Did you know that MSMEs (Micro, Small and Medium Enterprises) make up 84% of total jobs in Nigeria? SMEs in Nigeria are major drivers of innovation and growth in the Nigerian economy. According to the Ministry of Industry, Trade, and Investment, Nigeria has over 37.07 million micro, small and medium-scale enterprises (MSMEs). The ministry claimed that MSMEs account for about 48.5 percent of the total GDP in Nigeria. So what is an MSME?
MSME (Micro, Small and Medium Enterprises) are generally referred to as businesses with up to 250 employees. In Nigeria;
· Micro Enterprises comprises of 1 to 9 employees.
· Small Enterprises comprises of 10 to 49 employees.
· Medium Enterprises comprises of 50 to 249 employees.
Are you a new or existing company in need of funds to expand your business using brand new equipment or technology? Ever heard of the BOI Loans?
In this article we will be educating you on all you need to know about BOI Loans in Nigeria. We will be defining what a BOI Loans is, take you through the steps of applying for this loan as well as inform you on the collateral requirements.
What is BOI Loans?
The Bank of Industry (BOI) is a development finance institution focused on giving loan credit facilities to industrial equipment. The bank of industry targets businesses that are involved in manufacturing and processing activities. They target sub sectors like Agro Processing, Information technology, Solid minerals, Creative industry and Oil and Gas.
The Bank of Industry is the largest and oldest form of development finance institutions operational in Nigeria today.
The BOI Loans is a loan provided by the federal government for the establishment of Large, Medium and Small projects in Nigeria. It is also provided to already existing enterprises for the expansion and diversification of their business.
These loans are not given out to the borrowers, but to the suppliers of the equipment the loan application is for. If perhaps you are into the production of agricultural goods and you need equipment to handle the processing, the BOI will issue out the loan to the supplier of the equipment.
The BOI Loans provides loans starting from 5 million naira for SMEs in Nigeria. However, loans lower than 5 million are provided through schemes and funding platforms in collaboration with the state government.
Requirements for Micro Enterprises
- Formal Letter of Application
- Photocopy of Certificate of Registration
- Constitution and Bye-laws of Cooperative Society (only for Cooperative Societies)
- Business Plan
- Four (4) passport photographs of the Promoter (business owner)
- Photocopy of the Current Tax Clearance Certificate of the Business Enterprise and the Promoter.
- Photocopy of International Passport or Driver’s License or National Identity Card of the Promoter.
- Bank Statement of the Business Enterprise for a period of one (1) year (for an existing business)
- Sales record for six (6) months and operating expenses.
- Evidence of availability of Collateral Security (e.g. landed property, Individual Guarantor, etc.)
Requirements for Small, Medium & Large Enterprises
- A formal letter of application
- Photocopies of Certificate of Incorporation and Certified True Copy of Memorandum and Articles of Association of the Company.
- Photocopies of the Certified True Copy of Forms C02 and C07.
- Business Plan.
- Photocopy of title documents to project site (Statutory Certificate of Occupancy or Deed of Assignment).
- Photocopy of Title Documents (Statutory Certificate of Occupancy or Deed of Assignment) to the Collateral Security. (This must be a landed property in an urban center).
- Approved Building Plan (If new building).
- Bill of Quantities or Contractor’s Estimate of Cost to be incurred on Factory Building.
- Valuation Reports on Factory Building(s) (for existing projects) and property offered as Collateral Security.
- Quotations for items of plant and machinery (at least 3 quotations from different sources).
- Three (3) years most recent Audited Accounts of the company (for existing company).
- Three (3) years most recent Tax Clearance Certificate for the Company and two (2) Directors.
- Four (4) recent passport photographs of each of the two Directors and the Company Secretary.
- Evidence of appointment of a Company
The category of businesses qualified to obtain the BOI Loans include:
- Small, Medium and Large scale enterprises
- New or existing companies seeking to expand, diversify or modify their business
- Borrowers whose management ability, financial situation, character and reputation are undeniable.
- Clients with capacity to meet loan repayments
- Borrowers with no record of unpaid loans to any other development finance institution or banks.
Collateral Requirements for SMEs in Nigeria
The Bank of industry requires that you pledge some assets to secure you loan. However, the Bank also accepts other forms of security. The types of security that the Bank of Industry accepts include:
· Legal mortgage on a landed property.
· The property must be duly registered with a Certificate of Occupancy
· Debenture on assets of the company
· Bank Guarantee
· External Guarantors with Notarized statement of Net worth for loans below N10 million.
Interest Rates on BOI Loans
For SMEs in Nigeria, there is no restriction to the amount that can be accessed. The interest rate is 10% every month. For cooperatives, however, the largest sum that can be accessed is 10 million naira without collateral but rather, to make a deposit of 10% of the sum to be gotten.
How to Apply for the Loan
1. Visit the BOI website or any of the bank branches in your geopolitical zone.
2. Collect the bank’s form
3. Complete the BOI Questionnaire
4. Submit the forms
5. Download copies of the finished forms
Conclusion
The Bank of Industry is one of the most reliable ways of funding your business, whether it is a startup or existing business. With this article, we hope you have gotten some very useful information to get you started!
Have any questions on SMEs in Nigeria? We would love to hear from you. Drop them at the comment section below.