According to the new Central Bank of Nigeria guidelines for the N220 billion fund for Micro, Small, and Medium Enterprises (MSME), startup businesses can now borrow from the fund.
In the Revised Micro, Small and Medium Enterprises Development Fund (MSMEDF) Guidelines just issued by the apex bank's Development Finance department, financial institutions that lend to business start-ups under the fund will access the fund at zero interest rate.
According to the guidelines,
“participating Financial Institutions (PFIs) are required to fund start-up projects under the MSMEDF. To encourage Deposit Money Banks (DMBs) and Development Finance Institutions (DFIs), some incentives shall apply.
“PFIs are expected to accept charge on fixed and floating assets of the financed projects as collateral for start-ups. Collateral requirement from start-ups by PFIs (DMBs and DFIs) shall be educational certificates such as SSCE, National Diploma (ND), National Certificate of Education (NCE), National Business and Technical Examination Board (NABTEB), Higher National Diploma (HND), University degree (NYSC Certificate where applicable) and a guarantor.
“The start-ups to access the MSMEDF must present their Bank Verification Number (BVN).Venture Capital Firms (VCFs) that wish to finance start-ups in form of equity participation shall be eligible to access the MSMEDF at 2.0 percent for investment in start-up projects. The collateral for such facility to the VCF shall be bank guarantee.
“Incentive shall be offered to PFIs that repay loans as at when due.
a) Start-Ups (i) DMBs/DFIs playing in this space, shall access MSMEDF facility at zero percent interest for on-lending at 9.0 percent (all-inclusive) to start-ups. (ii) The PFIs shall qualify for a 50 percent risk shared on the net outstanding balance in the case of default. b)Other Incentives Microfinance Banks with PAR of 10 percent and below shall be exempted from providing financial assets as collateral to access facility under the MSMEDF.”
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