Are You A Farmer In Nigeria? See How to Get Agric Loan From The CBN
Being a commercial farmer, it is inevitable to borrow a few amounts of money to boost your production at some point in time. There will be a high demand for your farm produce. Hence, the reason for enlarging your farms won’t be overlooked.
However, getting a loan with favorable interest rates is not a small task to accomplish in Nigeria due to the country’s poor loan programs. Some private sectors or institutions that are involved in granting loans to farmers, and other interested entrepreneurs are known for their high interest rate, which tends to discourage people from borrowing money from them.
Many commercial banks in the country also portray the same characteristics because you must meet many challenging criteria before you can be eligible to enjoy their loan programs.
As a farmer who is eagerly in need of financial assistance to boost your farming or agro-based business, you might be tempted to ask yourself: ‘which way forward?’
Don’t be discouraged, there is one comfortable way to go about it, and that’s getting loan from the federal bank of Nigeria (CBN).
How Is It Possible To Borrow Money From CBN?
The answer to that question isn’t far from you because you will get all you need to know as long as you take your time to read and understand every part of this well-detailed write-up.
We shall be taking you through a journey of how you can get a tension-free loan from CBN without many struggles or delay.
What’s CBN Agric Loan Program or Scheme?
As a way to promote food security and massive participation in a very extensive commercial farming in every state of the federation, the Central Bank of Nigeria introduced the a program known as the Commercial Agriculture Credit Scheme (CACS) or CBN Agric Loan in 2009.
The CBN equally introduced other funding schemes for farmers in the country. They include: Agricultural Credit Guarantee Scheme (ACGS), Interest Draw-back scheme, Agricultural Credit Support Scheme among others.
However, the CBN Agric Loan, also known as the CACS, is being funded through the ₦200billion three (3) year bond raised by the Debt Management Office (DMO), and it is available to all the participating commercial banks across the country.
Apart from helping commercial farmers, state government also have the chance to borrow the maximum of ₦1B from the scheme if they intend giving it out to qualified farmer’s cooperative societies in their state. Click HERE to find out more about the CACS.
How Can I Be Part Of This Program As A Farmer or Agro-based Entrepreneur?
I. You must meet some criteria before you can be part of the program: These conditions include the following:
1. Your farm or other agro-based business must have assets worth ₦1m (one million naira). Note that the assets doesn’t include land.
2. Your agro-based business must be able to generate nothing less than ₦250m ( Two hundred and fifty million naira) in the next three years of farming season.
3. You must be involved in the following agricultural production:
A. Cash Crops: These include Palm Oil, Fruit Trees, Rubber, Cotton, Sugar Cane, Carcus and Cocoa.
B. Food Crops: This classification include Cassava, Maize, Rice, Beans, Millet, Wheat, Vegetables and Tomatoes.
C. Poultry: This section includes Broilers and Eggs production in considerable quantity.
D. Livestock: Piggery, Cow, Fishery, Fingerlings and Catfish
E. Food Processing: This includes Threshing, Feed mills development and pulverization.
F. Storage: This includes spacious and well-equipped warehouse, Agro-chemicals and other important commodities for food preservation.
G. Farm Input Supplies: This consists of herbicides, pesticides, seedlings, modern-day farm tools and animals feed.
II. Be Engaged In Some Commercial Banks Deposit Programs: As mentioned above almost all commercial banks in the country are participating in the program, so you should endeavor to deal with commercial banks closer to you in order to stand a chance of getting a loan from them.
It is important you get more understanding about the CBN Agric Loan from bank officials before you apply for it.
You should inquire if your bank also has any hidden charges attached to the scheme or not. In the meantime, you can explore the CBN’s official website for more information
III. The other way to get an Agric loan from CBN without the aforementioned criteria is to be part of farmer’s cooperative society who are eligible to receive loan from the state government.
Top Five Factors To Consider Before Applying For Loan
Having known how to apply for a CBN Agric loan, it is important we let you know that you must consider some factors before applying for any loan program either from CBN or other private corporations. The factors you must consider as a loan seeker include:
1. The size of Your Farm
If you are a subsistence farmer, please you don’t need to borrow money from any financial organization to start your farm.
This is because you will end up consuming (eating) your agricultural produce, leaving you with nowhere to repay you debt.
Farmers who are engaged in commercial farming are advised to apply for loan because they will record enough profit — that will be sufficient to settle their bills and loans — when they sell their farm yield.
Banks, private finances organizations, and CBN will ask for collateral before granting you loans. So you must prepare your collateral in the first place before applying for any financial aid (in form of loan).
3. Make Estimation Of Needed Amount
You must make an estimation of how you will spend the money in order to known the exact amount you need. You must map out how you want to spend the money you are requesting for as that will guide you to know the amount that will be sufficient to boost your farming system.
4. Make Plans of How To Repay Your Loan
As much this may sound funny or controversial, you are advised to plan how you will refund or repay your debt before you apply for any loan program.
If you have a plan or strategy on how to settle your debt, you will be able to set or choose a repayment date for your loan.
5. Interest Rate
You must also ensure that the interest rate of the loan you are going for isn’t too expensive. Try to consider the interest rate and see if you can afford it or not.