The Central Bank of Nigeria (CBN) has released guidelines for the disbursement of the N50 billion special intervention fund which is meant to serve as a stimulus package for households and small businesses to cushion the effect of the Covid-19 pandemic.
CBN governor, Godwin Emefiele had announced the introduction of the N50 billion Targeted Credit Facility (TCF) as a stimulus package to support households and micro, small and medium enterprises (MSMEs) affected by the COVID-19 pandemic.
The facility is targeted at cushioning the adverse effects of COVID-19 on households and MSMEs; support households and MSMEs whose economic activities have been significantly disrupted by the COVID-19 pandemic as well as stimulate credit to MSMEs to expand their productive capacity through equipment upgrade, and research and development.
According to the guideline, NISRAL Microfinance Bank (NMFB) will serve as the disbursing financial institution with SMEs, households and enterprises that have verifiable evidence of livelihood and evidence of business activities adversely impacted by COVID-19 well as those with bankable plans to take advantage of opportunities arising from the COVID-19 pandemic.
The guideline stated that the sectors that would be eligible for the credit facility include agric value chain, hospitality, health, airline service providers, manufacturing/value addition, trading as well as any other income generating activities as may be prescribed by the CBN.
The scheme which will be financed from the Micro, Small and Medium Enterprises Development Fund (MSMEDF), will see SMEs getting a maximum facility of up to N25 million while households can access up to N3 million based on the activity, cashflow and industry/segment size of beneficiary.
“Working capital shall be a maximum of 25 per cent of the average of the previous three years’ annual turnover; where the enterprise is not up to three years in operation, 25 per cent of the previous year’s turnover will suffice.
“Interest rate under the intervention shall be five per cent per annum all inclusive up to 28th February 2021 and thereafter, the interest on the facility shall revert to nine per cent as from 1st March 2021.” The guideline stated that collateral for the facility will include one or more of the following: “Moveable asset(s) duly registered on the National Collateral Registry (NCR), Simple deposit of title documents, in perfectible state, Deed of Debenture (for stocks), in perfectible state, Irrevocable domiciliation of proceeds, Two acceptable Guarantor, Personal Guarantee of the promoter of the business, Life Insurance of the Key-Man, with NMFB noted as the First Loss Payee, Comprehensive Insurance over the asset.”