Last week, we began this series on Bank of Industry (BoI) loan facilities to Small and Medium Enterprises, SMEs. We noted some basic pre-requisites for companies wishing to apply for loan in the Bank. And we also listed out about 41 groups of businesses the Bank provides loan for while noting that you can write to the Bank in case you didn’t find your line of business in the list.

In this second part we are going further in listing more basic considerations before approaching BoI for a loan.  Note that the Bank is principally set up to finance industrial equipment used in manufacturing.

Naira

Working capital

The Bank does not finance land and building which are expected to be financed from equity or owner’s/ promoter’s capital. But BoI also gives working capital loan indirectly. You can access the working capital loan from any of the ten (10) SME friendly banks that BoI partners with.

Interest rate on BoI loans is around 6 percent on top of Central Bank of Nigeria’s Monetary Policy Rate, MPR. This means that since current MPR is 14 percent, the interest rate on the BoI loans would be 20 percent.

Note also that when BoI approves loan for your business, it does not give you cash or put the money into your account. Instead it pays the supplier of the machine or equipment for which you sought the loan.

On the amount you can borrow BOI’s loan support to SMEs starts from N5 million. However, loan below N5 million are provided on BoI’s matching fund platform which is operated in collaboration with various State Governments and also on the bank’s Bottom of the Pyramid (BoP) scheme which is operated through MicroFinance Banks.

In the next week’s edition we continue this aspect of the discussion with how you can apply under the BoI matching Fund or the BoP scheme.