3 Ways to Access Fund for Small Businesses in Nigeria.

Starting a business or running an existing business is not a daunting task, especially when you have limited capital or cash-flow. Nigeria have suffered economic crunch since 2015 when the oil price plummeted; this has impeded business growth and stopped a lot of startups from springing up. It has also made it near impossible to access funds in Nigeria, but here are solutions.

Central Bank of Nigeria (CBN)

The Nigerian government through the Central Bank of Nigeria (CBN) had created NGN220 billion fund initiative for startups. However, according to the Governor of the apex bank, only 30% of the N220 billion Micro Small and Medium Enterprises Development Fund had so far released because of the tough conditions startups must meet before accessing the fund.

To ensure that more startups access the fund, CBN has directed financial institutions across the country to accept applicants’ educational certificates as collateral.

According to the new guideline, loans granted to startup businesses by deposit money banks and development finance institutions will have as collateral “educational certificates such as Senior School Certificate (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.”

Entrepreneurs are also required to present their Bank Verification Number (BVN) while Venture Capital Firms (VCFs) that wish to finance startups in form of equity participation shall be eligible to access the MSMEDF at 2% for investment in startup projects. The collateral for such facility to the VCF shall be bank guarantee.

Tony Elumelu Entrepreneurship Programme (TEEP)

TEEP, the flagship programme of The Tony Elumelu Foundation, is a Naira 17bn (US$100m equivalent) initiative to support emerging entrepreneurs across Africa over 10 years, aiming to generate a projected $10bn in revenues for the Continent and one new million jobs for its citizens. The 2015 round drew over 20,000 applicants from 51 countries and has created partnerships with entrepreneurs, the private sector and governments across Africa and internationally.

Bank of Industry/Dangote Foundation Fund

The Dangote Foundation/BOI Fund is a N5bn matching fund, which could be accessed by Enterprises and Limited Liability Companies engaged in the Manufacturing, Agro-Processing and Merchandising sectors for made in Nigeria goods, with single obligor limit of N50.0 Million with an interest rate of 5%.