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Why SMEs are finding it hard to access FG’s N200bn loan for sector

Months after the federal government, through the Central Bank of Nigeria (CBN) has approved N200 billion to the refinancing/restructuring of banks’ existing loan portfolios to SME/manufacturing sector, many of Small and Medium Enterprises (SMEs) who applied are yet to even get acknowledgment from the banks.

The main reasons why SMEs fail to access the loan, according to experts include poor record keeping and inability to give details of the businesses and lack of expansion plans. These are the major reasons why small business operators always fail to access loans in Nigeria.

It would be recalled that the central bank had published the procedure for accessing the fund. According to Lesgupnigeria an online financial platform, they include businesses in any agriculture, manufacturing, cottage industries, artisanship, services, trade and general commerce, renewable energy/energy efficient products and technologies; other income generating projects as may be prescribed by the CBN.

By the specification of the new facility for SMEs, CBN said applicant can get loan of up to N500,000 for micro-business and N50 million for SME.

However, a borrower is expected to meet the following criteria to be eligible including a wholly-owned and managed Nigerian private limited company registered under the Companies and Allied Matters Act of 1990; a legal business operated as a sole proprietorship and a start-up company with satisfactory cash flows indicating a fixed asset cover ratio of 100:150.

Others include a franchise; have no non-performing or delinquent loans with any financial institution; be a member of the Organised Private Sector bodies/associations such as Nigerian Association of Small & Medium Enterprises (NASME), the Manufacturers Association of Nigeria (MAN), etc.; have a clear business plan; provide up-to-date records on business operations, if any; and satisfy all requirements specified by a participating bank.