Bank of Agriculture (BOA) — how to get a loan or financing

The Bank of Agriculture can fund businesses involved in agricultural production or agribusiness.

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The Bank of Agriculture (BOA) is a government-backed bank, that provides loan facilities to farmers and other agro-allied businesses.

The job of the BOA includes:

  • Provision of credit to support agricultural activities across the value chain
  • Provision of non-agricultural microcredit
  • The mobilization of savings
  • Agriculture related capacity building

The BOA fulfills its role as the leading agricultural bank in Nigeria — with the help of over 201 retail outlets nationwide, 6 zonal offices and its headquarters in Kaduna.

The BOA partners with several other development finance institutions (DFIs) such as the Bank of Industry (BOI), the Central Bank of Nigeria (CBN) and the Development Bank of Nigeria (DBN).

Funding and types of loans available through the Bank of Agriculture

Agro-Processing Facility

The BOA’s Agro-Processing Facility, provides funds for the establishment of cottage or urban agro processing businesses.
Agro-processing is a key part of the agricultural value chain. Through this facility, the BOA seeks to help ensure national food security and to reduce post-harvest loss.

Direct Credit Product

This facility has been developed by the BOA, to finance agricultural production and other agro-allied activities. The facility is available to both individuals and corporate organizations.

While individuals can access up to N5 million, corporate organizations may borrow up to N50 million. In both cases, loan tenors do not exceed 5 years.

A 14% interest rate applies for agricultural production and agro-processing. Those engaged in commodity marketing, would have a 20% interest rate applied — to any borrowed funds.

Equipment Leasing Product (ELP)

Through the Equipment Leasing Product, the BOA seeks to increase the productivity of agricultural companies in Nigeria — by giving them the opportunity to mechanize some of their processes.

By improving the productivity levels of agribusinesses, output can be increased — satisfying domestic needs and potentially leaving surplus for export. Mechanized equipment may also lead to an increase in the quality of goods produced, which can also help make Nigerian produce more attractive to foreign buyers.

Almost any type of equipment can be leased, as long as it leads to an improvement in agricultural output.

Export Finance Facility

The BOA’s Export Finance Facility is designed to encourage the exportation of agricultural produce, in order to bring valuable foreign exchange into Nigeria. Through this initiative, it is also hoped that jobs and wealth will be created.

It is a short term credit facility, where the BOA can provide both pre-shipment credit and post-shipment invoice discounting. Through export financing, Nigerian exporters are able to make sales that may have otherwise not been possible.

At the pre-shipment stage, up to 70% of a verifiable export off-take contract can be financed. At the post-shipment stage, discounting also covers up to 70% of the export proceeds. Discounting is provided against a confirmed letter of credit (issued by the foreign importer).

Grow and Earn More (GEM)

The GEM credit facility has been developed as vehicle to get more Nigerian women into agribusiness.

Beneficiaries are required to be small holders, with the land needed for cultivation or to produce products along the agricultural value chain.

Collateral is not required with this facility, instead guarantors will be sought.

A maximum of N1 million can be borrowed, with an interest rate of 12%.

Haulage Credit Facility

This Bank of Agriculture product, has been developed to support businesses engaged in the transportation of agricultural related goods. Businesses are able to access this loan in order to acquire trailers, lorries and related vehicles.

Hides and Skin Revival Credit Facility

With the Bank of Agriculture’s Hides and Skin Revival Credit Facility, investors can get access to funds that can be used to develop businesses — across the hide or leather value chain.

One of the aims of the scheme includes increasing the foreign exchange earnings of Nigeria, through the export of hides and leather.

Input Procurement Credit Facility

The Input Procurement Credit Facility, is aimed at helping businesses finance their purchases of inputs to agricultural production — across the value chain.

Eligible business activities include those related to purchasing breeder seeders, the supply of seeds to Nigerian farmers and the import/production of fertilizer.

Inventory Credit Facility

Through the Inventory Credit Facility, the BOA extends farmers credit for dry season income generating activities (after the harvest of produce).

Harvested produce is kept in stores or warehouses, and acts as collateral for the loan. Stored goods are insured. This can finance a short conversion cycle project.

Large Credit Product

This Large Credit Product facility is only available to big corporate organizations. Companies involved in farming or other related agro-allied businesses, are eligible for the loan.

A minimum of N50 million can be advanced, up to a maximum of N1 billion. Repayments can be made over a maximum period of 5 years. The applicable interest rate is 14% for agricultural production and 20% for marketing or trading activities.

