NIRSAL Explains Why SMEs Have Been Struggling To Access CBN's N50 billion Loan

Amidst the coronavirus outbreak, the Central Bank of Nigeria (CBN) made N50 billion available for Micro, Small and Medium Enterprises (MSMEs) and households in need of loans, but accessing the credit has been a problem for many. The NIRSAL Microfinance Bank Ltd, which is in charge of the N50 billion loan, has now disclosed reasons SMEs are having difficulty obtaining the said loan.

Lockdown affecting loan process

According to the Managing Director of NIRSAL Microfinance Bank Plc, Abubakar Kure, the lockdown is affecting the processing of loan applications as there's a need for physical interface with borrowers, blaming it on the restriction of movement occasioned by the coronavirus pandemic. 

“You are all aware of the lockdown across the country and major cities. We have lockdown around Kano, Lagos, Port Harcourt, and incidentally Kaduna. So all these major cities constitute a significant part of the applicants who applied for COVID [loans]. We are actually thinking outside the box to see how we can reach them so that they can come and have the loans.

"Currently what we do is that we are using digitalization in the form of emails. We send emails to those who have email accounts, we print their offer letters, send back to them, do the documentations and they are able to drawdown. The most important thing is about the lockdown and that’s why the credit facility was created. It also constitutes a challenge.”

Some applicants can't provide guarantors

Although, Kure said about 1000 applicants are already beneficiaries of the loan, however, failure to provide guarantors also pose problems to some applicants. He explained further that, “This is a loan and not a grant, you are required to sign offer letters in terms of documentation that need to be signed so that it requires physical interaction between the bank i.e. NIRSAL Microfinance bank as well as the customers. So customers are unable to even come to sign the documentations and customers are even unable to get guarantors.”

He also said, "We are improving our processes, systems, people to be able to meet up with the expectations. You are fully aware that this loan is for a short term. It’s a short term seamless package by Central Bank intended to cushion the effect on businesses and people. However, because of the lockdown and the restriction of people, there have been delays. We have also noticed the issue around guarantors,” Kure said, while urging individuals qualified to be guarantors to step forward on behalf of the applicants to enable them obtain the loans.

Other factors that might affect applicants

Aside from guarantors, NIRSAL is also demanding other collaterals like cars, equipment, and other movable assets. Kure said the collaterals needed are soft due to the size of the businesses. However, he said the most important is the cash flow of the business. According to him, the focus is on the ability of the business and household applicants to repay the loan as at when due.

Meanwhile, Kure disclosed that NIRSAL obtained N5 billion from CBN, which will be disbursed to about 5000 applicants. According to Kure, the plan is to provide 90% of the capital in the next few weeks. It was learnt that 65% of the applicants interested in the loan are households.