The Central Bank of Nigeria has a number of intervention funds, aimed at both small and large businesses.
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The Central Bank of Nigeria (CBN) is Nigeria’s topmost bank. It is charged with controlling the monetary policies of the country.
The job of the CBN includes:
- Providing ways for people to pay for things safely i.e. issuing bank notes and supervising payment services (e.g. MasterCard, Verve and Visa)
- Keeping prices low and stable i.e. managing inflation
- Making sure all of Nigeria’s banks are well-run i.e. regulation
- Keeping the whole Nigerian financial system stable
The CBN fulfills its role as the foremost bank in the country through:
- Gathering and analyzing data from commercial banks, microfinance banks, credit unions, insurers and mortgage companies
- Conducting research that allows it to make better informed decisions
- Producing resources that ensures people are kept up to date, and that they understand how the economy works
One of the CBN’s key roles is to boost small and medium-sized enterprises (SMEs), by helping them get greater access to credit or funding. It does this through several development finance operations.
The Central Bank of Nigeria works closely with a number of other governmental agencies including the Nigerian Export-Import Bank (NEXIM), the Development Bank of Nigeria (DBN), the Bank of Industry (BOI) and the Bank of Agriculture (BOA).
Intervention funds and types of loans available through the Central Bank of Nigeria
Agri-Business Small and Medium Enterprises Investment Scheme (AGSMEIS)
AGSMEIS is a Federal Government of Nigeria intervention scheme, managed by the CBN. The loan specifically targets micro, small and medium-sized enterprises (MSMEs), in a bid to create more jobs and drive sustainable economic growth.
Interest rates are low (5%) and loan tenors are long (up to 7 years). Businesses are also entitled to a moratorium period of 18 months on the principal, and 6 months on interest.
Eligible businesses include all MSMEs engaged in productive activities related to:
- Agricultural sector
- Educational sector
- Real sector (manufacturing, mining, petrochemicals etc.)
- Service sector (ICT, creative industry etc.)
- Other businesses as deemed fit by the CBN
Anchor Borrower’s Programme (ABP)
Essentially, the Anchor Borrower Programme gives farmers loans without collateral. They are also given various farm inputs e.g. seeds and fertilizer. Loans are repaid with either cash or the equivalent value in harvested produce.
Up to N2 billion may be borrowed, at 9% interest. The maximum loan tenor is commonly 24 months.
Businesses that use agricultural products as raw materials (for production) are eligible for this loan. In other words, businesses involved in farming.
With this scheme, the CBN seeks to boost the production of cassava, cotton, maize, poultry, rice, sorghum, tomatoes, and more.
Commercial Agriculture Credit Scheme (CACS)
Agro-businesses can become beneficiaries of the Central Bank of Nigeria’s, N200 billion Commercial Agriculture Credit Scheme.
This facility was established by both the CBN and the Federal Ministry of Agriculture. It seeks to rapidly develop the agricultural sector in Nigeria, create jobs and enhance food security, through advancing loans to eligible agro-allied businesses.
This scheme features an interest rate of 9%. Up to N2 billion Naira can be borrowed, with loan tenors that can reach up to 60 months.
You may be eligible for the CACS fund If your enterprise is involved in activities such as cultivation of crops, fisheries and rearing of livestock .
Creative Industry Financing Initiative
The Creative Industry Financing Initiative enables businesses to access up to 500 million Naira. The facility is available to entrepreneurs or SMEs involved in:
- Information communication technology
- Movie distribution and production
- Music distribution and production
- Software engineering students
The maximum interest rate applied is 9%, with a maximum repayment period of 10 years.
With this initiative, the CBN seeks to stimulate the creative industry, where businesses have often struggled to meet the strict collateral requirements — of traditional commercial loans.
Credit Support Scheme For The Healthcare Sector
The Central Bank of Nigeria has taken measures to extend loans of up to N100 billion, to support intervention efforts focused on the healthcare sector.
