Education

How to Apply for CBN Covid-19 Loan Easily Without Collateral – Step by Step Guide

Wazobia April 30, 2020

Here are Step by Step guidelines on how to Apply and qualify for the Central Bank of Nigeria (CBN) Covid-19 Loan without any collateral at www.cbn.gov.ng

How to Apply for CBN Covid-19 Loan Easily Without Collateral

If you’re among the persons who wants to Apply for CBN Covid-19 Loan, Please carefully read through this page because this post is for you.

CBN introduced a N50 billion Targeted Credit Facility (TCF) as a stimulus package to support households and micro, small and medium enterprises (MSMEs) that are affected by the coronavirus pandemic.

OBEJECTIVES OF CBN COVID-19 LOAN

Contents

1 OBEJECTIVES OF CBN COVID-19 LOAN
2 WHO IS ELIGIBLE FOR CBN COVID-19 LOAN?
3 How to Access the Fund:
4 How to Apply for CBN Covid-19 Loan
- 4.1 More from my site

The broad objectives of the CBN’s N50 billion Targeted Credit Facility include:

Cushion 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.
Stimulate credit to MSMEs to expand their productive capacity through equipment upgrade, and research and development.

WHO IS ELIGIBLE FOR CBN COVID-19 LOAN?

Those who are eleigible for CBN Covid-19 loan are:

Househoods with verifiable evidence of livelihood adversely impacted by Covid-19
Existing enterprises with verifiable evidence of business activities adversely affected as a result of the COVID-19 pandemic.
Enterprises with bankable plans to take advantage of opportunities arising from the COVID-19 pandemic

How to Access the Fund:

There are two modalities here to consider. According to the CBN’s circular issued on March 23, 2020, either Households/MSMEs or Corporate entity.

For Households/MSMEs,

The first step is for an eligible household to submit an application to NIRSAL MFB, which must, among others, contain BVN number, business registration (where applicable) and business plan with clear evidence of the opportunity or adverse impact as a result of COVID-19 pandemic
NMFB shall appraise and conduct due diligence applications
Upon satisfactory appraisal of application, NMFB shall forward the applications to the CBN for final approval,
Then, CBN reviews applications and gives final approval for disbursement to NMFB.

For Corporate Entities

Like their MSMEs counterparts, applications are submitted to NMFB with clear evidence of the opportunity or adverse impact as a result of COVID-19 pandemic.
Also, NMFB shall appraise and conduct due diligence applications,
After satisfactory appraisal of application, NMFB shall forward the applications to the CBN for final approval.
CBN reviews applications and gives final approval for disbursement to NMFB.

Though, applicants may suffer certain setbacks due to communication gaps on the part of NMFB. For instance, one of the potential applicants, Kolade Emmanuel took to Twitter to make an enquiry about the loan has not received feedback from the bank after one month. When Nairametrics contacted him, he said, “I have not heard from the bank in about one month after I have followed all necessary processes.”

Loan Limit: There are different criteria used to determine the loan amount that is disbursed to different eligible participants and segments. They are:

SMEs- The loan amount shall be determined based on the activity, cash flow and industry/segment size of beneficiary subject to a maximum of N25 million for SMEs
Households- They can access a maximum of N3 million. Working capital shall be a maximum of 25% of the average of the previous 3 years’ annual turnover. But where the enterprise is not up to 3 years in operation, 25% of the previous year’s turnover will suffice.

Interest Rate: The CBN in its circular on the guidelines for the implementation of this facility stated that the interest rate under the intervention shall be 5% per annum (all-inclusive) up to February 28, 2021, and thereafter, the interest on the facility shall revert to 9% per annum (all-inclusive) as from March 1, 2021.

Loan Tenor: The guideline states that the loan for working capital shall be for a maximum of one year, with no option for rollover. As for the term loan, a maximum tenor of not more than 3 years with, at least, one-year moratorium.

Collateral Requirement: The guideline states that the collateral to be pledged by the beneficiaries under the programme shall be as may be acceptable by NIRSAL MFB, but may include

Moveable asset(s) that is duly registered on the National Collateral Registry (NCR);
Simple deposit of title documents, in perfect state
Irrevocable domiciliation of proceeds;
Two acceptable Guarantor and
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

Responsibilities of Stakeholders

The CBN shall;

Provide the seed fund for the scheme.
Release funds to NIRSAL MFB for disbursement to successful applicants
Review the guidelines of the facility as may be necessary
Receive and process periodic returns from NIRSAL MFB
Monitor and evaluate the implementation of the scheme by NIRSAL MFB.

As for NIRSAL MFB, they have the following responsibilities,

Validate the status and BVN of the applicants
Process and disburse funds to approved beneficiaries
Maintain records of all beneficiaries and disbursements
Forward periodic returns on the prescribed format on the scheme to CBN
Comply with the guidelines
Carry out any other duties as the CBN may prescribe from time to time.

Exit date: The exit date of this intervention is December 31, 2024. It should be noted that this framework from CBN shall be subject to review from time to time as may be deemed necessary by the apex bank.