Bank of Industry: How to get a loan

Bank of Industry: How to get a loan
Bank of Industry: How to get a loan

Bank of Industry: How to get a loan – The Bank of Industry (BOI) is a development finance institution (DFI). It is both the largest and oldest development financing institution in Nigeria.

It is the successor company to the Nigerian Industrial Development Bank (NIDB), which was established in 1964. The Bank of Industry, as it is now known, was recapitalized and reformed in 2001.

The BOI works together with a number of partner institutions including the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), the Federal Ministry of Industry, Trade and Investment, the Federal Ministry of Finance, the Central Bank of Nigeria (CBN) and various other private/public sector organizations. It also sits together with other DFIs like the Development Bank of Nigeria (DBN) and the Bank of Agriculture (BOA).

The Bank’s main aim is to provide long term funding, to the industrial sector of the Nigerian economy. It concentrates on providing credit to small and medium-sized enterprises (SMEs), as well as larger businesses. This credit may be advanced to newer companies. It may also be provided to expand, diversify, and modernize existing enterprises.

Also Read, Apply: MSME Finance Seminar

The Bank of Industry currently has four subsidiaries namely:

  • BOI Investment and Trust Company Limited
  • BOI Microfinance Bank
  • BOI Industrial and Development Insurance Brokers
  • Leasing Company of Nigeria (LECON)

Funding and types of loans available through the Bank of Industry

BOI products / Bank of Industry: How to get a loan

The Bank of Industry has a variety of direct funding products. These come in the shapes of asset financing, secured loans, working capital loans and more.

The BOI provides these funds to businesses in a wide range of industrial sectors. Focus sectors include agriculture, agro-processing, information communication technology, oil and gas, solid minerals and the creative industry.

Competitive interest rates are offered with relatively long repayment terms, among other support incentives. Loan facilities have tenors that range from 1 to 5 years (and above). Most loans are structured in a way to accommodate an incubation or moratorium period, where borrowers are not obligated to make repayments.

Products include:

  • ASM Fund
  • Bottom of Pyramid
  • Fashion and Beauty Product
  • Light Manufacturing
  • Food and Agro Commodity Processing
  • Graduate Entrepreneurship Fund
  • Nollyfund
  • On-Lending to Commercial Banks
  • Solar Energy
  • Youth Entrepreneurship Support (Yes) Program
  • Youth Ignite Program

Also Read, Apply: CBN Interventions Funds

BOI managed funds / Bank of Industry: How to get a loan

Managed funds or intervention funds are monies set aside by either the federal government, private institutions or individuals — to intervene in a specific sector or to cater for a particular interest.

These funds often come with a variety of benefits such as lower or zero interest rates, longer tenors and moratorium, as well as other incentives.

Some of these funds are directly managed by the Bank of Industry, under a number of different schemes. In managing these funds, the BOI is involved in disbursement, implementation, monitoring and recovery.

Managed funds include:

  • BOI/CBN Intervention Fund
  • Cassava Bread Fund
  • Cement Fund
  • Cottage Fund
  • FGN Special Intervention Fund for MSME (NEDEP)
  • NADDC Fund
  • National Program on Food Security (NPFS)
  • Rice and Cassava Intervention Fund
  • Sugar Development Council Fund.

Also Read, Apply: Entrepreneurship Programme for Women in Agriculture

BOI matching funds / Bank of Industry: How to get a loan

Matching funds aim to expand the funding opportunities available to SMEs and larger businesses. These dedicated pools of money, seek to drive industrial growth, sustainable development and economic growth across Nigeria.

With matching funds, the BOI collaborates with various other partner institutions including state governments, multilateral organizations and wealthy individuals.

Matching funds include:

  • BOI/State Matching Funds
  • BOI/Dangote Foundation Matching Funds

Qualifying for a Bank of Industry loan

In order to be eligible for a Bank of Industry loan, your company or enterprise must be registered with the Corporate Affairs Commission (CAC). Accordingly, you must have a registration number for a Limited Liability Company or a Business Name.

Businesses in the following sectors are given priority:

  • Agro-allied, textiles and leather
  • Polymer-based (plastic, wood, rubber, cotton etc.)
  • Solid minerals
  • Foundries
  • Information communication technology (ICT)

You will also need to meet at least one of these general lending criteria:

  • Ability to add to Nigeria’s industrial output
  • Projects that mainly use domestic raw materials
  • Industries where Nigeria’s comparative advantages can be turned into competitive ones
  • Production of high quality products for the domestic market
  • Capacity to promote the expansion of exports worldwide
  • Projects that are able to integrate with existing supply chains
  • Projects that promote inter-state or regional collaboration
  • Businesses that can employ a lot of people
  • Projects that are both technically feasible and commercially viable
  • Green projects that are environmentally friendly
  • Enterprises that are well-run, with good accounting or bookkeeping practices
  • Businesses powered by women entrepreneurs

How to apply for a Bank of Industry loan

You may apply for a Bank of Industry loan either online or in person. The BOI has various regional offices around Nigeria.

