How to Access CBN MSMEDF Loan – Requirements & How to Apply

July 22, 2020

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How to Access CBN MSMEDF Loan – Eligibility, Requirements & How to Apply: In this article, you will get vital information as regards to the Basic Guidelines on How to Access CBN MSMEDF Loan – Micro, Small and Medium Enterprises Development Fund.

After identifying the huge financing gap which hinders the development of MSMEs, the Central Bank of Nigeria (CBN) as part of its developmental role and mandate of promoting a sound financial system launched the Micro, Small and Medium Enterprises Development Fund – CBN MSMEDF Loan.

Table of Contents

CBN MSMEDF Loan – Eligibility, Requirements & How to Apply.

The objective of the Fund according to CBN is to channel low return funds to the MSME sub-sector of the Nigerian economy through Participating Financial Institutions (PFIs) enhance access by MSMEs to financial services;

Increase productivity and output of micro-enterprises;
Create jobs; and
Engender inclusive growth.

CBN MSMEDF Loan Eligibility.

Eligible Enterprises In line with the provisions of the Revised Microfinance Policy, Regulatory and Supervisory Framework for Nigeria, enterprises to be funded under the Scheme shall be:

a) Micro Enterprises

b) Small and Medium Enterprises (SMEs)

The following are eligible activities under the Fund: Microenterprises
● Agricultural value chain
● Cottage Industries
● Artisans
● Services
● Renewable energy/energy efficient product and technologies
● Trade and general commerce
● Other economic activities as may be prescribed by the CBN

The Fund is split into two components, Commercial and Developmental components.

Commercial Component

The Commercial Component shall constitute 90 per cent of the Fund which shall be disbursed in the form of Wholesale Funding to PFIs in the following ratio:

60% of the Fund: Women
40% of the Fund:

Others Objectives of Wholesale Funding are to:

a) Provide facilities to eligible PFIs for on-financing to MSMEs;

b) Improve the capacity of the PFIs to meet credit needs of MSMEs; and

c) Reduce the rate of financing to the PFIs and the beneficiaries

Developmental Component

The Developmental Component makes up the remaining 10 per cent of the Fund. It shall be earmarked for developmental programmes in form of Grants.
The 10% Grant shall be utilized for the general development of the MSME sub-sector in the following areas:

a) Capacity building
b) Development of appropriate regulatory regime for MSMEs financing
c) Financial literacy and entrepreneurship development
d) Mobilization, training and linkage of MSMEs to financial services
e) Research and Development of MSMEs-friendly financial innovations and products
f) Business Development and Advisory Services
g) Building of financial infrastructure to support the growth of MSMEs It shall also serve as incentive targeted at PFIs that demonstrate good performance under the Fund.

Note:

Only 10% of the Commercial component of the Fund shall be channeled to trade and general commerce.
Nigerian Agricultural Insurance Corporation (NAIC) Insurance is compulsory for primary agricultural production

CBN MSMEDF Loan for Start-ups

PFIs are required to fund start-up projects under the MSMEDF. To encourage NIFIs, some incentives shall apply (see Section 3.0). PFIs are expected to accept charge on fixed and floating assets of the financed projects as collateral for start-ups. Collateral requirement from start-ups by PFIs (NIFIs) shall be educational certificates

i. SSCE

ii. National Diploma (ND)

iii. National Certificate of Education (NCE)

iv. National Business and Technical Examination Board (NABTEB)

v. Higher National Diploma (HND)

vi. University degree (NYSC Certificate where applicable) and a guarantor.

The start-ups to access the MSMEDF must present their Bank Verification Number (BVN).