How To Get Loan From Development Bank Of Nigeria And Grow Your Business

This article explains how to get loan from Development Bank of Nigeria. According to Development Bank of Nigeria, “there are 37 million MSMEs contributing to over 50% of Nigeria’s GDP. However, less than 5% of these businesses have access to credit in the financial system.”

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In truth, at every stage in a business growth, capital is required. You need capital to start and grow your business. Lack of capital has killed many business ideas and has stopped many people from kick starting their businesses.

This is very harmful to the development of our economy. To curb the lack of access to capital for small and medium businesses, The Development Bank of Nigeria (DBN) was conceived by the Federal Government of Nigeria (FGN) in collaboration with global development partners.

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What Is A Development Bank

A Development Bank is a bank that provides risk capital for economic development of projects in a country. They are often owned by the federal government and provides funds for projects that will normally not get funding from commercial lenders.

In this article, we will discuss the Development Bank of Nigeria and one of Nigeria’s oldest, largest and most successful development financing institution- Bank Of Industry (BOI). We will also highlight how a small business can access loans from these institutions.

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Development Bank Of Nigeria

Development Bank of Nigeria began operations in 2017. The bank helps Micro, Small and Medium businesses in Nigeria to alleviate the challenge of raising funds to start or grow their businesses. So far, the bank has
impacted 95,000 MSMEs and N100,000,000,000 has been disbursed.

Basically, all MSMEs (startup or existing) involved in productive enterprises are eligible for DBN Loan. But, they must have accounts with Participating Financial Institutions (PFIs).

Development Bank of Nigeria loan can only be accessed through PFIs, which include Microfinance Banks, Commercial Banks, Development Finance Institutions (DFIs) and other financial institutions.

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Steps Involved In Getting DBN Loan

i. Visit Your Bank

There are several banks in Nigeria but not all of them are Participating Financial Institutions (PFIs) with DBN. So, you need to check the list of participating banks to open an account with.

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Find below the participating banks, the contact persons and their email address:

ii. Bank Verification

The next step is for the bank to appraise the business and purpose of loan. If the appraisal is favorable, the bank will then apply on your behalf to DBN for funding.

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iii. Disbursement

If DBN approves the loan, DBN will disburse to the bank for on-lending to the end borrower.

How To Repay DBN Loans

Interestingly, DBN loan is very flexible to repay. You have up to 10 years to repay the loan. Apart from that, you have 18 months grace period. This means that after receiving the loan, you are not under pressure to repay the loan for the first 18 months.

Another great news is that the interest rates are on a full market conforming and financially sustainable basis.

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Bank Of Industry (BOI)

The Bank of Industry Limited (BOI) is Nigeria’s most successful development financing institution. It was reconstructed in 2001 out of the Nigerian Industrial Development Bank (NIDB) Limited. NIDB was incorporated in 1964 and started operation with authorised share capital of 2 Million (GBP) in 1964.

BOI provide access to funds for startups, SMEs, and large enterprises. They facilitate the entire process right from pre-loan application.

The Bank works together with local and international development finance institutions and commercial banks to provide funding for key capital projects.

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Things To Know Before Applying For BOI Loans

BOI provides facilities at tenors that range from 12 to 60 months and above. The bank provides funds mostly for the manufacturing sector and understand that the industry takes time to return profit on investment. So, the bank structures its loan tenors to accommodate this incubation period. Moratorium periods are incorporated into the loan tenors to ease repayment concerns.

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Bank Of Industry partnered with key local and international fund partners through matching fund schemes, where the Bank matches the funds brought to the table by the fund partner. 17 state governments in Nigeria, the Dangote Foundation, the Central Bank of Nigeria and others are some fund partners whose funds the Bank manages.

The bank offers mostly equity financing as it is a better option to ensure sustainability of businesses. Also, they manage key projects of the Federal Government that provide equity financing including the YouWin Programme.

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The bank supports projects with potential development impact. The industries selected must meet the following criteria:

• working on projects that use largely domestic raw materials and add to industrial output
• Projects that can convert Nigeria’s comparative advantage into competitive ones and promote the expansion of exports.
• Projects which are environmentally friendly, technically feasible, commercially viable and economically desirable.

For more on eligibility criteria, visit BOI.

Requirements For BOI Loans

The requirements vary based on the type of business applying for a loan. The pre and post documents needed differ depending on the type of enterprise applying. The enterprises are grouped into micro enterprise, small enterprises and large enterprises.

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Some of the documentation include:

Pre-approval documentation

• Application letter on letterhead paper
• Company profile which include: company background, certificate of incorporation and other documents from CAC, profile of directors, management and technical team, means of identification (National ID or International Passport or Drivers Licence or Permanent Voter’s card, BVN of company signatories
• Comprehensive bankable business plan
• Collateral documents
• Legal documents
• Financial documents

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Post-approval documentations

• Acceptance of offer
• Board resolution accepting facility
• 4 Passport photographs of each director
• Submission of bank guarantee (as collateral
• Most recent annual returns
• 3 Years tax clearance of company and directors
• Evidence of appointment of company secretary
• Originals of title of property (C of O, Deed of Assignment etc)

See Also: Benefits of registering your business with Corporate Affairs Commission (CAC)

How To Apply For Bank Of Industry Loan

You can apply for BOI loan by visiting their nearest office or online. Ensure you are eligible to apply, then go through the requirements and have all your documents ready including your business plan before applying.

Follow the steps below to apply online:

1. Log on to https://www/boi.ng/apply/
2. Click ‘Register’
3. Follow other steps as required

You will be given an application tracking ID when you submit your loan application. With that, you can check your application status. To check, just insert your application tracking ID in the search box.

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