Through this scheme, it is hoped that indigenous pharmaceutical companies and related healthcare businesses across the value chain, are able to expand their capacity to deliver goods and services to Nigerians.
Eligible participants under this scheme include:
- Healthcare product manufacturers (pharmaceutical drugs and medical equipment)
- Healthcare service providers and medical facilities (clinics, diagnostic centers, fitness centers, hospitals, rehabilitation centers etc.)
- Pharmaceutical and medical products (distribution and logistics services)
- Other human healthcare service providers, as may be determined by the CBN
For working capital purposes, the loan limit is 500 million Naira — with a maximum loan tenor of 1 year. For term loans, the lending limit is 2 billion Naira — with a maximum loan tenor of 10 years. For both options, interest rates are set at 9% per annum.
Maize Aggregation Scheme (MAS)
The Maize Aggregation Scheme is a working capital facility. It helps Agro-businesses purchase home-grown maize. Businesses involved with the following activities are eligible for the MAS fund:
- Feed Millers
- Poultry Farmers
- Silo Operators
- Warehouse Operators
The maximum financing tenor is 12 months. You can borrow up to N2 billion at 9% interest per annum.
Micro, Small, Medium Enterprises Development Fund (MSMEDF)
The CBN N220 billion Micro, Small, Medium Enterprises Development Fund, is a single digit interest rate (9%) loan facility. It can be accessed through Participating Financial Institutions (PFIs) i.e. banks.
Loans must be repaid within 3 years and you can access up to 50 million Naira.
60% of the fund is available to women only, while 10% is provisioned for startups.
Businesses in the following sectors are eligible for the scheme:
- Agricultural value chain
- Renewable energy
- Trade & commerce
- Other economic activities as decided by the CBN
10 percent of the fund is earmarked for development objectives, through grants and capacity building. The remaining 90% is the commercial component. The fund as a whole seeks to enhance MSMEs access to credit, increase productivity and create jobs.
Non-Oil Export Stimulation Facility (NESF)
The Non-Oil Export Stimulation Facility is designed to help diversify the revenue base of the Nigerian Economy, by supporting the development of the non-oil export sector. The fund attempts to redress the decline in export financing.
The scheme allows for the financing of anything that can help Nigerian businesses export. Accordingly, as well as supporting the export value chain (everything from factories to transportation to warehouses), the scheme allows companies to import the plants and machinery required to manufacture and produce goods for export.
Export oriented businesses, with verifiable export off-take contracts are eligible for the scheme. There is a lending limit of 5 billion Naira. Loans have a maximum tenor of 10 years. An interest rate of 9% applies.
Paddy Aggregation Scheme (PAS)
The Paddy Aggregation Scheme is a short term bridging or working capital facility. It is designed to assist rice millers in purchasing paddy, for processing throughout the year.
Up to 2 billion Naira can be borrowed at an interest rate of 9% per annum. Repayments are to be made within 12 months.
Real Sector Support Facility (RSSF)
The goals of the Real Sector Support Facility are to increase output, generate employment, diversify the revenue base, increase foreign exchange and provide inputs for the industrial sector — on a sustainable basis for the economy.
The CBN has set aside N300 billion for the scheme. The RSSF may be used to support startups, as well as the expansion plans of more established businesses.
Businesses involved in the following sectors are given priority:
- Agro business
- Solid minerals
Simple trading activities are not covered by this scheme.
Credit can come in the form of either a term loan or working capital finance. Loans are suitable for asset acquisition or expansion, while working capital is to be used for purchasing raw materials.
Loans have a tenor of up to 10 years. Working capital facilities have a tenor of 1 year. Up to N10 billion can be borrowed, with the minimum level of borrowing set at N500 million. An interest rate of 9% per annum is applicable, to any facility offered.
Qualifying for a Central Bank of Nigeria loan
Any business involved in productive activities may qualify for a loan, under one of several intervention schemes of the Central Bank of Nigeria (highlighted above).
