If you’re an exporter and you need extra funding for your business, you may want to try NEXIM Bank’s export loan facilities. But just in case you’re unsure what NEXIM is, a brief introduction follows.
NEXIM Bank, that’s the Nigerian Export-Import Bank, is a government-backed financial institution which has a primary responsibility of providing financial assistance to Nigeria’s exporters. The bank funds exporters’ purchase of production input and capital goods and insures export businesses against risks. Loans are either disbursed directly to recipients by NEXIM Bank or through partner commercial banks.
Here, we’ll show you how to get a direct loan from NEXIM Bank.
NEXIM Bank’s Direct Loan Facility
This makes funding available to exporters for the acquisition of raw materials, packaging materials, spare parts and other capital goods. Short term, medium term and long term
loans in local or foreign currency are granted under this scheme. Funding from NEXIM Bank may cover up to 80% of the total project cost. There’s also the possibility of collaborative funding, in which case NEXIM Bank cofinances the exporter’s project with other banks.
Qualifying for a loan: what’s required
As is the case with any typical lending institution, NEXIM Bank expects companies and cooperative societies applying for its direct loan facility to have a record of keeping their finances in good shape and meeting financial obligations within proper time limits. Intending borrowers should also be able to demonstrate that the loan, if granted, will strengthen and expand their export business. Crucially, applicants must be sure that at least half of their businesses are export-oriented.
If you’re submitting a loan application, you should hand it in along with these documents:
- Certified True Copy of your company’s Certificate of Incorporation
- Audited statement of account for three years or a complete set of management report (signed by two directors of the company) for the accounting period for which the statement account is unavailable.
- A feasibility study report or business plan
- Certified True Copies of Form CO2 and CO7
- Certified True Copies of proforma invoice(s) for new or used equipment from a reputable supplier.
- Evidence of license or permit from relevant agencies
- Evidence of export commitment
- Copy of Environmental Impact Assessment Report
- Evidence of availability of counterpart funding (for new projects)
- Copies of title documents that are available as security
In addition, NEXIM demands collateral for its loans, and would accept any of these as security:
- The borrower’s (or company director’s) landed property
- Bank guarantee or insurance bond
- Share certificates of quoted companies
- Investment certificate or commercial bills
- Floating charge on movable property of the company’s borrower or directors.
- Fixed charge on borrower’s machinery and equipment
Fees You’ll need to pay
A number of fees and charges are expected to be paid by loan recipients. These fees include;
- A commitment fee, which is charged at 0.5% (per annum) of the loan and is paid along with the loan interest.
- Administrative fees, which (unlike the commitment fee) is paid just once. The fee is 0.1% of the loan amount, and can be paid by the borrowing business when it accepts NEXIM’s loan offer. However, if it’s a short-term loan (less than 180 days), the fee will be 0.5% of the loan.
- Legal fees set at 0.5% of the loan amount may be charged if legal agents are hired to help with preparing the loan document.
Apart from these, borrowers will also pay taxes, stamp duties (and other applicable duties) and foot the bill for monitoring visits by NEXIM as well.
How the loan is disbursed
If the loan applicant meets NEXIM’s conditions for doling out the loan, the bank could issue a Letter of Credit on behalf of the applicant. The Letter of Credit works as a guarantee that payment will be made to the seller for the equipment that the loan recipient wants to buy (import) from them. Note that the bank could do some background checks on such imports before they happen, and may charge the loan recepient for this.
If the exporter (who receives the loan) wants to purchase machines and equipment locally, NEXIM will release the funds directly to the supplier of those items.
Repayment terms
Loan repayments can be made for up to three years after loans are disbursed. Varying repayment conditions exist, depending on the agreement reached between the borrower and the bank. Such repayments may begin to be made in the first six months after the moratorium on loan repayments. NEXIM expects beneficiaries of its loans to comply with the repayment schedule it lays out at the point of granting the loan.
Find out more
There’s more information about this loan from NEXIM Bank. If you’re an exporter and are interested in getting a loan from them, you can send your inquiries to neximabj@neximbank.com.ng, or
click here to visit their website.
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