CBN Unveils Guidelines for N50bn COVID-19 Facility

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The CBN has released guidelines for the disbursement of the N50 billion special intervention fund meant to cushion the impact on the COVID-19 disease on the economy.

Emefiele had last week announced the fund as part of stimulus package by the bank.
According to the guidelines for the fund posted on the central bank’s website yesterday and signed by the Director, Financial Policy and Regulation, Mr. Kevin Amugo, NISRAL Microfinance Bank (NMFB) will serve as the disbursing financial institution with SMEs, households and enterprises that have verifiable evidence of livelihood and evidence of business activities adversely impacted by the deadly virus. He urged those with bankable plans to take advantage of opportunities arising from the COVID-19 pandemic.

The guideline listed sectors eligible for the credit facility to include agric value chain, hospitality, health, airline service providers, manufacturing/value addition, trading as well as any other income generating activities as may be prescribed by the CBN.

The scheme, which will be financed out of the CBN’s N220 Micro, Small and Medium Enterprises Development Fund (MSMEDF), earmarked a maximum facility of up to N25 million for MSMEs while households can access up to N3 million based on the activity, cashflow and industry/segment size of a beneficiary.

“Working capital shall be a maximum of 25 per cent of the average of the previous three years’ annual turnover; where the enterprise is not up to three years in operation, 25 per cent of the previous year’s turnover will suffice.

“Interest rate under the intervention shall be five per cent per annum all-inclusive up to 28th February 2021 and thereafter, the interest on the facility shall revert to nine per cent as from 1st March 2021.”

The guideline stated that collateral for the facility would include one or more of the following: “Moveable asset(s) duly registered on the National Collateral Registry (NCR), simple deposit of title documents, in perfectible state, Deed of Debenture (for stocks), in perfectible state, irrevocable domiciliation of proceeds, two acceptable guarantors, personal guarantee of the promoter of the business, life insurance of the borrower, with NMFB noted as the first loss payee and comprehensive insurance over the asset.”

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