Ranching Development Credit Facility

Through the Ranching Development Credit Facility, the BOA aims to support the National Food Security program. The introduction of this credit facility, will enable businesses to invest in the establishment of ranches around the country.

This will help Nigeria rear more cattle and sheep.

Sugar Revival Credit Facility

In its efforts to boost local sugar production, the Federal Government of Nigeria has conceptualized an initiative entitled “The Nigeria Sugar Master Plan”. The BOA is partnering with the National Sugar Development Council, to drive implementation of the program.

Under the scheme, funding can be provided to any business along the sugar value chain. Further, both individuals and corporate organizations are eligible for financing.

Youth Agricultural Revolution in Nigeria (YARN)

The YARN credit facility was established to encourage youths across Nigeria, to get involved in agribusiness. A maximum of N1 million can be advanced, attracting an interest rate of 12%.

Collateral is not required for this scheme, however personal guarantors are needed.

Beneficiaries are required to be small holders as stipulated under the — Nigeria Incentive Risk Sharing for Agricultural Lending (NIRSAL) guidelines.

Qualifying for a Bank of Agriculture loan

Any business involved in productive Agro-allied activities, is eligible for a loan from the Bank of Agriculture.

For the majority of credit facilities on offer, the BOA does not typically fund individuals. Consequently, if your business is not already registered with the Corporate Affairs Commission (CAC) — you will need to do that first.

Unlike other development finance institutions (BOA, CBN and DBN), the Bank of Agriculture does lend directly to the end-customer.

In order to access credit, you may need to open an account with the BOA — at one of their many branches spread across the country.

How to apply for a Bank of Agriculture loan

If your business is interested in applying for a BOA loan, you can go to your nearest Bank of Agriculture branch or outlet. At the branch, you may indicate your wish to make a loan application.

Before making an application, you may be asked what credit facility (mentioned above) you are specifically interested in. If you are unsure, BOA staff should be able to assist you — in applying for the facility that best suits your needs.

The purpose of the loan and your businesses suitability, will both need to be assessed. Should the assessment come out as favorable, you will be pre-approved for the loan.

Usually, full approval comes with you meeting certain conditions/requirements, highlighted in a pre-approval letter.

The requirements for a BOA loan vary according to factors such as — the loan amount requested and the size of your business. Having said this, there are a few standard documents that you will always need to show — like a business plan, statement of loan purpose, financial accounts and tax receipts.

A checklist of what is required, before a loan is approved could include:

  • Completed application form
  • Company profile
  • Business plan
  • Cash flow budget
  • Bank statements (12 months)
  • Audited financial accounts
  • Tax clearance certificate
  • Certificate of Incorporation
  • Valid means of identification (driving license, passport, voters card)
  • Proof of address
  • Details of collateral offered (if any)

Frequently asked questions (FAQs)

How long will it take before receiving funds from the Bank of Agriculture?

The length of application processes vary according to the exact credit facility applied for, and how much funding you need. Typically, the larger the sums involved — the longer it will take to get a loan.

How long do I have to pay back a Bank of Agriculture loan?

The nature of your business, the purpose of the loan and the facility applied for — determine the repayment period. Typically, loan tenors do not exceed 5 years.

What is the interest rate charged on a Bank of Agriculture loan?

The interest rates attached to loans from the BOA differ. It depends on the purpose of your loan and the type of business activities you are engaged in.

Agricultural marketing and trading activities, generally attract higher interest rates — than agricultural production activities. Interest rates of around 12-14% are common, although it can be lower.

How much can I borrow from the Bank of Agriculture?

The amount that you can borrow from the BOA, is highly dependent on both the size of your organization, and the credit facility applied for.

Normally, individuals are able to borrow significantly less — than large businesses. Individuals may only be entitled to a few million, while large businesses can get up to a billion.

Does the Bank of Agriculture give grants?

Most of the money advanced, by the BOA, is in the form of loans. However, from time to time, the Bank of Agriculture does give grants and engage in capacity building. For those looking for a grant, It is best to inquire directly with the BOA.

Does the Bank of Agriculture require collateral?

Yes, generally, the BOA does require collateral. There are a few facilities that do not, but the vast majority do. Acceptable forms of collateral may include:

  • Obligations of the Federal Government of Nigeria (FGN Bonds, FGN Eurobonds, FGN Treasury Bills etc.)
  • Obligations of state governments or agencies of the Federal Government of Nigeria
  • Other non-government debt instruments
  • Physical assets e.g. real property
  • Third party guarantors (or collateral)

The Bank of Agriculture website.

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