How to Apply For SME Grant, Requirements and Eligibility

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Did you know that small and medium enterprises contribute to 90% of the employment opportunities in the world? this post contains how to apply for SME Grant.

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In this article, we will be reviewing four small-medium enterprise grants for you, free to pursue the interests of your business. 

What is an SME Grant?

The Federal government of Nigeria is out again to support small-scale businesses to establish themselves. The Fund is a Federal Government of Nigeria program to give subsidized loans to Micro, Small, and Medium Enterprises (MSME) at all-inclusive interest rates in the single digits (9%). 

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The Fund would also support SMEDAN applications under the National Enterprise Development Programme (NEDEP). This is a move empowered by the World Bank to help alleviate poverty. It is projected that by 2030 the world will need about 600 million jobs to help absorb the current rate of population. 

And guess what? Small and medium-sized businesses would account for 90% of the new jobs, that is why this post contains how to apply for SME Grant.

In this article, you will learn how to apply for SME grants. The application is free. Therefore, you have to focus on getting all the details you need, like document requirements and everything else, to help you secure the grant.

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Remember that the competition is fierce, so to stand out, you must do something others are doing differently, starting from the type of application you write and all of the necessary qualifications. 

Objectives and Aims of SME Grant

As part of its developmental responsibility, the Central Bank of Nigeria (CBN) has created the Credit Guarantee Scheme for Small and Medium-Sized Enterprises (SMECGS) to boost SMEs’ access to financing in Nigeria. The Scheme would include an N200 billion fund entirely funded by the Nigerian Central Bank (CBN).

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The Scheme’s goals are as follows:

  1. The government aims to accelerate the growth of the manufacturing SME sector in the Nigerian economy by offering bank loan guarantees to SMEs and manufacturers. 
  2. Set the pace for the Nigerian economy’s industrialization.
  3. Increase finance availability for SMEs and manufacturing. 
  4. Increase output, create jobs, and diversify revenue sources.

Accepted Industries

Not every industry is granted the SME. Only a few selected are allowed, productive sectors of the economy, as itemized below;

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  1. Manufacturing
  2. Agricultural value chain activities
  3. Educational Institutions
  4. Renewable energy/energy-efficient products and technologies

Things that are not allowed

  1. Refinancing under the program is prohibited.
  2. Trading facilities are not allowed to ensure only productive sectors of the economy continue to attract more financing necessary for employment creation and diversification of the country’s economic base, and trading facilities are not allowed.
  3. The state government shall not use commercial banks to disburse funds to this Fund’s end-users.

Loan outline and how to apply for SME Grant.

The loan limit per individual: N50 million

Minimum Loan Amount: N5 million

Interest Rate: 9% p.a (per annum)

Maximum Tenor: 5 Years

Loan Structure: Term Loan

Repayment: Source Loan repayment shall primarily be from but not limited to proceeds of business operation.

Click here to APPLY NOW

Eligibility to Apply for SME Grant in Nigeria

To be eligible, a borrower must fulfill the following requirements:

  1. Any entity that fits the criteria of a small or medium-sized business.
  2. A Nigerian private limited company entirely owned and controlled and is registered under the Companies and Allied Matters Act of 1990.
  3. A sole proprietorship is a legal business that one person runs.
  4. Startup business with positive cash flows and a Fixed Asset Cover Ratio of 100:150.
  5. 3rd Franchise
  6. Have no loans with any financial institution that are non-performing or overdue.
  7. Become a member of the Nigerian Association of Small and Medium Enterprises (NASME), the Manufacturers Association of Nigeria (MAN), and other organized private sector bodies/associations.
  8. Have a well-thought-out company plan.
  9. If applicable, provide up-to-date records on business activities.
  10. Meet all of the conditions set out by a Participating Bank.
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 5 Sources where you can apply for SME Grant

SME application is available online, so you don’t have to visit any physical office initially when applying for a grant. You know that if this, you must know a master of all the procedures you need to follow for a successful application. However, there are sources where you can apply to get grants. Below are some of them: 

Bank loans

In Nigeria, banks (Commercial, Merchant, and Development banks) provide loans to SMEs. Before they provide you with a loan, they must first determine your creditworthiness and the stage of your firm. 

You should also be aware that before asking for a loan, your small-scale business must align with the aims and interests of the financial institution to which you wish to apply. A well-written business plan, a financial record, collateral, and a guarantor are factors banks evaluate before making a loan. 

Nonetheless, many financial institutions are wary of lending to SMEs due to the risks. Some would rather pay the price levied for failing to reach the aim of providing SMEs loans than run the risk of being exposed to them.

Equity Investment Scheme for Small and Medium-Sized Businesses (SMEEIS)

The Small and Medium Industries Equity Investment Scheme (SMEEIS) Fund is another source of investment for Nigerian SMEs. Through venture capital, this sort of investment is intended to support SMEs.

This government project encourages SMEs to support industrialization, poverty alleviation, sustainable economic growth, and job creation. Venture capital financing lends funding to SMEs to transform the borrowed capital into equity in the future.

Venture capital is an equity investment in which investors expect large financial returns in exchange for incurring the risk of losing all of their stock. To be eligible for the Scheme’s equity funds,

  • Be registered as a limited liability business with the Corporate Affairs Commission and follow all necessary Companies and Allied Matters Act (2020) rules, such as filing yearly reports with audited financial statements.
  • Comply with all relevant tax rules and regulations, and file timely returns with the authorized authorities.

Non-governmental organization/foundation grants

Business grants are another type of funding typically provided by NGOs and foundations. Individuals, firms/companies, businesses, and corporations can apply for these awards to help them grow their enterprises or expand their operations. A grant is one of the best methods to receive funding for a business or an idea. While a loan is an option, a grant is significantly superior to a loan. 

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It provides you with the confidence to establish and expand your business or concept. It’s similar to receiving “free money” Many organizations in Nigeria, Africa, and worldwide provide grants. The Tony Elumelu Foundation, Bank of Industry, YouWIN, AYEEN cash grant, and others are among these organizations.

Bootstrapping

This is a circumstance in which business owners must rely on their funds and earnings to fund their operations without venture capitalists or bank loans. Aside from personal resources, financial assistance for enterprises, particularly during the initial stage, can be obtained from relatives and friends. Obtaining loans from microfinance organizations/moneylenders.

Microfinance banks were founded to aid small companies in obtaining loans due to the arduous processes and high-interest rates imposed by conventional banks. SMEs are eligible for microfinance loans if they fulfill the bank’s conditions. 

Finally, SMEs are the driving force behind the country’s industrial growth and development. The government should foster the sector by making low-interest-rate funding more accessible to industry participants to help them prosper.

What do you need to know before applying for an SME grant?

It is important to know that there are certain things you are supposed to know before applying for an SME Grant. 

  1. Almost all grants are for current firms — winning a grant if you haven’t launched your business is very difficult. Instead, look for a loan.
  2. Grants are offered to small businesses that are “interesting” A typical tailor or a local fisherman will have difficulty obtaining a grant. Most awards are given to innovative firms or contribute to a social cause.
  3. Programs aren’t always available; most grants only accept applications once a year, and the winner isn’t always revealed right away. Grants are not a quick fix for money.

Don’t hesitate to use the comments box below to ask questions, and feel free to contact us.

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About David Umoz

David Umoz is a pro and certified scholarship content writer who sincerely desires to inform scholars about details and how to apply for financial grants, scholarships, and loans.

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