How to get a loan for your small business according to CBN’s guidelines

NAIRAMETRICS

Anyone starting a business or running an existing one may be required to obtain loans to keep the business operational. Access to funding is crucial to the success of a business, as it can determine whether a business can succeed or fail.

Business owners should know their business type and identify the right financial institution that can offer a loan.  

In July 2020, the Central Bank of Nigeria (CBN) set guidelines to direct low-yielding funds to MSMEs through participating financial institutions to improve their access to financial services. 

These guidelines are set for new businesses, business growth, and reviving struggling companies, and they align with the provisions of the Banks and Other Financial Institutions Act (BOFIA (1991) and the principles of Non-Interest Financial Institutions (NIFIs). 

The goal is to increase the productivity and output of these micro-enterprises, create jobs, and promote inclusive growth. 

Prospective borrowers can approach Participating Financial Institutions (PFIs) of their choice to apply for the Micro Small and Medium Enterprise Development Fund (MSMEDF). 

Participating Financial institutions

These financial institutions serve two groups: Micro entrepreneurs and SMEs-

• Micro entrepreneurs (i. e. borrowers seeking loans of less than N500,000) are to approach any of the four institutions: