What is a MEDAN loan?

SMEDAN, established in 2003 under the “SMEDAN Act,” plays a crucial role in fostering the development of small businesses in Nigeria. It is dedicated to supporting the growth of small-sized enterprises across the country.

SMEDAN is a statutory body that:

• Encourage, monitor and oversee the growth of micro, medium and small businesses (MSMEs)
• Create and implement policies that encourage growth for MSMEs
• Get involved in capacity building
• Assistance to MSMEs in obtaining access to credit as well as other sources of financing

SMEDAN is here to assist in making it easier for your business to secure financing.

Effective MSME development is seen as a way to combat poverty and is essential to Nigeria’s prosperity. Given its function as a “champion” for small enterprises, SMEDAN may be seen as a significant catalyst for the Nigerian economy.

Through its headquarters in Abuja and many other sites around Nigeria, SMEDAN contributes to the development of small-scale enterprises.

The Bank of Agriculture (BOA) and the Bank of Industry (BOI) are two of the many partners with whom SMEDAN collaborates.

The types and amounts of loans are available through the Small and Medium Enterprises Development Agency

Typically, SMEDAN doesn’t directly provide loans to businesses. Instead, it plays the role of a facilitator, connecting eligible small and medium-sized enterprises with suitable loan providers. SMEDAN collaborates with other government agencies, such as the BOI and the Central Bank of Nigeria (CBN), to offer credit programs for small businesses. However, SMEDAN primarily focuses on providing entrepreneurial training and development opportunities, as well as facilitating the distribution of loans through various institutions like BOA, BOI, CBN, and more.

In addition to loans offered by private sector institutions, SMEDAN can also assist small enterprises in accessing loans from the private market. This includes commercial banks, finance houses, microfinance banks, and other financial institutions.

Eligible for Small and Medium Enterprises Development Agency credit

What is the best way to make an application to get a Small and Medium Enterprises Development Agency credit?

There are two methods to get the loan from SMEDAN. In the first instance, you can submit an application for one of SMEDAN’s education courses. Additionally, you are able to make use of SMEDAN’s credit information portal before moving into the direct application for commercial bank loans.

Submitting applications by SMEDAN

If you’re looking to secure a loan, you must apply for one of the SMEDAN initiatives. These programs focus on educating participants about various aspects of running a business. To get started, visit your nearest SMEDAN branch to fill out an application form. You may also be required to attend a training session. SMEDAN provides an online MSME registration portal for easy access.

Upon successful completion of the program, you may be eligible for an unconditional grant or a soft loan with lower interest rates and no collateral needed. Whether you receive a loan or a grant, having a registered business is crucial. In Nigeria, the Corporate Affairs Commission (CAC) handles company registrations.

Depending on your business type, you might also need to register with the Standards Organization of Nigeria (SON) and the National Agency for Food and Drug Administration and Control (NAFDAC). Make sure to have a solid business plan outlining how you intend to utilize the funds.

Utilizing the SMEDAN Credit Information Portal, prior to making an application with commercial banks

SMEDAN’s Credit Information Portal serves as a valuable resource for individuals seeking commercial bank loans in Nigeria. It provides detailed information on lending institutions, loan terms, and interest rates. While you can’t apply for a loan directly through the portal, it helps you connect with suitable lenders based on your needs. Remember, it’s an information tool, not an application platform.

Checklist for loan applications

An inventory of the things that are necessary before any loan with SMEDAN (or commercial banks) is granted might comprise:

• Application form completed
• Plan of business
• Budget for cash flow
• Certificate of Incorporation
• A valid means of identification (driving licence (passport, driver’s license, or voters’ card))
• Address proof
• The details of the collateral that is offered (if there is any)

Frequently asked questions (FAQs)

How long will it take before receiving funds from the Small and Medium Enterprises Development Agency?

The time required to apply for a loan differ based on the specific program or credit facility you’re applying to. Once you have registered and applied through SMEDAN, it is necessary to complete training sessions and meet the other requirements (e.g. the registration of your business) prior to any loans being made.

How long do I have to pay back a Small and Medium Enterprises Development Agency loan?

The duration of repayment depends on the plan and facility being used. All loans made through SMEDAN are likely to be soft loans with acceptable repayment rates.

What is the interest rate charged on a Small and Medium Enterprises Development Agency loan?

The rates for interest on loans made through SMEDAN are different. Most loans are called soft loans because they have a low rate of interest. Some loans have no interest.

How much can I borrow from the Small and Medium Enterprises Development Agency?

The amount of money that could be borrowed through SMEDAN is quite minimal. If you are in need of large sums of capital, it’d be perfect for you to make an application directly to a commercial lender, and SMEDAN could benefit in this regard.

Does the Small and Medium Enterprises Development Agency give grants?

It is true that SMEDAN offers a conditional grant. The grants are part of specific initiatives SMEDAN manages periodically.

Does the Small and Medium Enterprises Development Agency require collateral?

In the majority of cases, SMEDAN gives unsecured loans, i.e. loans that don’t require collateral. What you could require is a personal guarantee.

Another loan application that is made to commercial banks could need collateral.

What programs does the Small and Medium Enterprises Development Agency run?

• Automotive (Component Parts Fabrication) Empowerment Scheme
• Commercialization and Empowerment Initiative (for ICT)
• Conditional Grant Scheme (CGS)
• Enterprise Network Initiatives
• Financial Empowerment for MSMEs
• Garment and Textile Cluster Growth Support Scheme
• Hewlett-Packard: Learning Initiative for Entrepreneurs (HP – Life)
• Leather Cluster Enterprises Scheme
• MSME Market Linkage Initiative
• One-Local Government-One-Product (OLOP)
• SMEDAN Cloud for MSMEs
• Waste to Wealth Cluster Development and Enhancement Scheme
• Young Business Owners in Nigeria (Y-BON)