7 Sources of Finance for Small Scale Business in NigeriaAbbakin
One of the easiest sources of finance for small scale business in Nigeria is by taking advantage of government grants and low-interest business loans. Even, you can get these business loans without collateral.
Financing an enterprise like all start-ups – can be a threat and challenge which entrepreneurs have to face.
This article will cover some of the things you need to understand about government grants and loans assistance; including its development institutions, information on loan terms and how to apply.
What is a Government Grant?
A government grant is a financial award given by the federal, state or local government to an eligible grantee… according to Investopedia.
Government grants are not expected to be repaid and do not include technical assistance or other financial assistance, such as a loan or loan guarantee, an interest rate subsidy, direct appropriation, or revenue sharing.
The main purpose of government grants is to help fund ideas and projects providing public services and stimulating the economy.
Government Grants also support critical recovery initiatives, innovative research and other programs aimed at Domestic Assistance.
Usually, government loans can be in the form of student loans, small business loans, or house insurance loans that come from the federal government, or private sources – such as banks or financial institutions.
For example, small business loans may be distributed through government organizations in many of its counseling, mentoring and training programs to help put small and medium enterprises, SMEs within economic advantage.
Also, the federal housing mortgage loans made by government or private lending institutions to finance the purchase of new homes for the public can make great social impact to the people.
Business Grants and Loans Eligibility in Nigerian
The eligibility to apply for and receive a federal government grant or loan assistance is based on the individual qualification… and/or on behalf of a company, nonprofit organization, for-profit businesses, institution, or government agencies.
Usually, government-backed loans are easier to qualify for and they offer competitive rates over the stipulated time period.
However, the general criterion for accessing these funds is the capacity to present a bankable and viable business plan.
The interested entrepreneur should be clear on where he wants to be in the near future, and also be able to describe the market for his/her products or services.
Other criteria may include membership of a business organizations, which in most cases will recommend the business owner for the loans.
Some of these business organizations in Nigerian that you can join include;
- the Nigerian British Chamber of Commerce,
- the Lagos Chamber of Commerce,
- the Association of Small Business Owners (ASBON),
- the Abbakin Global Business Forum, etc.
The Role of the Nigerian Government in Business Financing
All over the world, the Government has been the major source for investment funding to micro, small and medium sized enterprises (MSMEs) through its development finance institutions.
The Federal Government of Nigeria has also a number of intervention policies, designed to make it easy for small and medium sized businesses in Nigeria to obtain business finances in the form of grants and small-interest loans.
Examples of such government initiatives include the Federal Government YouWin Connect program, the SMEDAN Loans projects, the One-Stop Shop and GEEP Marketmoni for MSMEs and the YES-Programme of the Nigerian Bank of Industry (BOI) among others.
Therefore, some of the government finance institutions serving in this capacity includes: the Central Bank of Nigeria (CBN), the Bank of Industry (BOI), Nigeria Agricultural Cooperative Rural Development Bank (NACRDB), and so on.
Other multinational government institutions aimed to make investment funding available to those that need them also include the International Bank for Reconstruction and Development (World Bank), the African Development Bank (AfDB), and many other government and private finance institutions and foundations.
As a business owner or entrepreneur who is seeking to raise capital for the business, below are some government sources of funding for Nigerian small and medium enterprises that may benefit your business.
7 Sources of Finance for Small Scale Business in Nigeria
#1. The Nigerian YouWin Connect Program
The YouWiN Application Portal or YouWiN Connect Program is a Nigerian government initiative aims to support young entrepreneurs as they PLAN, START and GROW their businesses.
By providing enterprise education, funding, as well as access to technical and consulting services to Nigerian SMEs.
The YouWiN Program is meant to promote entrepreneurship, job creation and wealth creation via enterprise education and empowerment.
How the Nigerian YouWin Connect Program Works:
YouWin! program requires that Nigerian entrepreneurs, startup individuals and businesses register online by answering some questions related to their businesses and writing a business plan indirectly.
The program facilitators then select the most promising businesses ideas or initiatives across different sectors of the economy, from the 6 geopolitical zones and diaspora.
The sectors of focus for the masterclass phase are:
- Information & Communication Technology (ICT)
- Manufacturing & Retail
All participants do receive certification on completion of the training and will be required to submit a business plans for areas where their businesses requires improvement.
The winners are therefore given business training, mentoring and funding – up to the tune of N10 Million Naira to start, grow and expand their businesses.
The best part of the YouWin! Connect Program is that it is a grant and you will not be required to pay the money back to the government.
Interested candidates should use the federal government‘s YouWin! Connect official website and find out more about the YouWin Grant Information and/or Application Processes.
#2. The SMEDAN MSMEs Development Programs
The term – SMEDAN stands for the Small and Medium Enterprises Development Agency of Nigeria.
SMEDAN is a pioneer institution for the sustainable development of the Micro, Small and Medium Enterprises (MSMEs) in Nigeria.
The scheme is made of commercial banks, industries and MSME funds provided by the Central Bank of Nigeria.
How the SMEDAN MSMEs Development Programs Works:
The Agency has recently unveiled a Credit Information Portal to facilitate easier access to funding for the Micro, Small and Medium Enterprises in Nigeria.
The Portal provides an information pool that will assist Nigerian entrepreneurs make informed decisions in getting loans and credits from financial institutions within their locations.
This initiative was part of the agency’s efforts to tackle the challenges confronting the Micro, Small and Medium Enterprises (MSMEs) sector in the country.
