How Farmers Can Access Financial Grants and Loans in 2021
The continuous increase in the inflation rate in Nigeria has made it more difficult by the day for business owners including farmers to operate their businesses. This creates a need for farmers to access loans and grants to be able to run their businesses successfully.
Irrespective of the public clamour for farming, many farmers in Nigeria have no idea how or where financial grants and loans can be accessed.
CBN Agricultural Loan
The Central Bank of Nigeria allocated about 200 billion Naira to fund the agricultural sector in 2018 and continues to push in money for this purpose.
The major agricultural products that can qualify you for a grant in Nigeria include:
Cassava farming, fish farming, poultry farming, cotton farming, oil palm farming, pig farming, rice farming, maize farming, snail farming etc This loan can be accessed directly through the bank of Agriculture.
Bank of Agriculture (BOA) Loans
The First Step is to visit your state’s Bank of Agriculture (BOA) to know the full agricultural loan requirements and how to proceed with your application for the loan.
The major requirements for accessing the BOA loan are:
- You must have banked with them for at least 6 months.
- You must have saved 20% of the amount you intend to loan from the bank.
- You must provide collateral excluding land
- You must provide a detailed business plan
- The loan rate is usually 12%
Loans From Commercial Banks
Many commercial banks like United Bank for Africa (UBA), Stanbic IBTC, First Bank, etc have partnered with the federal government, Bank of Agriculture, and the Bank of Industries to provide loans for farmers. These commercial banks give loans to individuals and cooperatives for agricultural purposes.
The types of loans that can be accessed vary between short-term loans, medium-term loans, and long-term loans and the general requirements for all commercial banks are:
- You must have an account with the bank
- Submit a loan application
- You must deposit at least 10% of the total money applied for
- You must provide a collateral
- You must provide a detailed business plan with a complete feasibility study
Loans From Agricultural Co-Operatives
There are plenty of Agricultural cooperatives that provide agricultural loans. Credits given to these societies come as grants.
Most times, banks provide grants to cooperative societies who in turn distribute them to each member on the basis of contributory payments.
Some of the most notable agricultural cooperatives that provide loans for farmers are: All Farmers Association of Nigeria (AFAN), Youth Empowerment in Agricultural Program (YEAP), and FADAMA
The basic requirements for accessing loans and grants from banks by cooperatives:
- Form a cooperative society
- Submit a loan application written on the Cooperative letterhead and signed by the cooperative’s representative
- Submit a detailed feasibility study on the business.
The government is paying increasing attention to the agricultural sector especially as the oil sector continues to depreciate by making loans and grants available for the Agricultural sector and it is best for farmers to take advantage of this and build their business.