No Need For Guarantors In N50bn COVID-19 Facility For Households, MSMEs- CBN

Says Applicants Account’ll Be Credited In 48 Hours

In an apparent bid to ease the process of participation, the Central Bank of Nigeria (CBN), on Monday, announced a waiver of its requirement for guarantors by Households and Micro, Small and Medium-scale Enterprises (MSME) applying for its N50bn COVID-19 Targeted Credit Facility.

In a series of tweets via its Tweeter handle, the CBN assured that the accounts of successful applicants will be credited within 48 hours of submitting their details under the facility.

It urged those whose accounts are not credited within the period to visit: and input their account details in any bank of their choice, or call 09010026900.

Following the waiver of the requirement for two acceptable guarantors, potential beneficiaries are to under the programme, pledge eligible collaterals, moveable assets duly registered on the National Collateral Registry (NCR); simple deposit of title documents, in perfectible state; Deed of Debenture (for stocks), in perfectible state; and irrevocable domiciliation of proceeds.

Others, according to the guidelines issued on March 23, 2020, include: Personal Guarantee of the promoter of the business; life insurance of the Key-Man, with NMFB noted as the First Loss Payee; as well as a comprehensive Insurance over the asset.

The fund, the guidelines explained, was introduced as a stimulus package to cushion the adverse effects of COVID-19 on households and MSMEs; offer them support following the significant disruption of their economic activities by the pandemic. It is also aimed at stimulating credit necessary to help MSMEs expand their “productive capacity through equipment upgrade, and research and development.”

Eligible participants include households with verifiable evidence of livelihood adversely impacted by COVID-19; and existing enterprises with verifiable evidence of business activities adversely affected as a result of the COVID-19 pandemic.

It is also for enterprises with bankable plans to take advantage of opportunities arising from the COVID-19 pandemic; and will cover activities such as agricultural value chain activities; hospitality (accommodation and food services); health (pharmaceuticals and medical supplies); and airline service providers.

Others include manufacturing/value addition; trading; and any other income generating activities as may be prescribed by the CBN, even as the scheme will be financed from the Micro, Small and Medium Enterprises Development Fund (MSMEDF).

While the loan amounts for SMEs shall be determined by activity, cashflow and industry/segment size of beneficiary, subject to a maximum of N25m; that of households is a maximum of N3m, at an interest rate of 5% per annum (all inclusive) up to February 28, 2021. Thereafter, the interest on the facility shall revert to 9% p.a. (all inclusive) from March 1, 2021.

Working capital shall be a maximum of 25% of the average of the previous three years’ annual turnover, according to the guidelines, and where the enterprise has not operated for up to three years, it will be 25% of the previous year’s turnover.

The tenor of working capital loans under the facility shall be for a maximum period of one year, with no option for rollover, while that of term loans shall be a maximum tenor of not more than three years with, at least, one-year moratorium.

Repayment of the loan shall be on installment basis by the beneficiaries to the NMFB according to the nature of enterprise and the repayment schedule/work plan provided at the application stage.

Eligible households or MSMEs are to submit applications, which must contain, among others, the Bank Verification Numbers (BVN), “business registration (where applicable) and business plan with clear evidence of the opportunity or adverse impact as a result of COVID-19 pandemic,” directly to NIRSAL Microfinance Bank (NMFB).

NMFB is to appraise and conduct due diligence on the applications, and when satisfied, forward them to the CBN for review and final approval for disbursement to NMFB.

In the case of corporate entities, they shall submit application to NMFB with clear evidence of the opportunity or adverse impact as a result of COVID-19 pandemic, which shall likewise appraise and conduct due diligence applications; while the CBN shall give final approval for disbursement.

Exit date of this Intervention, the guidelines noted is December 31, 2024.

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