Development Bank of Nigeria (DBN) — how to get a loan or financing

Development Bank of Nigeria loans are great for businesses, looking for long-term funding.

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The Development Bank of Nigeria (DBN) is a wholesale financial institution. Its primary goal is to expand access to funding for micro, small and medium-sized enterprises (MSMEs). Credit is advanced through eligible financial intermediaries i.e. Participating Financial Institutions (PFIs).

The DBN was established by the Federal Government of Nigeria (FGN), in partnership with global development partners including the African Development Bank (AfDB), the European Investment Bank (EIB), the French Agency for Development (AFD), the KfW Development Bank and the World Bank (WB).

Through the provision of credit, the DBN seeks to ease the financing constraints faced by businesses across Nigeria. As well as providing credit, the DBN also gives partial credit guarantees — to eligible financial intermediaries (PFIs). In doing so, the DBN has encouraged them to take on more lending risk.

With the provision of additional capital, the DBN has contributed to lowering interest rates and increasing loan tenors — enabling businesses to make capital improvements, purchase new equipment and buy supplies.

The Development Bank of Nigeria exists alongside a number of other development financing institutions (DFIs) such as the Bank of Industry (BOI) and the Bank of Agriculture (BOA). It also works closely with the Central Bank of Nigeria (CBN).

Services, funding and types of loans available through the Development Bank of Nigeria

Wholesale lending and partial credit risk guarantees

The Development Bank of Nigeria provides wholesale credit and risk-sharing facilities to PFIs, for onward lending to businesses. These PFIs include commercial banks, microfinance banks, existing development finance institutions and leasing companies.

This means that the DBN does not directly lend to businesses. Rather, the DBN provides funds to PFIs, who are mandated to provide business credit on its behalf. Credit is typically advanced in the form of a secured or unsecured term loan. Working capital finance is also available.

The Development Bank of Nigeria loan repayment terms are flexible. Loan tenors can go up to 10 years, and a moratorium period of up to 18 months can be accommodated. Any interest rates charged are competitive.

The DBN provides credit that is used to support local entrepreneurs and empower business owners. As a result, it aims to have a positive impact on the Nigerian economy through diversification, job creation, wealth creation and economic growth.

The Development Bank of Nigeria does not only concentrate on one specific sector of the economy. The DBN provides loans to businesses involved in any part of the economy, to include resource extraction, manufacturing and services. Essentially, this means that DBN products can cater to almost any company in Nigeria.

Capacity building — the DBN Entrepreneurship Training Program

The Development Bank of Nigeria runs a training program, aimed at giving businesses the skills required to be successful. The training program educates MSMEs on writing business plans, basic business management and bookkeeping — among other things. By participating in such training programs, the DBN hopes businesses become more creditworthy.

Qualifying for a Development Bank of Nigeria loan

Any business involved in productive enterprises, is eligible for a loan with the Development Bank of Nigeria.

The DBN does not fund individuals and so, if you are not already registered, your company will need to register with the Corporate Affairs Commission (CAC).

Further, you must be a customer of one of the eligible financial institutions i.e. PFIs. This means you will need to have a bank account, with one of the following institutions:

Commercial banks

  • Access Bank Plc
  • Ecobank Nigeria Bank Plc
  • FCMB Ltd
  • Fidelity Bank Plc
  • First Bank Nig Ltd
  • GTBank
  • Stanbic IBTC Bank Plc
  • Sterling Bank Plc
  • Union Bank of Nig Plc
  • Wema Bank Plc

Microfinance banks

  • AB Microfinance Bank Nigeria Ltd
  • Accion Microfinance Bank Limited
  • Addosser Microfinance Bank
  • Baobab Microfinance Bank
  • Bosak Microfinance Bank
  • Davodani Microfinance Bank
  • HASAL Microfinance Bank
  • Infinity Microfinance Bank Ltd
  • La Fayette Microfinance Bank Limited
  • LAPO Microfinance Bank Ltd
  • Mainstreet Microfinance Bank Ltd
  • NPF Microfinance Bank Plc
  • Parallex Microfinance Bank
  • Seedvest Microfinance Bank
  • Trust Microfinance Bank

New PFIs are sometimes added to the list, so if your bank is not listed above, you may consider contacting them directly to inquire. Alternatively, you can apply and open a business bank account, with one of the above financial institutions.

How to apply for a Development Bank of Nigeria loan

To apply for a DBN loan, you will need to visit one of the PFIs (banks) listed above. Once there, you are required to indicate your interest in applying for a DBN loan.

The bank will proceed to assess your business as a whole and the purpose of the loan. Should its assessment be favorable, the bank will subsequently apply to the DBN for funding.

The DBN will conduct its own internal evaluation, before approving the loan. Once approved, credit will be released to the bank — which will go on to disburse the loan to you.

When applying for a DBN loan, specific requirements will vary according to the bank in question, the type of business (limited company or business name) and the loan amount needed.

Nonetheless, some basic documents will commonly be requested such as a statement of loan purpose, a business plan, financial statements and evidence of collateral offered (if any).

A checklist of what you may need 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 Development Bank of Nigeria?

No, the DBN does not lend directly to businesses. Instead, loans are disbursed through Participating Financial Institutions (PFIs). These PFIs are charged with assessing your creditworthiness, and supervising any loans approved.

How long will I have to pay back a Development Bank of Nigeria loan?

Based on the nature of your enterprise and the loan purpose, loan terms can be up to 10 years. A moratorium of 18 months (where repayments are not made) can also be offered.

How much interest does the Development Bank of Nigeria charge?

DBN loans come with flexible interest rates. These interest rates depend on the loan tenor and are linked to prevailing market rates.

How does the Development Bank of Nigeria loan differ from other business loans?

DBN loans are specifically targeted at small and medium-sized enterprises (SMEs). This ensures that SMEs have increased access to credit. Further, the DBN is able to lend money for the long term, where other commercial loans are typically short-term.

How much can I borrow from the Development Bank of Nigeria?

Individual micro businesses can access up to 10 million Naira, while those in the small category can get around 150 million Naira. For medium-sized corporates, funds up to the amount of 600 million Naira may be provided.

Does the Development Bank of Nigeria require collateral?

As the DBN lends via intermediary banks, each of these banks will have their own requirements as to collateral. However, yes, typically collateral is required. Acceptable collateral often includes:

  • Obligations by 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 estate
  • Third party guarantors (or collateral)

The Development Bank of Nigeria website.

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