Business Finance Loans

How To Secure Federal Government, Private Grant and Loan In Nigeria

Federal Government business loans may be a viable option for Nigerian entrepreneurs — looking to start, grow and develop a business.

The Nigerian government has several different initiatives in place that assist both small and large businesses with funds— although the focus is placed on smaller businesses.

The government concentrates on small and medium-sized enterprises (SMEs) for a number of reasons. One of the main reasons is, that the SME sector is a key ingredient for a healthy market economy. SMEs make up the vast majority of the total number of businesses in Nigeria. Accordingly, they make big contributions to value-added and employment.

Almost everyone starting a new business venture is looking for money to get started. In Nigeria, one of the easiest and cheapest ways to get funds for your business is by applying for small business grants. But unfortunately, there aren’t actually that many Nigerian federal or provincial government grants available for small businesses.

Unlike business loans, grants don’t need to be repaid, so there’s no worry over term length, interest rates, APR, or refinancing. You just need to qualify, and boom—free money. 

The FGN helps fund businesses through a variety of government-backed organizations or agencies including:

  • Bank of Agriculture (BOA)
  • Bank of Industry (BOI)
  • Central Bank of Nigeria (CBN)
  • Development Bank of Nigeria (DBN)
  • Nigerian Export-Import Bank (NEXIM)
  • Small and Medium Enterprises Development Agency of Nigeria (SMEDAN)

Based on the agency and loan product on offer, FGN loans come with a variety of different interest rates and repayment plans.

Funding and types of loans are available through government agencies and private individuals.

Also Read: Access Bank DBA Lite Account

How TO Secure Federal Government, Private Grant and Loan In Nigeria

Tony Elumelu Entrepreneurship Program (TEEP)

The Tony Elumelu Entrepreneurship Programme (TEEP) is a yearly program launched by one of Nigeria’s business tycoons Mr. Tony Elumelu via the Tony Elumelu Foundation (TEF). The program launched in 2015 is aimed at providing 10,000 USD seed funding for entrepreneurs across Africa. Every year, the program selects 1,000 entrepreneurs across Africa from a pull of over 50,000 applicants.

Every year, the program selects 1,000 entrepreneurs across Africa from a pull of over 50,000 applicants. Each application is carefully reviewed by business experts in the industry and winners are selected based on market feasibility, clear financial models, and a capable team to run the business. Each program cycle begins with an application process opened from January 1st until March 1st.

Eligibility Criteria

  • Business must be based in Africa
  • Business must be for-profit
  • Business must be 0-3 years old
  • Applicants must be at least 18 and a legal resident or citizen of an African country 

YouWIN Connect Nigeria

YouWiN! Connect is a multimedia program of the Federal Ministry of Finance. The program aims to promote entrepreneurship, job creation, and wealth via enterprise education for young Nigerians. Nigerian entrepreneurs will enhance their productivity through relevant SME development tools. These ventures are promoted by young Nigerians in target sectors that align with the government’s objective of diversifying the economy and promoting competition and transparency

The first edition, tagged YouWin!1, was initiated to sensitize aspiring entrepreneurial Youth on job creation by funding their business plans. The second edition (YouWin!2) was a Mono-gender version, with Women below the age of 45 years as the target participants. It rewarded over 1200 youths. The third edition (YouWin!3) was Poly-gender, with a record number of awardees (over 2500 Youth).

Eligibility Criteria 

  • Applicants must be a graduate of a higher institution.
  • Applicants must be between the ages of 18 and 40.
  • Applicants must be Nigerians and residents in Nigeria.
  • Applicants’ businesses must be residents of Nigeria.
  • Applicants must be able to communicate effectively – speaking and writing – in English.
  • Applicants must be willing to attend all training and mentoring exercises organized by the program.
  • Applicants must not be an employee of the Nigerian Civil Service.
  • Previous YouWiN awardees are not eligible to apply.

Bank Of Industry (BOI)

The Bank of Industry (BOI) recently launched a youth empowerment program for young and talented entrepreneurs looking to venture into various sectors of Nigeria’s economy. The Youth Entrepreneurship Support (YES) Program is BOI’s effort at addressing the worrisome phenomenon of youth unemployment in Nigeria by building the capacity of the youths and funding their business ideas.

