g) key man life insurance, with NMFB noted as the first beneficiary of the loss;
(h) and comprehensive insurance on the asset
For more information, please contact:
Kusamotu and Kusamotu
(The rooms of the green fish)
2A Udi Street, Osborne Foreshore Estate,
Ikoyi, Lagos State.
E-mail: [emailÂ protected]
Phone: +234 (0) 8147203068
Disclaimer: Noting in this question and answer should be construed as legal advice from one of our attorneys or the firm. Responses are a general summary of developments and principles of interest on the topic of discussion and may not apply directly to specific circumstances. Professional advice should therefore be sought before taking any action based on any response.