Find out more on how the programs and projects of the SMEDAN can help your business.
#3. The BOI Youth Entrepreneurship Support (YES-Programme)
The Youth Entrepreneurship Support Programme (YES) is the enterprises empowerment initiative of the Nigerian Bank of Industry (BOI).
The programme provides the young aspiring Nigerian entrepreneurs the opportunity to access funds for the actualisation of their business ideas, expansion, as well as the modernization of their existing businesses.
One of the benefits of the YES-Program in Nigeria is its real business training courses. It also offers small business loans. So young Nigerians now have an opportunity to develop their business ideas with the YES- Programme.
How the Youth Entrepreneurship Support (YES) Programme Works:
The interested candidates must be of ages 18 – 35 years with a minimum educational qualification of OND to access these opportunities.
They must also have been trained under the BOI Entrepreneurship Capacity Building Programme (as stipulated in the Training Programme Framework).
The National Youth Service Corps (NYSC) members that have gone through the NYSC’s Skills Acquisition and Entrepreneurship Development Programme (SAED) are also legible.
For more about the YES scheme:
#4. The One-Stop Shop and GEEP Marketmoni for MSME
The Federal Government has unveil the One-Stop Shop and GEEP Marketmoni for MSMEs, saying the move is aimed at removing bottlenecks hindering the growth and development of Micro Small and Medium Enterprises (MSMEs) in Nigeria.
Vice President explained that this initiative would give small businesses access to interact with all the relevant agencies that are critical to supporting the growth and development of the business community.
Such relevant agencies includes the Nigeria Bank of Industry (BOI), the Corporate Affairs Commission, National Agency for Food, Drug Administration and Control (NAFDAC), and Standards Organisation of Nigeria (SON).
How the One-Stop Shop and GEEP Marketmoni for MSMEs Work:
MarketMoni is a Government Enterprise and Empowerment Programme (GEEP); created to provide financial aid for the under-banked and unbanked individuals.
This objective is being achieved by providing easy and quick loans at no interest rate besides a five per cent (5%) administrative fee
To access the GEEP all that is required is for the market women, artisans and small businesses to have an active bank account, a Bank Verification Number (BVN);
You must belong to a credible market association or cooperative registered in your state or with the CAC.
The association will then indicate your interest in MarketMoni by submitting its application to BOI.
#5. The Nigeria N-Power Programme
The Nigeria N-Power Programme is another sources of finance for small scale business in Nigeria. This project linked to the Federal Government’s policies in the economic, employment and social development scheme.
The programme is meant to addresses the challenge of youth unemployment by providing a structure for relevant work skills acquisition and development;
While linking its core and outcomes to fixing inadequate public services and stimulating the larger economy.
How the Nigeria N-Power Programme Works:
The Nigeria N-Power Programme ensures that each participant will learn and practice most of what is necessary to find or create work.
The N-Power Volunteer Corp involves a massive deployment of 500,000 trained Nigeria graduates who will assist the public services in areas such as education, health and civic education.
N-Power Programme also focuses on providing non-graduates with relevant technical and business skills that enhance their work outlook and livelihood.
By engaging in this government initiate, you can work for some time and save up money for your businesses.
Interested candidates should visit the official website to be aware of the N-Power Recruitment Processes, and N-Power Testing Procedures.
#6. The Lagos State Employment Trust Fund
The Lagos State Employment Trust Fund (LSETF) is a Lagos State Government initiative, established in 2016 to provide financial support to residents of Lagos State for job and wealth creation, and to tackle unemployment.
LSETF serves as an instrument to inspire the creative and innovative energies of all Lagos residents and reduce unemployment across the State.
How the Lagos State Employment Trust Fund Works:
The Fund has the mandate to directly invest ₦25Billion in helping Lagos residents grow and scale their Micro, Small and Medium Enterprises (MSMEs) or acquire skills to get better jobs.
The fund is divided into two categories; micro and small businesses.
Under the micro, businesses can access up to N500, 000 loans with an interest rate of five percent and a tenor of one year.
For the small business category, businesses can get up to N5 million for a tenor of three years.
Visit the official website for more information on how the Lagos State Employment Trust Fund works and how to apply.
Sources of Finance for Small Scale Business In Nigeria
#7. The Tony Elumelu Entrepreneurs Empowerment Fund
The Tony Elumelu Foundation has $100 million for 10,000 African entrepreneurs. And this will continue to be available for another seven to eight years.
The Tony Elumelu Foundation (TEF) is an African non-profit organization founded in 2010 by Tony O. Elumelu, based on his belief that, with the right support, entrepreneurs can be empowered to contribute meaningfully to Africa’s prosperity and social development.
How Tony Elumelu Foundation Fund Works:
The Foundation is intent on charting a new course for African philanthropy and does not operate merely as a grant-awarding organisation.
Through the programme, the foundation provides support, access to training, guidance, and business mentorship to Africa entrepreneurs and potential entrepreneurs.
If you are in agriculture, fashion and design, light manufacturing, ICT, and solid minerals, among others, then apply for the annual Tony Elumemu Foundation Fund.
For those who are just starting up a business and perhaps missed last year’s edition, this is another sources of finance for small scale business in Nigeria and Africa. You can be lucky to be one of the 1,000 entrepreneurs to be shortlisted this time.
You can also go to the website for more information on how the Tony Elumemu Fund works and how to apply.
Subscribe to our Newsletters now if you want to receive latest updates about innovation, business trends and statistics. You’ll get a free eBook!