The YES program is aimed at equipping young people with the requisite skills and knowledge to be self-employed by starting and managing their own businesses. The YES Programme comprises of;

Eight (8) weeks of intensive online Entrepreneurship and Business Management training which has the ability to test participants’ understanding and track their progress.

Five (5) days of in-class Entrepreneurship and Business Management training.

Technical skills training in partnership with the various technical training and vocational institutes in the country.

Financing the businesses by BOI under its SME Cluster initiative in consonance with the United Nations Economic Commission for Africa’s commodity-based Industrialization Strategy.

Eligibility Criteria

  • The applicant must be a Nigerian.
  • Must have a viable business idea within the 40 identified clusters that are operated, or will operate in Nigeria.
  • Must be within the age limits of 18 and 35. (proof of identity: International passport/Driver’s License/National ID/Voters card required).
  • Must possess a minimum educational qualification of Ordinary National Diploma (OND).
  • Applicants must be able to carry out the application process online.

Some of the BOI products and services include:

  • ASM Fund
  • Bottom of Pyramid
  • Fashion and Beauty Product
  • Light Manufacturing
  • Food and Agro Commodity Processing
  • Graduate Entrepreneurship Fund
  • Nollyfund
  • On-Lending to Commercial Banks
  • Solar Energy
  • Youth Entrepreneurship Support (Yes) Program
  • Youth Ignite 

Diamond Bank BET Programme

Building Entrepreneurs Today (BET) is a program designed to support budding entrepreneurs. Every year, 50 entrepreneurs are selected from the pool of the numerous applications received and these entrepreneurs undergo six (6) months of intensive entrepreneurial/business training. At the end of the training period, the Top Five (5) Entrepreneurs are awarded financial grants as seed capital for taking their business to the next level.

The BET Program has witnessed 6 editions with over 25 winners and over 150 business supports. The sixth edition of the program awarded Three Million Naira (N3,000,000) grants to the top 5 finalists to take their businesses to the next level.

AYEEN Financial Grants

Africa’s Young Entrepreneurs (A.Y.E) is committed to empowering young entrepreneurs across Africa by creating platforms that facilitate intra-trade on the continent. We are dedicated to developing the next generation of outstanding African entrepreneurs, who will shape the economies and political landscapes of their home countries.

AYEEN is looking to finance small businesses in various sectors of the economy. Winners would be awarded their respective prizes without any stake for the organizers. Although, the business owners and businesses will be duly monitored for a period of one year. The only criteria for the program are that the applicant must be a Nigerian and the business must be located in any of the 36 states of the country.

 Lagos State Entrepreneurs Trust Fund (LSETF).

The Lagos State Employment Trust Fund (LSETF), was established by The Lagos State Employment Trust Fund Law 2016 to provide financial support to residents of Lagos State, for jobs, wealth creation, and to tackle unemployment. LSETF serves as an instrument to inspire the creative and innovative energies of all Lagos residents and reduce unemployment across the State. The Fund has the mandate to directly invest ₦25Billion in helping Lagos residents grow and scale their Micro Small and Medium Enterprises (“MSMEs”) or acquire skills to get better jobs.

As the brainchild of Governor Akinwunmi Ambode, the LSETF is committed to financially supporting a target of 100,000 MSMEs by 2019, creating 300,000 direct and 600,000 indirect jobs as a result. The mission is well underway with a total of 705 beneficiaries who have received support to date.

Bank of Agriculture (BOA)

The Bank of Agriculture is a government-sponsored bank. It gives credit and other forms of funding — to farmers and related agribusinesses.

Some of the BOA products and services include:

  • Agro-Processing Facility
  • Direct Credit Product
  • Equipment Leasing Product (ELP)
  • Export Finance Facility
  • Grow and Earn More (GEM)
  • Haulage Credit Facility
  • Hides and Skin Revival Credit Facility
  • Input Procurement Credit Facility
  • Inventory Credit Facility
  • Large Credit Product
  • Ranching Development Credit Facility
  • Sugar Revival Credit Facility
  • Youth Agricultural Revolution in Nigeria (YARN)

Central Bank of Nigeria (CBN)

The Central Bank of Nigeria, through a number of development finance operations, provides a variety of loans to businesses across the country.

