The Central Bank of Nigeria (CBN) is calling on applications for N50bn Targeted Credit Facility (TCF) created to support individuals, MSMEs, Businesses and Households affected by COVID-19
The novel coronavirus outbreak has a severe impact on the livelihood of households and business activities resulting to drop in global demand for goods and services, declined consumer confidence, and a slowdown in production among others.
The Federal Government through the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance, Budget, and National Planning have announced some monetary and fiscal measures to help mitigate the impact of the coronavirus pandemic on the economy, Nigerian businesses, and households.
The CBN on its own, through various circulars and pronouncements, has announced some stimulus packages that will impact different sectors like the health sector, Micro Small and Medium Enterprises (MSMEs), manufacturers, households, and so on.
The apex bank introduced an N50 billion Targeted Credit Facility (TCF) as a stimulus package to support households and micro, small and medium enterprises (MSMEs) that are affected by the coronavirus pandemic
The CBN loan facility will run for a maximum of 3 years and repayment will be made on an instalment basis according to the nature of the enterprise. Households will be able to access loans between N1 million and N3 million while MSMEs can obtain loans ranging from N3 million to N25 million.
The Interest rates varies between 5% and 9% depending on loan purpose.
— Central Bank of Nigeria (@cenbank) April 13, 2020
The TCF was designed to 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, and to stimulate credit to MSMEs to expand their productive capacity through equipment upgrade and research and development.
A. Who is TCF meant for?:
In the operational guideline for the facility, the CBN listed participants who are eligible to apply for credit from this facility. They are as follows;
Households with verifiable evidence of livelihood adversely impacted by the coronavirus outbreak;
Existing enterprises with verifiable evidence of business activities adversely affected as a result of the coronavirus pandemic (as part of its consistent review, CBN has declared that eligible applicant does not need to have a business plan),
and firms in agricultural value chain activities.
- Hospitality industry (accommodation and food services)
- Airline service providers
- Health (pharmaceuticals and medical supplies)
- Manufacturing/value addition
- Trading and other income-generating activities as may be prescribed by the CBN
Source of fund
The scheme shall be funded from the Micro, Small and Medium Enterprises Development Fund (MSMEDF) and the eligible participating financial institution for the scheme is NIRSAL Microfinance Bank (NMFB).
This means the CBN will be sourcing the fund from its MSME development fund which will be administered through NIRSAL Microfinance Bank. Thus, while the CBN will be providing the funds, applicants will have to apply for the loan through NIRSAL Microfinance Bank.
How to access the fund
There are two modalities here to consider. According to the CBN’s circular issued on March 23, 2020, the modalities apply to either Households/MSMEs or Corporate entity.
Loan Terms & Limit
There are different criteria used to determine the loan amount that is disbursed to different eligible participants and segments. They are:
The loan amount shall be determined based on the activity, cash flow and industry/ segment size of beneficiary subject to a maximum of N25 million for SMEs
They 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. But where the enterprise is not up to 3 years in operation, 25% of the previous year’s turnover will suffice.
The CBN in its circular on the guidelines for the implementation of this facility stated that the interest rate under the intervention shall be 5% per annum (all-inclusive) up to February 28, 2021, and thereafter, the interest on the facility shall revert to 9% per annum (all-inclusive) as from March 1, 2021.
The guideline states that the loan for working capital shall be for a maximum of one year, with no option for rollover. As for the term loan, a maximum tenor of not more than 3 years with, at least, one-year moratorium.
The guideline states that the collateral to be pledged by the beneficiaries under the programme shall be as may be acceptable by NIRSAL MFB, but may include
Moveable asset(s) that is duly registered on the National Collateral Registry (NCR);
- Simple deposit of title documents, in perfect state
- Irrevocable domiciliation of proceeds;
- Two acceptable Guarantor and
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
Responsibilities of Stakeholders
- Provide the seed fund for the scheme.
- Release funds to NIRSAL MFB for disbursement to successful applicants
- Review the guidelines of the facility as may be necessary
- Receive and process periodic returns from NIRSAL MFB
- Monitor and evaluate the implementation of the scheme by NIRSAL MFB.
Responsibility of NIRSAL MFB
they have the following responsibilities,
- Validate the status and BVN of the applicants
- Process and disburse funds to approved beneficiaries
- Maintain records of all beneficiaries and disbursements
- Forward periodic returns on the prescribed format on the scheme to CBN
- Comply with the guidelines
The exit date of this intervention is December 31, 2024. It should be noted that this framework from CBN shall be subject to review from time to time as may be deemed necessary by the apex bank.
To qualify for the N50 billion Targeted Credit Facility (TCF), all applicants should possess:
- a valid means of identification such as a national ID, driver’s license, voter’s card or international passport, as well as a valid BVN.
- MSMEs and households must agree to allow the NIRSAL Microfinance Bank (NMFB) Credit Unit assess their financial records and estimate the impact of COVID-19 on their level of sales proceeds. Applicants must also present evidence of opportunity cost and justify their numbers.
Terms and Conditions:
- Flexible and movable collateral options shall be admitted and registered under the Collateral Registry Bureau.
- Forfeiture Undertaking and Power of Attorney agreement to be signed by customer, giving NMFB rights to take over pledged assets in instance of loan default.
- Insurance cover on the asset financed or asset availed as flexible collateral, with the NMFB noted as the first loss payee.
- Loan amount must match loan repayment plan and loan purpose.
- Domiciliation of proceeds with NIRSAL Microfinance Bank.
- Customer must have a verifiable supplier/s who he/she must have had a business relationship with for a minimum of 6 months (for MSMEs).
How To Apply
Interested and Qualified Nigerians should;
Application Deadline: Not Specified