Thursday, 25 April 2013

BUSINESS LOAN OPPORTUNITY. How to Access Federal Government Loans and Grants

STEP-BY-STEP GUIDE  TO  ACCESSING LOAN  FROM  NATIONAL  ECONOMIC  RECONSTRUCTION  FUND     If  there’s any peculiar hurdle most micro, small and medium [MSMEs] business owner struggle to cross, it is that of insufficient funds. For some business owners, it is fund to jump start a business while for others it is fund to take their business to the next level.
The issue of business funding has led many to abandon their entrepreneurial aspirations. Those who have dared have experienced snail speed growth because of lack of or little knowledge of how to access funds that could aid their bail out.

    Most business owners are very much aware of some fund sources like personal savings, friends, money lenders, contributions, co-operatives etc. Also there are those who are aware of banks but wouldn’t dare because of absurd interest charge. Unfortunately, little is known of fund sources from government.
    However, in a bid to offer a life- line, the federal government has set apart a funding platform where small business owners like you, can access collateral- free-loan. The government agency responsible for this is the NATIONAL ECONOMIC RECONSTRUCTION FUND [NERFUND].

  Establishment of  NERFUND

      NERFUND as it is generally referred to was established by degree No. 2 of 1989 which was the NERFUND act, cap 254 1990 laws of the federation. NERFUND is an intervention scheme established to ensure the speedy rise of micro enterprises in the country through the provision of medium long term loans.
     The real intention of the government is to harness the large army of Nigerian businessmen and women who merchandise imported consumer goods and re-orientate them to embark on local manufacture of these goods.  The agency is presently headed by Alhaji Maina Gimba.
     How genuine is the NERFUND loan scheme?
     NERFUND   assisted projects for individuals and business groups are evident in all 36 states in Nigeria.
      Earlier in February 2011, the honourable minister of finance, Dr. Olusegun  Aganga   gave approval to the  second  set industrial project for funding  under  NERFUND scheme.
   The minister gave his nod to the setting up of 415 micro enterprises worth a total investment cost N998.2 million. The current number brings the total number approvals since the resumption of the operation in 2009 to 623 projects valued at a total investment cost N1.255 billion. The business groups/ individuals who are beneficiaries are listed in NERFUND webites. 


    NERFUND’s mandate is actually, to make long and short term  micro-credit loans  available to individual  [skilled men and women, retirees, young  graduates etc.] and business  groups involved mainly in manufacturing, mining ,quarrying,  agro-allied, industrial  support services, equipment  leasing and other  ancillary  service. Such SMEs must be wholly Nigerian owned. The grand objectives are to increase quantum of goods and services available for local consumption and export, provide needed employment, expand local production base and add value to the economy.


Every Nigerian business qualifies for NERFUND funding if it is engaged in manufacturing, agro-allied project, industrial support services, and ancillary projects provided that:
A.The enterprise or project is wholly owned by Nigerians.
b. The enterprise or project must fall into micro, small or medium scale.
c. In the case of manufacturing enterprise or project, at least 60 percent of its raw material s and other production inputs must be locally sourced.
d. Intended project or business is not into merchandising or primary agriculture.
E.Your business or project must be viable and must have potential to give employment.
f. Fund can be for business expansion, diversification, purchase of fixed assets like machinery etc.
The truth is preference is given to enterprises or projects located in the rural areas.

       What you must put in place to access NERFUND loan

  • You must have a registered business name [an enterprise for a micro credit loan or limited liability company for an SME facility].
  •  A simple feasibility report showing viability of your business or project is required for a medium scale enterprise and a simple business plan for a small business operator.
  •  You must present pro forma invoice stating the price and source of proposed plant and machinery.
  • Be able to contribute up to 10% equity of loan requested. Intended project shall not be into merchandising or primary agriculture.
  • Provide site plan for the location of the project.
  • Submit sources and quotation of raw materials  expressed in units
  • Applicants should be ready to comply with other conditions as may be prescribed by NERFUND

          Applying for loan 

Under  the NERFUND scheme, any eligible Nigerian who falls under  the micro, small and medium  scale [MSMEs] can apply  directly, either  as  individuals, business  group, cooperatives  through any  of the  partner institutions  with which the fund signed an MOU.
Such institutions could be NDE, SMEDAN, and National Board for Technology incubation [NBTI], Entrepreneurship Development Centres [EDCs] etc. The reason for these listed preconditions is that they give credibility to your application. In the case of default of loan repayment, NERFUND holds the group accountable than an individual. Small registered business groups or associations of 10 members can jointly apply for a loan and when the loan is approved, the money is shared equally.

       Amount and Tenor that NERFUND can give Out

The agency has capacity to disburse loans to the tune o f between N100, 000 and N5 million.  The micro credit scheme shall have a maximum tenor of three [3] year s inclusive of 6 to 9 months moratorium. The interest rate chargeable on the facility would be 2% above the monetary policy rate [MPR], inclusive of administration expenses.

      Disbursement of loan

              Funds could only be disbursed after the project is approved and all conditions preceding draw down are fulfilled. This will be done at the discretion of the NERFUND.  The NERFUND will release approved loans directly to the suppliers of the equipment, while the working capital may be released to the vendors of the raw materials or directly to the beneficiaries.

       Repayment Duration Requirement

           As earlier stated, the micro credit scheme shall have a maximum tenor of three [3] years inclusive of 6 to 9 months. Loan  applications after  appraisal are subjected to consideration  by the interim  Management  Committee [IMC ] following  which they are presented  to  the honourable  minister  of finance for  final approval.
        Once you pick up the loan form, you have 30 days to get the necessary documents and submit to NERFUND office. NERFUND can be contacted for details on how to pick up the loan application form.
 NERFUND office:

 plot 1340, Aminu Kano Cresent, Wuse II, P.M.B 319, Garki, Abuja. Website : www.
Email: [email protected] .ng     tel:  09-6705604, 6725040, 07026106306.
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