Do you desire to go into commercial agriculture, but don’t have sufficient start-up capital?
Of course, you will need to get something called an agricultural loan to help you make your dream agribusiness a reality.
Don’t worry; we’ll show you how to obtain a loan for your Agriculture from any financial institution that supports farmers.
How To Secure Agricultural Loans In Nigeria
Before the discovery of crude oil, agriculture was the largest source of income for Nigeria.
As soon as crude oil was discovered, there was a massive decline in the agricultural sector, with no further attention being paid.
Today, more than half of the nationals go into agriculture for their means of livelihood, since white-collar jobs are no longer available. Some of them engage in commercial farming activities.
As a result, they need a great deal of capital to stimulate their agricultural businesses.
What Is An Agricultural loan?
An agricultural loan is simply a scheme that provides financial support to those engaged in small, medium, and large agricultural activities.
People are applying for an agricultural loan to either support an existing farm business or to start one. These loans are given at a low-interest rate, but there are certain requirements that you need to correspond to.
Bank of Agriculture is a platform where farmers can obtain loans for their agric-businesses.
They have over 201 sales outlets throughout the country and the headquarters at Kaduna State.
Getting Agric Loan in Nigeria
There are so many places where you can get subsidized loans for your farming operations across the country.
These include the Bank of Agriculture (BOA), the Central Bank of Nigeria, private and non-governmental organizations, Nigerian commercial banks, and others.
We’ll give you more information about their Agric loan and how you can apply.
Bank of Agriculture (BOA)
The organization was put in place around 1972 by the federal government and the CBN an investor. It is one of the largest financial institutions providing agricultural loans and grants to Nigerians.
Getting a loan from BOA is not as rigid as you might think. They offer a few loan services such as direct lending, credit monitoring, and collaboration.
Others include the Export Finance Facility, higher growth and income, Skin and Pelt Recovery Loan Facility, Inventory, Credit Fertility, Large Loans, the livestock development loan, and so forth.
Let us take a few moments to review these loans.
This is one of the facilities BOA created for the urban agro-processing business. It is because it is part of the agricultural value chain in the country.
Through this initiative, the bank aims to ensure domestic food security in Nigeria and reduce the level of post-harvest losses.
Direct Credit Loan
Both private and commercial enterprises can access this loan to finance their agricultural production and other agro-related activities.
An individual may collect up to ₦5 million, whereas corporate organizations may collect up to ₦50 million. Given that you are collecting the loan for agricultural production, the interest rate is only 14%.
But if you recoup the loan for the marketing of the goods, the interest rate is 20 percent.
Grow and Earn More (GEM)
This type of loan is specially designed for women who want to get involved in farming.
Despite the fact you don’t necessitate any collateral, you must have a piece of land you will use for farming or manufacturing some products in line with the agricultural value chain.
A woman can only receive a maximum of ₦1 million, with an interest rate of 12 percent.
BOA Loan Application Process
You can visit one of their outlets near your street and complete the process if you desire to apply for a loan from the Bank of Agriculture.
Until then, you will be asked to complete a form, present a company profile, business plan, cash flow budget, bank statement, tax clearance, proof of address, valid means of identity, and so on.
Central Bank of Nigeria
As we said earlier, CBN is another place where you can apply for a loan for Agriculture and kick-start your business.
In case you don’t know, NBC has released more than ₦100 billion into the agricultural sector to provide loans to new and existing farmers with attractive interest rates.
These sectors include Commercial, Agricultural Credit Scheme, Real Sector Support Facility Micro SME Development Fund, and so forth.
Let’s look at some of these facilities and how you can access their loan.
Commercial, Agricultural Credit Scheme
This agricultural program was set up in 2009 to strengthen national food security and reduce the cost of credit in agricultural production. As such, you can access this loan through one of the commercial banks in Nigeria.
Only 9 percent of the interest rate is required for every loan collected.
But before you can benefit from this loan, you must participate in livestock, cash crops, poultry, aquaculture, food crops, marketing, storage, or agric-chemical and other agriculture-related activities.
Real Sector Support Facility
This is another fantastic initiative to support farmers who want to start a big farm and those who need to scale up.
You can have access to a loan of ₦500 million to ₦10 billion, but the loan is going to last 15 years at a low-interest rate.
Before this loan is granted, the applicant must present a good business plan, a certificate of incorporation, and a memorandum and article of association.
Private or Non-Governmental Organization Commercial Banks
You can also get a loan of your choice from one of the country’s commercial banks. Some of them are short-term, long-term, and medium-term. However, each of these loans has its terms and conditions.
To apply for such a loan, you must meet some requirements.
First of all, you must have an existing account with any of these organizations, a minimum partial payment of 10 percent, a good business plan, and valid collateral.
There are several other agricultural loan schemes in Nigeria other than those listed above. Nevertheless, there are financial institutions you can get a loan for your farm business.
Select your preferred financial institution and go through the application process.