How to Get a Business Loan from the Federal Government of Nigeria

The Nigerian government offers various programs that provide cash to both small and large businesses, with a focus on smaller businesses.

For numerous reasons, the government prioritizes small and medium-sized enterprises (SMEs). One of the primary reasons is that the SME sector is an essential component of a successful market economy. SMEs account for the great majority of all enterprises in Nigeria. As a result, they provide significant contributions to value-added and employment.

Funding and types of loans available through the Federal Government of Nigeria

Bank of Agriculture (BOA)

The Bank of Agriculture is government-sponsored. It gives credit and other forms of funding to farmers and related agribusinesses.

Some of the BOA 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)

Bank of Industry (BOI)

The Bank of Industry aims to provide long-term financing to the industrial sector of the Nigerian economy. Focus sectors include agriculture, agro-processing, information and communication technology, oil and gas, solid minerals, and the creative industry.

Some of the BOI products and services include:

• ASM Fund
• Bottom of Pyramid
• Fashion and Beauty Products
• 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

Central Bank of Nigeria (CBN)

The Central Bank of Nigeria, through several development finance operations, provides a variety of loans to businesses 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, and Medium Enterprises Development Fund (MSMEDF)
• Non-Oil Export Stimulation Facility (NESF)
• Paddy Aggregation Scheme (PAS)
• Real Sector Support Facility (RSSF)

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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-sized enterprises (MSMEs).

Some of the DBN products and services include:

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

Nigerian Export-Import Bank (NEXIM)

The Nigerian Export-Import Bank is mandated to help facilitate the export of goods and services from Nigeria. Businesses involved in export-related 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

Small and Medium Enterprises Development Agency of Nigeria (SMEDAN)

SMEDAN is tasked with stimulating, monitoring, and coordinating the development of MSMEs in Nigeria. As part of its duties, SMEDAN also helps MSMEs access credit and other forms of funding.

Some of the SMEDAN products and services include:

• Automotive (Component Parts Fabrication) Empowerment Scheme
• Commercialization and 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)

Qualifying for a loan from the Federal Government of Nigeria

Anyone in Nigeria who owns or wishes to start a business is eligible for a Federal Government of Nigeria loan.

Depending on the loan, your company may not need to be registered with the Corporate Affairs Commission (CAC) in order to qualify. However, if your company is not registered, you will be compelled to register as part of the funding program or project.

Furthermore, depending on the nature of your firm, you may need to register 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).

A FGN loan is available to both limited liability companies and registered company names. As a limited business, you can typically apply for significantly larger sums.

Some government loans need your business to have a commercial history, which means it must have been in operation for some time. This criterion does not apply to other FGN loans, so companies are encouraged to apply.

Several government entities handle and disburse federal government loans. Each organization will have its own set of rules or lending criteria.

As a result, your company may not be eligible for every financing scheme and project operated by the FGN. For example, if your company does not export goods or services, you will be unable to obtain a NEXIM loan. Similarly, if your company is not involved in agriculture, a BOA loan is out of the question. And so forth.

Government loans can be utilized for a variety of purposes, including leasing equipment, purchasing shares, or simply as a startup loan, depending on the credit institution in issue.

Loans for things like buying a house are typically not supported.

How to Apply for a Loan from the Federal Government of Nigeria

Applying for a government loan entails researching and locating a product that is both qualified for and appropriate for your company’s needs.

Because most loans are handled by certain government agencies, you must either apply directly to these agencies or through a partnering commercial bank.

Some applications may be submitted online; however, the majority of applications must be submitted in person at an appropriate office or branch.

Your business appropriateness and loan purpose would be evaluated in accordance with the credit facility or financing program standards. If you are approved for financing, funds will be transferred to you in accordance with the provisions of your acceptance letter.

Whatever agency, credit institution, or financing initiative you apply for, some fundamental documentation will almost always be required. A list of what might be required 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 (driver’s license, passport, voter card)
• Proof of address
• Details of collateral offered

This checklist does not identify a comprehensive or required set of papers. If you are a startup, for example, you may not require audited financial statements or a Certificate of Incorporation. However, if you are a large limited company, you may require additional documents such as a tax clearance certificate and others.