Some of the CBN products and services include:

  • Anchor Borrower’s Programme (ABP)
  • Commercial Agriculture Credit Scheme (CACS)
  • Creative Industry Financing Initiative
  • Credit Support Scheme For The Healthcare Sector
  • Maize Aggregation Scheme (MAS)
  • Micro, Small, Medium Enterprises Development Fund (MSMEDF)
  • Non-Oil Export Stimulation Facility (NESF)
  • Paddy Aggregation Scheme (PAS)
  • Real Sector Support Facility (RSSF)

 Development Bank of Nigeria (DBN)

The Development Bank of Nigeria is a wholesale financial institution. The DBN has the goal of expanding the access to credit for micro, small and medium-sized enterprises (MSMEs).

Some of the DBN products and services include:

  • Wholesale lending
  • Partial credit risk guarantees
  • Capacity building — the DBN Entrepreneurship Training Program

Nigerian Export-Import Bank (NEXIM)

The Nigerian Export-Import Bank is mandated to help facilitate the export of goods and services — from Nigeria. Businesses involved in export-related activities are eligible for a NEXIM loan.

Some of the NEXIM products and services include:

  • Direct Lending Facility
  • Foreign Input Facility
  • Local Input Facility
  • Nigerian Creative Arts and Entertainment Industry Loans
  • Small and Medium Enterprise Export Facility (SMEEF)
  • Stocking Facility (SF)
  • Women and Youth Export Facility (WAYEF)
  • Export Development Facility (EDF)
  • Nigeria-Africa Trade and Investment Promotion Program (NATIPP)
  • Rediscounting and Refinancing Facility (RRF)
  • Export Credit Guarantee Facility
  • Export Credit Insurance Facility

 Small and Medium Enterprises Development Agency of Nigeria (SMEDAN)

SMEDAN is tasked with stimulating, monitoring, and coordinating the development of MSMEs in Nigeria. As part of its duties, SMEDAN also helps MSMEs get access to credit and other forms of funding.

Some of the SMEDAN products and services include:

  • Automotive (Component Parts Fabrication) Empowerment Scheme
  • Commercialization, Empowerment Initiative (for ICT)
  • Conditional Grant Scheme (CGS)
  • Enterprise Network Initiatives
  • Financial Empowerment for MSMEs
  • Garment and Textile Cluster Growth Support Scheme
  • Hewlett Packard – Learning Initiative for Entrepreneurs (HP – Life)
  • Leather Cluster Enterprises Scheme
  • MSME Market Linkage Initiative
  • One-Local Government-One-Product (OLOP)
  • SMEDAN Cloud for MSMEs
  • Waste to Wealth Cluster Development and Enhancement Scheme
  • Young Business Owners in Nigeria (Y-BON)

Qualifying for a Federal Government of Nigeria loan

Anyone in Nigeria is eligible for a Federal Government of Nigeria loan — as long as they either have a business or want to start one.

Depending on the loan you are applying for, your business does not necessarily have to be registered with the Corporate Affairs Commission (CAC) — in order to qualify. However, where your business is not registered, you will usually be required to register as part of the funding program or initiative in question.

Further, based on the type of business you have, you may also need to be registered with the National Agency for Food and Drug Administration and Control (NAFDAC), the Nigerian Export Promotion Council (NEPC), and the Standards Organization of Nigeria (SON).

Both limited liability companies and registered business names are eligible for an FGN loan. Typically, the amount that you can apply for, as a limited company, is much greater.

For some government loans, your business needs to have some trading history i.e. you must have been operating for some time. Other FGN loans, do not have this requirement — so startups are encouraged to apply.

Loans from the Federal Government, are managed and disbursed by several different government agencies. Each agency will have its own specific requirements or lending criteria.

Accordingly, your business may not be suitable for every financing scheme and initiative — run by the FGN. For example, if your business does not export goods or services — you cannot get a NEXIM loan. Likewise, if your business is not involved in agriculture — a BOA loan is off the table. And so on and so forth.

Depending on the credit facility in question, government loans may be used for a variety of things such as — leasing equipment, buying stock, or simply as a startup loan.

Loans for things such as buying real estate — are normally not supported.  Click on the link to learn how to apply for a loan for your business

Also Read: Types Of Zenith Bank Accounts

Conclusion

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About the author

Mathias Amodu

Mathias Amodu, NIRA Award winner (Youth Dev), Quickteller Ambassador, Web designer, Blogger, son, and a business Man.
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