Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) — how to get a loan or financing

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The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), was created to promote the development of smaller businesses across the country. SMEDAN was established in 2003 — following the “SMEDAN Act”.

SMEDAN is mandated to:

  • Stimulate, monitor and coordinate the development of micro, small and medium-sized enterprises (MSMEs)
  • Develop and implement polices favorable to the growth of MSMEs
  • Engage in capacity building
  • Help MSMEs get access to credit and other forms of funding

A well-developed MSME sector — is seen as a way of combating poverty and is the key to Nigeria’s prosperity. Accordingly, in its role as the “champion” for small businesses, SMEDAN can be considered as an important driver of the Nigerian economy.

SMEDAN fulfills its role in facilitating the development of small businesses — through its headquarters in Abuja, and numerous other offices spread throughout the country.

SMEDAN collaborates with a number of partner institutions like the Bank of Agriculture (BOA) and the Bank of Industry (BOI).

Funding and types of loans available through the Small and Medium Enterprises Development Agency

Generally, SMEDAN does not directly provide loans to businesses. Instead, SMEDAN acts as a middle man — connecting eligible MSMEs with suitable loan providers.

There are programs where SMEDAN partners with other government agencies, such as the BOI and the Central Bank of Nigeria (CBN), in providing credit to small businesses. Having said this, SMEDAN primarily sticks to entrepreneurship training and business development, with the disbursement of loans — being handled by other institutions e.g. BOA, BOI, CBN etc.

As well as loans from the public sector, SMEDAN can also assist small businesses in accessing credit from the private sector. For example — commercial banks, finance houses and microfinance banks.

Qualifying for a Small and Medium Enterprises Development Agency loan

All MSMEs are eligible to get a loan, via one of SMEDAN’s many initiatives. Usually, the main requirement is that you have a registered business. Nonetheless, unregistered businesses can still apply — getting registered at a later stage.

If applying for a loan from a commercial bank, in addition to needing to be a registered business, the bank will have its own lending criteria. SMEDAN can help make you aware, of the main lending requirements — of most commercial banks.

How to apply for a Small and Medium Enterprises Development Agency loan

There are two ways to apply for a loan through SMEDAN. Firstly, you can apply to one of SMEDAN’s training programs. Secondly, you can use SMEDAN’s credit information portal — before going on to directly apply for a commercial bank loan.

Applying through SMEDAN

In order to get a loan, you can apply or register to be part of one of several SMEDAN sponsored initiatives. These programs typically involve, you being trained on one or more aspects of business.

Registration can involve visiting a SMEDAN office near you. There you would complete an application form, and may subsequently be invited to a course or training program. SMEDAN also has a new MSME registration portal, where you can register online.

Upon satisfactory completion of a course — some programs involve you either getting a conditional grant, to start or expand your business, or you being given a soft loan. These soft loans normally come with lower interest rates attached, and will often require no collateral.

Regardless of if you are given a grant or loan — you would usually be required to either already have a registered business, or be encouraged to register (as part of the program). The Corporate Affairs Commission (CAC), is in charge of registering businesses in Nigeria.

Depending on the type of business you have, you may also need to register with the Standards Organization of Nigeria (SON) and the National Agency for Food and Drug Administration and Control (NAFDAC).

A business plan would also need to be produced — detailing how and what you will use the money for.

Using SMEDAN’s Credit Information Portal — before applying to a commercial bank

SMEDAN has a Credit Information Portal — that can be useful for those wanting to apply for a commercial bank loan. Essentially, this portal is a database of credit facilities — that are potentially available to MSMEs in Nigeria.

On this portal, you can find basic information about lenders, how much you can borrow, loan repayment periods and interest rates. As well as a business loan, there are 3 other credit options — personal loans, mortgage loans and credit cards.

The portal has a search function, where you are matched to appropriate lenders — based on the details you provide. However, with this online platform, you cannot instantly apply to a lender. Instead, you will need to apply directly — with the financial institution in question.

Think of the SMEDAN credit portal, as more of a credit information resource — rather than a means of applying for a loan.

Loan application checklist

A checklist of what is required, before a loan through SMEDAN (or a commercial bank) is approved — could include:

  • Completed application form
  • Business plan
  • Cash flow budget
  • 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 Small and Medium Enterprises Development Agency?

The length of application processes vary — based on the exact program, or credit facility that you apply for. After registering and applying with SMEDAN, you will need to attend training and fulfill other conditions (e.g. business registration) — before any loan can be disbursed.

How long do I have to pay back a Small and Medium Enterprises Development Agency loan?

The repayment period depends on the program, and credit facility applied for. Any loans that come by the way of SMEDAN, are likely to be soft loans — with favorable repayment terms.

What is the interest rate charged on a Small and Medium Enterprises Development Agency loan?

The interest rates applied to loans through SMEDAN differ. Generally, most loans are soft loans, with very little interest charged. There are also loans that come with zero interest.

How much can I borrow from the Small and Medium Enterprises Development Agency?

The amount of money that can be borrowed from SMEDAN is relatively low. If you require significant amounts of capital, it would be best to directly apply to a commercial bank — SMEDAN can help facilitate this process.

Does the Small and Medium Enterprises Development Agency give grants?

Yes, SMEDAN does give conditional grants. These grants come as part of certain initiatives that SMEDAN run — from time to time.

Does the Small and Medium Enterprises Development Agency require collateral?

For the most part, SMEDAN provide unsecured loans i.e. loans that do not require collateral. What you may be asked for, is a personal guarantor.

Other loan applications, made to commercial banks, may require collateral.

What programs does the Small and Medium Enterprises Development Agency run?

  • Automotive (Component Parts Fabrication) Empowerment Scheme
  • Commercialization, Empowerment Initiative (for ICT)
  • Conditional Grant Scheme (CGS)
  • Enterprise Network Initiatives
  • Financial Empowerment for MSMEs
  • Garment and Textile Cluster Growth Support Scheme
  • Hewlett Packard – Learning Initiative for Entrepreneurs (HP – Life)
  • Leather Cluster Enterprises Scheme
  • MSME Market Linkage Initiative
  • One-Local Government-One-Product (OLOP)
  • SMEDAN Cloud for MSMEs
  • Waste to Wealth Cluster Development and Enhancement Scheme
  • Young Business Owners in Nigeria (Y-BON)

The Small and Medium Enterprises Development Agency of Nigeria website.

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