The CBN does not usually fund individuals. Accordingly, you will need to have a registered business or company — with the Corporate Affairs Commission (CAC).
Additionally, as the CBN does not lend directly, you will need to be a customer of one of the eligible financial institutions i.e. PFIs.
Eligible PFIs include all microfinance banks, non-governmental organizations-microfinance Institutions (NGO-MFIs), financial cooperatives, finance companies, development finance institutions (Bank of Agriculture and Bank of Industry) and deposit money banks (commercial banks).
How to apply for a Central Bank of Nigeria loan
Those wishing to apply for a CBN loan are encouraged to visit an eligible PFI (bank). Once you arrive, indicate your interest in applying for a CBN loan.
If you already know what scheme (mentioned above) you would like to apply for, you may mention this at the time of application. If you are not sure, the bank will likely inform you of your options — in accordance with your businesses current circumstances.
The bank will then proceed to assess your businesses suitability and the purpose of the loan. Following a favorable assessment, the bank will apply to the CBN for funding.
The CBN will perform its own internal evaluation, before releasing funds to your bank. Your bank is then charged with disbursing the loan to you, on behalf of the CBN.
The specific requirements for a CBN loan vary according to the size of your business, the amount applied for and the bank you are applying through.
Having said this, there are a few basic documents that will almost always be required — such as a business plan, statement of loan purpose, financial statements and evidence of collateral offered (if any).
A checklist of what you may require includes:
- Completed application form
- Company profile
- Business plan
- Cash flow budget
- Bank statements (12 months)
- Audited financial accounts
- Certificate of Incorporation
- Valid means of identification (driving license, passport, voters card)
- Proof of address
- Details of collateral offered
Frequently asked questions (FAQs)
Can I borrow directly from the Central Bank of Nigeria?
No, you cannot borrow directly from the CBN. Loans are disbursed through any one of the Participating Financial Institutions (PFIs). These PFIs are mandated to assess your businesses creditworthiness, and to supervise any loans approved.
How long will it take before receiving funds from the Central Bank of Nigeria ?
The length of an application process is based on the scheme applied for, and how much money is requested. With certain schemes, the process is highly automated, disbursing loans as early as 6 weeks after application. Other schemes, particularly where larger sums are involved, may take longer.
How long do I have to pay back a Central Bank of Nigeria loan?
Loan terms vary according to the specific scheme applied for. It is also based on the nature of your business and the loan purpose. In general, loan terms vary between 1 to 10 years. An incubation or moratorium period can also be offered.
What is the interest rate for a Central Bank of Nigeria loan?
The interest rates applied to loans from the CBN are typically at 9%. However, at its discretion, the CBN may charge a lower interest rate. Some schemes, like AGSMEIS, come with a lower interest rate as standard.
What is the difference between a Central Bank of Nigeria loan and other commercial loans?
Through its intervention funds, CBN loans are specifically targeted at certain sectors — which may have challenges accessing finance. Further, many of the CBN’s products are favorable to SMEs — by the way of longer repayment periods, as well as cheaper interest rates i.e. soft loans.
How much can I borrow from the Central Bank of Nigeria?
The amount that you can borrow from the CBN is highly dependent on both the scheme applied for, and the size of your business. Loans as small as a few million Naira can be provided, as well as bigger loans upwards of a billion Naira.
Does the Central Bank of Nigeria give grants?
Most of the funds released by the CBN are in the form of loans. However, from time to time, the Central Bank of Nigeria does give grants to eligible businesses. For those seeking a grant, It is best to inquire directly with the CBN.
Is there a deadline for applying for a Central Bank of Nigeria loan?
No, there is typically no deadline for applying for a CBN loan. However, intervention funds come with initial seed capital, which may or may not be replenished, after depletion.
Does the Central Bank of Nigeria require collateral?
As the CBN lends via intermediary banks, each of these banks will normally have their own collateral requirements. Nonetheless, collateral is usually (but not always) required. This is the case regardless of the bank you apply through. 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)
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