Due to the outbreak of the novel coronavirus, many households and businesses have suffered. Businesses have experienced a significant drop in sales as customers have slowed down on purchasing.
Fashion businesses are not left out of this struggle, seeing as fashion is not an essential service, many fashion entrepreneurs have had to close up shop which has led to little to no income in this period.
In light of this, the Federal Government through the Central Bank of Nigeria (CBN) and Federal Ministry of Finance, Budget and National Planning has set up a fund to help mitigate the effects of the pandemic on businesses. The fund, which is a N50 billion Targeted Credit Fund (TCF), will be financed through the Micro, Small and Medium Enterprises Development Fund (MSMEDF) and disbursed by the NIRSAL Microfinance Bank (NMFB).
Who is Eligible for this Fund?
The fund is targeted at households and micro, small and medium enterprises (MSMEs) whose activities have been adversely affected by the COVID-19 pandemic, such businesses do not even need to have a business plan in order to participate in the funding. Businesses who have found an opportunity in the midst of this pandemic are also eligible for the fund.
How Can I Apply for the Fund?
As a fashion entrepreneur whose business has been affected by this pandemic, all you have to do to apply for the fund is submit an application to the NMFB with clear evidence of the impact of the pandemic on your business. If you are a fashion entrepreneur who has seen an opportunity in this pandemic, you’re going to need to provide clear evidence of the opportunity found.
When an application goes in, it is first reviewed by the NMFB which then passes it on to the CBN. The CBN goes through the application and send applications approved by them back to the NMFB for disbursement of funds to businesses.
What is the Interest Rate on the Loan?
For SMEs, the loan amount is determined based on the business’ activities, cash flow and industry/segment size of the beneficiary. The maximum amount that can be disbursed to such businesses is N25 million with an interest rate of 5% per annum up until February 28, 2021, after which interest rates will be reverted to 9% per annum.
What is the Loan Tenure?
Those looking to use this funding for opportunities provided by the COVID-19 have a maximum of 1 year to pay back the loan with no option of rollover. As concerns those who seek long-term loans, they will have 3 year to pay back with a 1 year moratorium.
What is Acceptable as Collateral?
Collateral acceptable for the loan include;
- Moveableasset(s)thatisdulyregisteredontheNationalCollateralRegistry (NCR),
- Simpledepositoftitle documents, inperfectstate,
- 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.
You can apply for the scheme, which will be available till 31st December, 2024, here.
This is indeed a great opportunity for fashion entrepreneurs whose businesses have been adversely affected by the coronavirus pandemic to key into.