What you need to know about BOI’s SME loans

The Bank of Industry offers different loan facilities to both Small and Medium Enterprises (SME) and Micro, Small and Medium Enterprises (MSMEs) among others.

While some of the loans are a Federal Government of Nigeria initiative, they are designed to provide subsidized loans at 9% per annum, and an all inclusive interest rate.

Here are 8 things to know about BOI’s loans

Mandate: The bank of industry targets businesses that engage in manufacturing and processing activities. Target sub-sectors include Agro-processing, Solid Minerals, Information Technology, Oil and Gas and Creative Industry.

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Entities that BOI Finances: Bank of industry only finances enterprises or companies and not an individual person or group of persons. The company/enterprise must be duly registered and will be required to provide the registration number for a Limited Liability Company or business name for an enterprise before you can proceed with your application.

Items that BOI can finance: The bank is principally set up to finance industrial equipment used in manufacturing. The Bank does not finance land and building which are expected to be financed from equity. You can also access your working capital requirements from any of the ten (10) SME friendly banks that Bank of Industry partners with at Monetary Policy Rate of 6 percent.

Mode of disbursement: The bank does not disburse the loan to the borrower in cash but to the vendors and suppliers of the equipment that the loan application is for.

Amount that can be financed by BOI: BOI’s loan support to the SME starts from N5 million. However, loans below N5 million are provided on BOI’s matching fund platform which is operated in collaboration with various state governments and on their Bottom of the Pyramid (BOP) scheme which is operated through MicroFinance Banks.

Collateral requirements: As part of the fiduciary responsibility in managing funds under its care, Bank of industry requires that you pledge some assets to secure your loan. However, the Bank also accepts other forms of security subject to adequate coverage of the loan being provided to you. Types of security the Bank accepts include:

• Legal mortgage on landed property and the property must be duly registered with a Certificate of Occupancy;
• Debenture on assets of the company;
• Bank Guarantee;
• External Guarantors with Notarized statement of Networth for loans below N10 million.

Also, note that the Bank is willing to accept third party collateral.

Startup businesses: While the Bank under its general risk acceptance criteria requires a prospective borrower to have at least three years of acceptable performance track record, it can also lend to start-ups at its discretion and on a case-by-case basis. A startup would need to provide proof of cognate experience in its business area and would need to have a highly qualified management and operational team with sound management structure.

Support your application with some documents: Click here to see the list of the documents you should be prepared to upload while you apply for the loan.

What you should know about BOI

• BOI provides access to funds for startups, SMEs, and large enterprises and by access, it facilitates the entire process, right from pre-loan application.
• The International Finance Corporation, which produced its pioneer Chief Executive, held 75% of its equity along with a number of domestic and foreign private investors.
• Although the bank’s authorized share capital was initially set at N50 billion in the wake of NIDB’s reconstruction into BOI in 2001, it has been increased to N250 billion in order to put the bank in a better position to address the nation’s rising economic profile in line with its mandate.