When applying for BOI financing, you can expect to complete an extensive application process. Not every loan will have the same requirements. Requirements also depend on the size of your business (micro, small or large enterprise) and the amount of money you are applying for.

Having said this, you’ll need to provide some standard documents including financial statements, details on the collateral offered, a description of your business, a statement of what you intend to use the loan for, and more.

A checklist of what you may need includes:

  • Completed loan application form
  • Certificate of Incorporation
  • Memorandum and Articles of Association
  • Business plan
  • Feasibility study
  • Quotation for the supply of equipment and/or machinery
  • Quotation for the supply of raw materials
  • Means of identification (passport, driving license, permanent voters card)
  • Passport photographs and Bank Verification Number (BVN).
  • Audited financial accounts
  • Company bank statements
  • Tax clearance certificate
  • Declaration of current liabilities
  • Details of the security or collateral offered
  • Lease agreement (if operating from a rented property)

Business development service providers

In order to address some of the problems smaller businesses have in getting access to credit, the BOI has partnered with numerous Business Development Service Providers (BDSPs). These SME consultants can be found across Nigeria and are categorized as national, regional/zonal and state.

These BDSPs are mandated to provide a number of services such as:

  • Identifying creditworthy SMEs
  • Helping SMEs in developing the business plans and proposals, required to access Bank of Industry funds
  • Providing mentorship and advising SMEs on best practices
  • Supporting SMEs in developing ties with larger enterprises, buyers and suppliers across the value chain
  • Assisting the BOI in monitoring SMEs post-funding

Although some BDSPs charge a small token fee, for their services, others provide free advice.

Frequently asked questions (FAQs)

What items can the Bank of Industry finance?

The Bank of Industry primarily finances industrial equipment, that is used in manufacturing. The BOI does not fund the acquisition of land or buildings. If you have other more general working capital requirements, you may seek alternative funding solutions.

How does the Bank of Industry disburse the loan?

Should your loan application be successful, money will not be released to you directly . Instead, money is advanced to the vendors and suppliers of the equipment the loan application is for.

How much can I borrow with the Bank of Industry?

Generally, you are only able to apply for a minimum of a 5 million Naira loan. Loan requests of below 5 million Naira can be accommodated through the BOI’s matching fund platform and its Bottom of the Pyramid (BOP) scheme.

Does the Bank of Industry require collateral?

Yes, the Bank of Industry requires that you pledge some assets as collateral. However, this collateral does not have to be physical property; other forms of security are accepted including:

  • Legal mortgage on a piece of real estate
  • Debentures on assets of a company
  • Bank guarantee
  • External or third party guarantors
  • Third party collateral
  • Assets previously pledged to other lenders (as long as the BOI’s loan is adequately covered)

Can the Bank of Industry fund my startup?

Although the bank commonly requires that any prospective borrower has an already established company, with a track record, at its discretion it does give startup loans. Where the bank is to fund a startup, it would require a sound business plan and proof of competence in the given business sector.

How much interest does the Bank of Industry charge?

The Bank of Industry interest rate is typically at 9% per annum. Depending on the exact finance product or scheme applied for, this may be lower or higher. There may also be other applicable charges such as processing fees, appraisal fees, commitment fees and monitoring fees.

What is the Bank of Industry loan term?

Loans disbursed by the BOI have a term length of anything from 12 to 60 months. Depending on the exact loan term, a moratorium of up to 12 months is also offered.

How long does the Bank of Industry take to approve a loan?

Provided all required documents are in place, the loan processing time usually does not exceed 30 to 40 working days. More time will be required to process bigger loan requests.

What type of businesses do the Bank of Industry support?

The BOI supports various product clusters, including but not limited to:

  • 3D printing
  • Animal feeds
  • Aquaculture
  • Bakery
  • Blocks and interlocking stones
  • Bottled water
  • Ceramics and tiles
  • Chemicals and paints
  • Cosmetics and hair products
  • Dairy
  • Digital printing and multimedia publishing
  • Doors and window frames
  • E-commerce
  • Fashion
  • Fish smoking and drying
  • Food processing
  • Foundries and metal fabrication
  • Fruit juice
  • Furniture and wood processing
  • Gemstones
  • Greenhouses
  • Grocery packaging
  • Healthcare (medical diagnostics)
  • Information and communications technology (ICT)
  • Laundry and dry cleaning
  • Leather
  • Light manufacturing (lube blending, paper, paints etc.)
  • Liquefied petroleum gas and compressed natural gas
  • Meat processing
  • Mechatronics
  • Movie production (Nollywood)
  • Plastics
  • Quarries
  • Recycling
  • Restaurants
  • Roofing sheets
  • Shoemaking
  • Soaps and detergents
  • Solar (off grid)
  • Technical and vocational schools (offering city and guild certificate)
  • Theme parks
  • Water transportation
Bank of Industry: How to get a loan
Bank of Industry: How to get a loan