Getting a business loan in Nigeria is a step easier, all thanks to the Development Bank of Nigeria (DBN). Without a doubt, there are over 37 million Micro, Small and Medium Enterprises (MSMEs) contributing to over 50% of Nigeria’s GDP.
MSMEs are the powerhouses when it comes to employment in many low-income or striving countries. They are the largest employers of labour in any developing or underdeveloped countries. Unfortunately, their viability is threatened by a couple of factors such as savings, insurance and adequate credit. Their growth is often hindered by access to credits to further drive their businesses. This is where the Development Bank of Nigeria (DBN) comes in. Meanwhile, we have compiled Top 17 Quick Loan Websites/Apps That Give Loans Without Collateral in Nigeria. We suggest you read it. Below is everything you need to know about the Development Bank of Nigeria and how to get a loan.
What is the Development Bank of Nigeria (DBN)
The Development Bank of Nigeria (DBN) was conceived by the Federal Government of Nigeria (FGN) in collaboration with global development partners to address the major financing challenges facing Micro, Small and Medium Scale Enterprises (MSMEs) in Nigeria. The main objective of the DBN is to alleviate financing constraints faced by MSMEs and small Corporates in Nigeria through the provision of financing and partial credit guarantees to eligible financial intermediaries on a market-conforming and fully financially sustainable basis.
Development Bank of Nigeria exists to alleviate financing constraints faced by Micro, Small and Medium Scale Enterprises (MSMEs) in Nigeria through providing financing, partial credit guarantees and technical assistance to eligible financial intermediaries on a market-conforming and fully financially sustainable basis.
Who Qualifies a DBN Loan?
All MSMEs (start-up or existing) involved in productive enterprises are eligible for the Development Bank of Nigeria (DBN) loan. However, they must be customers of eligible financial institutions. DBN is poised to provide funding and risk-sharing guarantees through Participating Financial Institutions (PFIs), who will then on-lend to end beneficiaries.
DBN loans can be accessed through PFIs, which include Commercial Banks, Microfinance Banks, Development Finance Institutions (DFIs) and other Financial Institutions.
DBN loan repayment tenure is flexible (up to 10 years with a moratorium period of up to 18 months) and the interest rates are on a market-conforming and fully financially sustainable basis.
How to get a DBN Loan
- Visit your bank: Commercial Bank, Microfinance Bank, Development Finance Institution (DFI) and other Financial Institutions and indicate you want to apply for a DBN Loan.
- The Bank appraises the business and loan purpose, and if its assessment is favourable, the Bank applies to DBN for funding.
- If DBN approves the loan, DBN will disburse to the Bank for on-lending to end borrowers.
DBN Loan Eligibility
- To be eligible to receive financing from DBN, the PFI shall have met the minimum eligibility requirements set out below on the Cut-Off Date. The PFI shall maintain the minimum eligibility requirements throughout the Financing Period.
- DBN or its representative will conduct an annual due diligence process to confirm that the PFI is not in breach of the minimum eligibility requirements and may declare all advances to the PFI immediately payable if the PFI is in breach of one or more of the requirements or fails to remedy the breach of a requirement within any grace period allowed by DBN at DBN’s absolute discretion.
- To be eligible to receive financing from DBN, the PFI shall:
- hold a duly issued and valid license from CBN to carry on business as a bank or finance company;
- demonstrate within the three most recent financial years, two years of profitable lending operations, with effective risk management procedures, controls, and acceptable levels of loan portfolio quality and performance;
Below are questions you probably have at the back of your mind about the DBN and its loan scheme:
Can I borrow directly from DBN?
No, Development Bank of Nigeria (DBN) does not lend directly to businesses. DBN loan is channeled through PFIs. PFIs carry out the credit evaluation and supervision of the loan.
How many years do I have to pay back the loan?
Depending on the nature of your business and loan purpose, you may have up to 18 months moratorium on principal repayment for working capital & investment projects, and up to 10 years to repay the loan.
What is the interest rate?
DBN loan offers flexible interest rates that are based on tenure and referenced to market rates.
What is the definition of an MSME?
MSMEs are classified into Micro, Small and Medium-Sized Businesses based on asset size, sales volume and number of employees, as defined by The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).
How does DBN loan differ from other commercial loans?
DBN loan is specifically targeted at small businesses to ensure that such businesses have increased access to financing. In addition, DBN loans have a longer tenure than other commercial loans, which are usually short-term.
Can I open a current/savings account at DBN?
No, DBN is a wholesale Financial Institution and does not provide retail banking services.
Can I file a complaint with DBN regarding a Participating Financial Institution?
For any inquiry, complaint or suggestion, you may contact us directly through the following channels:
Call: +234 811 384 1699
You can access the DBN loan through any of these PFIs by contacting any of the banks listed below: