CBN explains why it is releasing N50bn loan to households, MSMEs and how to access it

As confirmed cases of COVID-19 increases to 65 in Nigeria, leading to shutdown of businesses and cancellation of other activities that have disrupted daily lives, the Central Bank of Nigeria (CBN) is providing a response that will lessen the harsh economic effects of the COVID-19 on individuals and businesses.

CBN said it has introduced a 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.

A circular by the CBN’s director of Financial Policy and Regulations Department, Kevin Amugo explained that the goals of the credit facility are to: “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 and stimulate credit to MSMEs to expand their productive capacity through equipment upgrade, and research and development.”

The statement added: “Interest rate under the intervention shall be 5% p.a. (all inclusive) up to 28th February 2021 and thereafter, the interest on the facility shall revert to 9% p.a. (all inclusive) as from 1st March 2021.”

According to the guideline released by CBN, those that can benefit from the loan are:

1. Households with verifiable evidence of livelihood adversely impacted by COVID-19

2. Existing enterprises with verifiable evidence of business activities adversely affected as a result of the COVID-19 pandemic.

3. Enterprises with bankable plans to take advantage of opportunities arising from the COVID-19 pandemic.

Activities covered by the loan include: Agricultural value chain, Hospitality (accommodation and food services), Health (pharmaceuticals and medical supplies), Airline service providers, Manufacturing/value addition,Trading and any other income generating activities as may be prescribed by the CBN.

The apex bank also pegged the maximum loan accessible at N25 million for SMEs and N3m for households.

How to access the loan:

Households/MSMEs

1. Eligible households or MSMEs shall submit applications directly to NIRSAL Microfinance Bank (NMFB);

2. The application 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.

3. NMFB shall appraise and conduct due diligence applications.