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  • Business - Entrepreneurship
  • Updated: July 15, 2020

BOI Reduces Interest Rates For CBN SME Loan, Suspend Payment Of Loan

 

The Bank of Industry (BOI) has reduced interest rates and initiated moratorium for micro, small and medium-sized enterprises (SMEs). This is part of the palliatives BOI developed for small businesses that have been affected by the COVID-19 pandemic and the government measures that led to business shutdown.

According to the Managing Director of BOI, Kayode Pitan, BOI took it upon itself to reduce its direct credit interest by 2 percent for one year, from April 1, 2020, to March 31, 2021. Also, AllNews learnt that a moratorium was announced for principal repayment to all beneficiaries of the BOI credit.

This means for three months extra, repayment was delayed for borrowers from April 1, 2020, to June 31, 2020.

Beneficiaries of BOI credits also have the opportunity to extend the moratorium for 12 months. This is for beneficiaries with reasonable excuse pertaining to why they can't afford to pay the credit at the stipulated timeframe.

[READ ALSO: Access Bank, GTBank, Others Will Start Deducting Debtors Money From Other Banks]

BOI Collaborating To Initiate More Palliatives

The Bank of Industry in its collaboration with the Central Bank of Nigeria (CBN) also reviewed interest rates downward for credits from CBN's intervention programme. The interest rate was reduced to 5 percent per annum to expand access to loans for small businesses in need of funds. Also, a three-month moratorium was given.

Meanwhile, BOI also said it partnered with the Nigerian Content Development Management Board (NCDMB) to reduce the interest rate from 8 percent per annum to 6 percent per annum for credit facilities approved under the Nigerian content intervention fund; with moratorium also made available. These are the steps Pitan said BOI is undertaking during a recent webinar.

This, Bank of Industry believes will help micro, small and medium-sized enterprises - all of which are the major drivers of the Nigerian economy. Note that micro, small and medium-sized enterprises account for over 80% of businesses in Nigeria, meaning majority of the employment opportunities comes from the micro, small and medium-sized enterprises.

CBN Suspends Repayment Of Loans For One Year

CBN had also suspended repayment of COVID-19 intervention loan for one-year while directing banks and other financial institutions to restructure their loan tenor and terms. The suspension, according to the CBN, was to help households and businesses mitigate the impact of COVID-19 on their finances.

The CBN placed a moratorium on all repayments, stating that the suspension became effective March 1, 2020. This directive implies that banks and other financial institutions will extend the due date for the loan repayments, a circular signed by the Director, Financial Policy and Regulation Department, Kevin Amugo, disclosed.

[READ ALSO: Here's Why CBN's Suspension Of Loan Payments Does Not Apply To All Banks]

COVID-19: What You Need To Do As CBN Waives Requirement To Obtain Loan

The requirement for Households and Small and Medium Scale Enterprises (SMEs) to obtain loans from the Central Bank of Nigeria (CBN) N50 billion COVID-19 Targeted Credit Facility has been waived by the apex bank to enable applicants to easily access the loan they need to withstand the COVID-19 pandemic impact.

CBN waived the guarantor requirement. This will make getting the loans easier than initially planned. In a tweet by the CBN on its Twitter handle, the apex bank said, "CBN waives the requirement for the provision of guarantors by Households and SMEs applying for its N50bn COVID-19 Targeted Credit Facility." This means applicants no longer need anyone to stand in place for them to access the COVID-19 loan.

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Olalekan Fakoyejo
Olalekan Fakoyejo

Fakoyejo Olalekan is a certified media practitioner from the Nigerian Institute of Journalism (NIJ)....

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