We’ve said severally how difficult it is for small business owners to access financing, but getting the right information to know the right credit facility for SMEs is also very important.
Do you know that even when the loans are available, the eligibility requirements and the interest rates by the commercial banks are not always favourable?
But we hope that the recent CBN Guidelines for Credit Guarantee Companies would see SMEs gaining more access to funding just as we pointed out at: https://infomediang.com/msmes-benefits-cbn-guidelines-for-cgcs
One of the steps the Federal Government of Nigeria took was the establishment of the Development Bank of Nigeria (DBN).
Objectives of DBN
1) To remove the difficulty faced by Micro, Small and Medium Scale Enterprises (MSMEs) in Nigeria in accessing credit facility
2) To provide partial credit guarantees
3) To provide technical assistance to eligible Participating Financial Institutions
Unfortunately, the awareness about the existence of DBN is poor as most of the MSME owners we asked said they’ve never heard about the bank and what they do.
So, how can SMEs access some of the credit facilities of the Development Bank of Nigeria?
Who Can Access DBN Loan?
- All existing MSMEs in productive enterprises
- Startup SMEs in productive activities
The good thing about this is that DBN will be providing funding and risk-sharing guarantees through Participating Financial Institutions (PFIs), who will in turn undertake on-lend to end beneficiaries.
Follow the steps below to apply for the credit facility:
Step 1: Visit one of the Participating Financial Institutions (PFIs) near you, some commercial, Microfinance Bank, and Development Finance Institution (DFI) have the form available in their branches spread across Nigeria
Step 2: The PFI assesses your application and loan purpose.
Step 3: If your business gets a positive assessment, the bank on your behalf sends your score to DBN
Step 4: DBN disburses the funds to the bank through which you applied.
Interest Rate:
The interest rate of depends on the PFIs through which you submitted your application, though it’s a double-digit rate.
It’s more favourable when you applied through Deposit Money Banks (DMBs) like GTCO, FCMB, Sterling, Providus, and Union bank among others.
If you submitted your loan application through microfinance banks and other financial institutions (OFIs), you’d pay more interest.
- For DMBs, the interest rate is 12.5% per year.
- For MFBs and OFIs, it is 16.5% per annum
What does this mean?
If you applied and received a loan of N2,000,000 via the DMBs, you’d pay N250,000 as an interest rate in 12 months
If you get the same DBN N2,000,000 loan through a microfinance bank, you’d pay N330,000 as an interest.
Repayment Mode:
- Up to 10 years
- Moratorium period of up to 18 months
Below is a list of banks – Commercial Banks, Microfinance Banks, Development Finance Institutions (DFIs) and other Financial Institutions – where you can apply get DBN loan:
- GTBank
- Astra Polaris MFB
- Baobab Microfinance Bank
- Access Bank Plc
- Ecobank Nigeria Bank Plc
- Fidelity Bank Plc
- HASAL Microfinance Bank
- Infinity Microfinance Bank Ltd
- Wema Bank Plc
- Providus Bank
- Stanbic IBTC Bank Plc
- Infinity Trust Mortgage Bank
- La Fayette Microfinance Bank Limited
- LAPO Microfinance Bank Ltd
- FCMB Ltd
- First Bank Nig Ltd
- Parallex Microfinance Bank
- Regent Microfinance Bank
- Mainstreet Microfinance Bank Ltd
- Microvis Microfinance Bank
- NPF Microfinance Bank Plc
- Seedvest Microfinance Bank
- Stanford Microfinance Bank
- Trust Microfinance Bank
- AB Microfinance Bank Nigeria Ltd
- Accion Microfinance Bank Limited
- Addosser Microfinance Bank
- Davodani Microfinance Bank
- FSDH Merchant Bank
- Bosak Microfinance Bank
- Sterling Bank Plc
- Union Bank of Nig Plc
- Jubilee Life Mortgage
Final Thought
It is imperative to note that DBN loan isn’t available in all Nigerian banks. The above banks applied to be participating partners.
All the best as you take another step to boost your business with a friendly credit facility.
