It is almost impossible for SMEs to run without loans. Did you know that SMEs in Africa create employment as high as 80%? Africa has continued to expand remarkably as SMEs increase yearly.
The challenge, however, for most SMEs in Africa is the lack of funding and access to credit. The government in various African countries have taken measures to make credit available for SMEs in Africa through setting up programmes and creating funding initiatives. Helping SMEs in Africa is not only crucial for the continent but the global economy because it creates marketing opportunities for foreign investors.
In Nigeria, SMEs have accounted for 48% of the National GDP for the past five years and as well as providing employment opportunities. The Nigerian government has set up several funding programmes, one of which is SMEDAN (The Small and Medium Enterprises Development Agency of Nigeria).
The SMEDAN Loan
The Small and Medium Enterprises Development Agency in Nigeria (SMEDAN) was created to support the development of Micro, Small and Medium Enterprises (MSMEs) in Nigeria. It was established in 2003 following the SMEDAN act. It is mandated to develop MSMEs, provide funding, help in building capacity and implement favourable policies for the growth of MSMEs.
SMEDAN carries out its activities at its headquarters in Abuja as well as other offices across the country. Registering with SMEDAN provides lots of benefits. Some of which are: a conditional grant scheme of up to N50,000, business insurance, a SMEDAN unique identification number as well as access to training and empowerment programs.
It is important to note that SMEDAN does not directly provide loans to businesses but acts as a middleman that connects MSMEs with loan providers. SMEDAN primarily sticks to entrepreneurship training and disburses loans through other loan providers like Bank of Industry (BOI), Bank of Agriculture (BOA), Central Bank of Nigeria, etc. SMEDAN can also assist businesses in getting loans from the private sector like commercial banks, microfinance houses and finance houses.
Who Can Apply for the SMEDAN loan?
Every small business in Nigeria can apply! Individuals and groups can apply, as well.
SMEDAN Loan Requirement and Collateral
SMEDAN does not directly disburse loans but loan providers. Collateral and requirements differ. However, SMEDAN emphasises on minimum or no collateral.
How to get a Loan from SMEDAN
- The first step is to visit the credit information portal. To visit this portal, click here.
- Make a selection of the type of loan you want. There are four types of loans accessible on the site. These loans include Personal loans for helping individuals, Business loans for assisting businesses, Mortgage loans to help in assisting properties and Credit card loans.
- You would need to build your profile and provide your information. This will include the purpose of the loan, your age, employment status and how much you need.
- Once the form is filled, click on “check availability” to get a list of available loan options.
- Lastly, apply for any of the loans available and get started.
The interest loans on these loans vary because they are from different loan providers. However, SMEDAN prioritises loans with small interest rates.
Loan Application Checklist
The following is considered before a loan is approved:
- Completed application form
- Cash flow budget
- Business plan
- Certificate of Incorporation
- A valid means of identification
- Proof of address
- Details of collateral offered (if any)
The SMEDAN credit information portal is only available in three states in Nigeria; Lagos, Abuja and Kaduna as it is still in its early stage. You can visit the SMEDAN credit information portal to get started now. You can register your business with SMEDAN and get access to N50,000 grant. Check out our article on How MSMEs can register with SMEDAN to get started. Do you have questions or comments on SMEs in Africa? Kindly drop them in the comments section below!