CBN: No Processing Fee for COVID-19 Loan Applications

The Central Bank of Nigeria (CBN) yesterday described as false news making the rounds that loan seekers and owners of small scale businesses that applied for its N50 billion special intervention fund meant to cushion the impact on the COVID-19 pandemic are expected to pay a certain amount of money.

The Director, Corporate Communications, CBN, Mr. Isaac Okorafor, who said this in a statement, yesterday also warned members of the public, particularly households and owners of small-scale businesses, to disregard any message requiring them to pay any amount to process their loan applications.

According to him, “The attention of the CBN has again been drawn to false reports in the social media circles that loan seekers and owners of small-scale businesses who apply for loans provided to cushion the effects of COVID-19 are required to pay a certain amount as an application processing fee.

“For the avoidance of doubt, there are clearly spelt out procedures for accessing the N50 billion Targeted Credit Facility (TCF) stimulus package to support households and micro, small and medium enterprises (MSMEs) affected by the COVID-19 pandemic, which is disbursed through the NIRSAL Microfinance Bank (NMFB).

“Members of the public, particularly households and owners of small-scale businesses, are therefore advised to disregard any message requiring them to pay any amount to process their applications.”
He advised prospective applicants to approach NIRSAL Microfinance Bank or the CBN branch nearest to them for clarification on the procedure for accessing any of the CBN-related loans, adding: “Any observed irregularities should be reported to the Consumer Protection Department of the CBN.”

According to the guidelines for the Special Intervention Fund, NISRAL Microfinance Bank serves as the disbursing financial institution with SMEs, households, and enterprises that have verifiable evidence of livelihood and evidence of business activities adversely impacted by the deadly virus.

The CBN in the guidelines had also listed sectors eligible for the credit facility to include agric value chain, hospitality, health, airline service providers, manufacturing/value addition, trading as well as any other income-generating activities as may be prescribed by the CBN.

The scheme, which is to be financed out of the CBN’s N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF), earmarked a maximum facility of up to N25 million for MSMEs while households can access up to N3 million based on the activity, cash flow, and industry/segment size of a beneficiary.

“Working capital shall be a maximum of 25 per cent of the average of the previous three years’ annual turnover; where the enterprise is not up to three years in operation, 25 per cent of the previous year’s turnover will suffice.

“Interest rate under the intervention shall be five per cent per annum all-inclusive up to 28th February 2021 and thereafter, the interest on the facility shall revert to nine per cent as from 1st March 2021,” it had stated

The guideline stated that collateral for the facility would include one or more of the following: “Moveable asset(s) duly registered on the National Collateral Registry (NCR), a simple deposit of title documents, in the perfectible state, Deed of Debenture (for stocks), in perfectible state, irrevocable domiciliation of proceeds, two acceptable guarantors, personal guarantee of the promoter of the business, life insurance of the borrower, with NMFB, noted as the first loss payee and comprehensive insurance over the asset.”