The Nigerian government has worked to provide a favorable climate for agriculture by providing Agric loans. The rise of the agrotech business in recent years has opened up agricultural opportunities to a wider range of persons eager to invest in the area.
Despite government initiatives and improved investment prospects in the agricultural sector, many farmers and investors in Nigeria continue to face difficulties in obtaining agricultural loans. Given this issue, we’ve listed a few options for obtaining an agricultural loan in Nigeria below.
1. Central Bank Of Nigeria (CBN) Loan
The CBN provides low-interest loans to present and prospective farmers. The CBN has injected over $100 billion into the agricultural sector over the last decade and made the funds available to all states through the Bank of Agriculture and other commercial banks.
The CBN provides these types of loans to both farmers and investors.
2. Commercial Agriculture Finance Scheme
The Commercial Agriculture Finance Scheme was formed in 2009 to help the agricultural sector develop faster, improve national food security, and lower the cost of agricultural credit. Many commercial banks participate in this program and offer loans at a maximum interest rate of 9%. State governments can also use the money to provide on-lending to farmers.
You must consume the following produce to be eligible for this agricultural loan:
Livestock, cash crops, food crops, poultry, aquaculture, agrochemical processing, marketing, and storage, as well as farm input suppliers.
3. Real Sector Support Facility
This is another initiative of Nigeria’s Central Bank. Large firms with starting and expansion finance needs of N500 million to N10 billion would be supported by the Facility.
The agriculture sector is one of the real industries being targeted, and farmers and investors can benefit from this.
The loan can be repaid over a period of up to 15 years, with a low interest rate. The following are the fundamental prerequisites for obtaining this form of loan:
- A business plan
- Certificate of incorporation
- Apply formally
- Memorandum and Article of Association
4. Micro SME Development Fund
The CBN established the MSME Development Fund on August 15, 2013, with a share capital of N220 billion. 90% of the fund was made available at a 2% interest rate to Participating Financial Institutions (PFIs) for on-lending to MSMEs at a maximum interest rate of roughly 9% per year.
Farmers and investors in the agriculture industry are among the fund’s eligible recipients. So, if you’re looking for a financing facility to assist you expand your agribusiness, this could be a good option.
5. Bank of Agriculture (BOA)
The Bank Of Agriculture, formerly known as the Nigerian Agricultural Bank and founded in 1972, has changed in its service to the agricultural industry over time. Nigeria’s federal government owns it, and the Federal Ministry of Finance is in charge of it. CBN is a financier.
You’ll need the following items to qualify for this loan:
- Present a comprehensive business plan.
- Have a 20% down payment on the loan on hand.
- You must establish a six-month relationship with the bank in terms of putting payments into your account, no matter how small. You must also show proof of physical collateral.
Bank Of Agriculture Products
- Micro Credit loans
- Grow and earn more-(gem)
- Loan application for SME (Individuals)
- Loans from commercial banks:
6. Private And Non-government Organisation Commercial Banks
Commercial banks are another source of money, and they can provide you with loans based on your preferences. Long, short, and medium-term loans are included into various products. These loan products, in general, have diverse criteria, some of which are specific to the organizations that offer them. First Bank, Access Bank, Stanbic IBTC, Union, and UBA are examples of such banks.
The basic prerequisites for receiving a loan from any commercial bank vary, and they include, but are not limited to, the following:
- You should have an account with at least one of them.
- You’ll need to fill out an application for the loan and then present it.
- You should have paid a ten percent down payment on your loan.
- It will be necessary to produce collateral.
- Give a comprehensive business strategy as well as a viability analysis.
If you are a member of a co-operative, you have a good possibility of winning a grant from a bank.
The following are the requirements:
- Become a member of one of the co-ops.
- Apply to the bank using the cooperative’s letterhead, which has been added by one of its representatives.
- You must offer a company plan viability study.
Here are some suggestions if you’re not sure which cooperative to join:
- All Farmers Association of Nigeria (AFAN);
- Youth Empowerment in the Agricultural Program (YEAP);
Farmers and agricultural SMEs can also get loans from lenders who specialize in agriculture loans to assist them grow their businesses.
These options for obtaining agricultural loans in Nigeria will be ideal for Nigerians looking to establish a new agricultural business or grow an existing one.