Are you affected by the COVID-19 outbreak? Is your business on lockdown? Are you aware there’s a stimulus package by the CBN to help small businesses in Nigeria navigate through this pandemic? or perhaps, you are wondering how small businesses can access CBN’s N50 Billion COVID-19 Stimulus fund. In this piece, we shared everything you need to know about this intervention fund and how you can access it.
The Federal Government of Nigeria through the Central Bank recently announced a series of palliative measures to cushion the effect of the COVID-19 pandemic.
In another circular to deposit banks and the general public on March 27, the CBN outlined guidelines and requirements small businesses and households that are particularly hit hard by the global pandemic can follow to access the N50 billion stimulus fund.
As concern over the spread of the novel coronavirus in the country continue to rise, businesses are beginning to see a sharp decline in growth and patronage.
To ensure these businesses survive the crisis the government is implementing measures to bolster business resilience.
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So, if you are asking how your small business can access CBN’s N50 Billion stimulus fund , here’s everything you need to know.
According to CBN, the objectives of the Targeted Credit Facility include:
- To ameliorate the negative impact of the COVID-19 pandemic on SMEs and households.
- To support households and small businesses whose economic activities were disrupted as a result of the pandemic
- To extend credit facility to SMEs to expand their productive capacity through equipment upgrades, research and development.
Who is Eligible to Apply for the CBN’s COVID-19 Intervention Fund?
Before applying for the stimulus fund, be sure you meet all eligibility criteria. According to the CBN, the following are eligible to participate in the intervention fund:
- Households with verifiable evidence of livelihood negatively impacted by the coronavirus pandemic.
- Existing businesses with verifiable evidence of disruption in business activities due to COVID-19
- Businesses with bankable plans to take advantage of the opportunities created as a result of COVID-19.
Can Businesses in Any Industry Apply for the COVID-19 Intervention Fund?
According to the Central Bank, only businesses in the following industries are eligible to apply for the COVID-19 Stimulus fund:
- Agricultural value chain activities
- Hospitality (accommodation and food services)
- Health (pharmaceuticals and medical supplies)
- Airline service providers
- Manufacturing/value addition
- Any other income-generating activities as may be prescribed by the CBN
How Much Can Businesses Access from the CBN’s COVID-19 Stimulus Fund?
- Small businesses can access up to N25 million. However, the amount each business can access will depend on their activity, industry size and cashflow.
- Households can access up to N3 million.
- Working capital shall be a maximum of 25% of the average of the previous 3 years’ annual turnover. If however, the business is not up to 3 years in operation, 25% of the previous year’s turnover will suffice.
Is CBN’s N50 Billion COVID-19 Stimulus Fund a Loan or Grant to Businesses?
The Targeted Credit Facility or COVID-19 Stimulus fun is a single-digit interest loan businesses in Nigeria can access to cushion the effect of the coronavirus.
According to the CBN, the interest rate under the intervention is 5% p.a. (all-inclusive) up to 28th February 2021. From March 1st, 2021 the interest on the facility shall revert to 9% p.a. (all-inclusive).
What is the COVID-19 Stimulus Fund Loan Tenor?
According to the CBN, Term loan shall have a maximum tenor of not more than 3 years with, at least, one-year moratorium.
For working capital, the maximum tenor shall be one year, with no option for rollover.
Do I Need a Collateral Before I can Access the COVID-19 Stimulus Package?
Since the CBN’s COVID-19 intervention fund is a loan, you will have to provide an acceptable collateral or guarantee before you can access the fund.
The CBN also listed some of the collaeral you may need to pledge including:
- Movable assets duly registered on the National Collateral Registry (NCR).
- Deed of Debenture (for Stocks), in perfectible state.
- Simple deposit of title documents, in perfectible state.
- Irrevocable domiciliation of proceeds
- Two acceptable Guarantor
- 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
When it’s time to repay the loan, do you pay at once or on instalment?
From the CBN circular, repayment is on instalment basis by the beneficiaries to the NMFB according to the repayment schedule provided at the application stage.
How do I Apply for the CBN COVID-19 Intervention Fund?
According to the CBN’s guidelines:
- Eligible small businesses and households should send their application directly to NIRSAL Microfinance Bank (NMFB).
- When applying, be sure to include the following: Your BVN number, Business registration (where applicable) and business plan with clear evidence of the opportunity or impact of COVID-19 on your business.
- NMFB will appraise and conduct due diligence on the applications.
- Upon satisfactory appraisal of the application, NMFM shall forward the application to the CBN for final approval.
- CBN reviews applications and gives final approval for disbursement to NMFB
Now you know everything you need to do about accessing this CBN’s latest intervention fund to help small businesses in Nigeria weather the COVID-19 storm.