In view of the myriad of challenges facing operators in Nigeria’s fashion industry, including inadequate access to credit facilities, the Bank of Industry BoI) has unveiled a ₦1 billion fashion fund aimed at supporting fashion entrepreneurs.
The special fund is specifically designed to benefit those involved in the production and marketing of fashion items such as clothes, handbags, shoes, jewelry/accessories etc. It will also support “initiatives that can improve financial literacy and industrial entrepreneurship development for players in the fashion industry.”
The BoI fashion fund, which comes in the form of loans, also targets three categories of fashion entrepreneurs namely retailers, wholesalers, and distributors.
According to a notice that was posted on the Bank of Industry website, only companies owned/promoted by Nigerians, and specifically, limited liability companies will be considered to partake in this special fund.
Below are other details about the fashion fund as sourced from BoI website
- Maximum Obligor: ₦30 million.
- Pricing fees: 1% appraisal fee, 1% commitment fee, 0.125% monitoring fee, and a 9% per annum, payable at the end of every month.
- Tenure: Maximum of five years.
- Moratorium: Maximum of 12 months (from date of loan disbursement).
- Security arrangement: Lien on stock of trade and items of equipment.
- Collateral/Support: Deposit of 5% of the loan amount in an interest yielding joint account opened by the company with a designated bank with BoI as a sole signatory, notarised Statement of net worth of two guarantors, and strong and reliable monthly net cash flows that can support monthly loan repayment at ratio 3 to 1.
- Funding: BoI Term Loan/CBN MSMEDF – 75%
- Structure: Equity – 25%