What You Need To Know As FCMB Offers SMEs COVID-19 Loan

With many Small and Medium Enterprises (SMEs) affected by the COVID-19 pandemic and the lockdown measures adopted by Nigeria for more than two months, First City Monument Bank (FCMB) has announced that SMEs can now apply for loans to assist their businesses.

The loan that will be disbursed to small and medium enterprises was secured from International Finance Corporation (IFC), a member of the World Bank Group. IFC approved a $50 million loan for FCMB to enable the bank to financially assist the small businesses that are crucial to Nigeria's economy.

What You Need To Know

The $50 million funds secured by FCMB is from the IFC's $8 billion global COVID-19 fast-tracking facility which was launched in March 2020. FCMB isn't the first Nigerian bank to obtain credit from the COVID-19 fund, as about $100 million was approved for Zenith Bank on June 18, 2020. The credit would also be disbursed to strengthen the liquidity of its clients and businesses.

The Small businesses account for majority of the jobs in Nigeria, and in order to ensure these jobs are not downsized, the financial industry alongside CBN has been initiating various palliatives to act as catalyst for growth during a period the Nigerian economy is expected to enter a recession - the worst in about 40 years.

FCMB And IFC Address Essence Of The Credit

While speaking about the credit facility approved by IFC, the FCMB’s chief executive, Adam Nuru, said, “IFC’s loan facility will allow us to keep credit flowing to SMEs as well as corporate companies across all sectors of Nigeria’s economy, including in the health, pharmaceutical, food and trading industries,”

Also commenting on the partnership for the benefit of small businesses, IFC country manager, Eme Essien Lore, said, "Supporting financial institutions like FCMB is vital to keeping smaller businesses solvent, saving jobs, and limiting economic damage in the face of a challenge as formidable as COVID-19”.

Lore added that “Although Nigeria has a strong and dynamic private sector, it needs liquidity now to ensure it remains viable during and after COVID-19.”

CBN Suspends Repayment Of Loan

Aside from offering loans as a palliative for small businesses, the CBN had also suspended the repayment of loan for one year, according to an AllNews report. The suspension is for the COVID-19 intervention loan for one-year. Also, CBN directed banks and other financial institutions to restructure their loan tenor and terms.

The CBN had also waived the requirement to obtain COVID-19 loan from NIRSAL Microfinance Bank, stating that it will ease the process and allow many households and small businesses to benefit from the N50 billion COVID-19 loan. Although, the CBN has now revealed that about N49 billion has already been disbursed.