Following the damages many individuals, businesses and corporate organisations suffered in the last few months of the virulent COVID-19 outbreak, Lagosians among others have been offered an opportunity to benefit from the Federal Government’s N50bn Targeted Credit Facility to boost the gross domestic product as well as upgrade the health system.
The N50bn Credit Facility, which is a type of loan made in a business or corporate finance context, is aimed at resuscitating businesses for economic boom in response to COVlD-l9 outbreak and spillovers.
Beneficiaries include: households and small and medium sized enterprises (SMEs) that have been particularly hard hit by COVID-19.
The COVlD-19 pandemic, according to reports, has disrupted global supply chains, sharp drop in global crude oil prices, turmoil in global stock and financial markets, massive cancellation of sporting and entertainment event, lockdown of large movements of persons in many Lagos among others, and travel bans/restrictions across critical air routes in and outside the state.
Of course, because the outcomes have had severe consequences on households‘ livelihoods and business activities, resulting from drop in global demand, declined consumer confidence and slowdown in production, the credit facility was created to cushion the adverse effects on households and MSMEs.
*Criteria for eligibility* Those qualified for the credit facility are: households with verifiable evidence of livelihood adversely impacted by COVlD-19; and; existing enterprises with verifiable evidence of business activities adversely affected as a result of the COVID 19 pandemic; enterprises with bankable plans to take advantage of opportunities arising from the COVID 19 pandemic.
For households, there is access to a maximum of N3 million with a maximum working capital maximum of 25 per cent of the average of the previous one year annual turnover, (where the enterprise is not up to three years in operation)
Sectors to Benefit are:Agricultural value chain activities; Hospitality (accommodation and food services); Health (pharmaceuticals and medical supplies); Airline service providers; Manufacturing/value addition; Trading; Any other income generating activities as may be prescribed by the CBN.
Funding Scheme, according to the credit facility, would be financed from the Micro, Small and Medium Enterprises Development Fund (MSMEDF).
Participating Financial Institution
Eligible participating financial institution for the Scheme is NIRSAL Microfinance Bank (NMFB).
Collateral Requirement
The collateral to be pledged by beneficiaries under the programme shall be acceptable by NIRSAL MFB, but may include any one or more of the following: moveable asset(s) duly registered on the National Collateral Registry (NCR); simple deposit of title documents in perfectible state; Deed of Debenture (for stocks) in perfectible state.
Others are: irrevocable domiciliation of proceeds; two acceptable guarantor; personal guarantee of the promoter of the business; life Insurance of the Key Man, with NMFB noted as the First Loss Payee; and comprehensive insurance over the asset.
Principal Repayment is meant to be made on installment basis by the beneficiaries to the NMFI according to the nature of enterprise and the repayment schedule/work plan provided at the application stage.
Indeed, the creation of the credit facility shows that the federal government acknowledges and appreciates the role of SMEs in enhancing economic growth and development.
