How to Apply for a Loan from the CBN Under the 100 for 100 Policy

How to Apply for a Loan from the CBN Under the 100 for 100 Policy

The Central Bank of Nigeria (CBN) recently published a list of 28 firms that received N23.2 billion from the first cycle of the 100 for 100 Policy on Production and Productivity (PPP).

The maximum loan limit under the initiative is N5 billion, which most applicants should keep in mind. However, applications exceeding N5 billion may be considered subject to CBN approval.

This scheme, which began on November 1, 2021, will select 100 private sector companies with projects that have the potential to significantly boost local productivity and Nigeria’s capacity to generate foreign exchange.

The initiative, which will be led by a financial institution, will be rolled over every 100 days (quarterly), and a new set of companies will be chosen for financing.

Nigerian entrepreneurs who want to get funding for their existing businesses or start-ups can apply for the loan, and if their business aligns with the CBN’s goal of stimulating the economy, they will be approved.

Covered activities

The project includes manufacturing, agribusiness and agro-processing, extractive industries, petro-chemicals and renewables, healthcare and pharmaceuticals, logistics services and trade-related infrastructure, and other activities as prescribed by the CBN.

Existing projects will be the focus of the initiatives, though the CBN may look into new ones as well.

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Funding

The initiative will be funded through the Central Bank of Nigeria’s Real Sector Support Facility-Differential Cash Reserve Requirement (RSFF-DCRR) window or any other window determined by the Bank.

Loan amount and type

Long-term loans for the purchase of equipment and machinery, as well as working capital loans, will be included in the 100 for 100 PPP intervention. The maximum lending limit for the initiative is N5 billion. For applications worth more than N5 billion, CBN approval is required.

Term loans must have a maximum term of 10 years, depending on the complexity of the project, and must be repaid by December 31, 2031. The working capital arrangement will be for one year with the option to extend it for up to three years. Term loans will be subject to a two-year moratorium.

The interest rate
The annual interest rate shall not exceed 5% (all-inclusive) until February 28, 2022. Following that, interest on the facility will revert to 9% per annum (all-inclusive) on March 1, 2022.Collateral is required.

The 100 for 100 PPP initiative accepts collateral under the CBN’s Real Sector Support Facility.

Payback

The monthly interest on the facility will be amortised and transferred to the CBN quarterly along with principal repayments.

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How to Use

Interested businesses must submit applications to participating financial instruments (commercial banks) along with the necessary documentation, which includes:

  • Evidence of company incorporation with Corporate Affairs Commission (CAC)
  • Three years of audited financial reports.
  • Evidence of the company’s creditworthiness, including its promoters and directors.
  • A minimum of two credit reports of the company and directors.
  • Business plan of the underlying project in need of financing.
  • Detailed status report on project’s capacity utilization, production output, productivity/efficiency level, employment level, value creation.
  • Detailed report on the post-financing economic benefit of the project.
  • Applicants shall notify CBN of submitted applications via a dedicated online portal https://100for100ppp.ng/ for tracking and monitoring application status.

How did you obtain the funds?

  • PFIs (participating financial institutions) must accept applications and conduct due diligence on them based on business and credit considerations.
  • Following approval by the credit committee of the PFI, the lending bank will forward eligible private sector companies to the CBN.
  • The CBN will screen and finance qualified applicants in 100 days, with a 100-day rollover period in between.
  • The Bank will conduct an internal review of all applications to ensure that they meet the requirements.
  • The CBN then transfers the approved sum to PFIs for distribution to selected private sector companies.
  • Beneficiaries would be listed in National Dailies so that the public could confirm the details of the activities funded.

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