Table of Contents Hide
- What is Agriculture Loan?
- Agriculture Loan Scheme
- List of Agriculture Loans in Nigeria 2022 (Including Bank of Agriculture Loan)
- How to acquire Agricultural loans aside from BOA and CBN
- AGRICULTURE LOAN REQUIREMENTS
- Agric Loan Without Collateral
- Poultry Farm Loan in Nigeria
- How To Apply For Agriculture Loan In Nigeria
- Agriculture Loan FAQs
- Which bank is best for agriculture loan?
- What is a agriculture loan?
- Is it hard to get an FSA loan?
In the agriculture business world, starting up or running a farm can be very expensive. In regards to the purchase of land and other agricultural tools, especially if you are new in the business. This is why agriculture loans like the types listed in this article are very much important and useful to farmers. As it helps farmers to carry out their farming plans and activities successfully.
In this article, you will learn what is agriculture loan, how to acquire, requirements, scheme, list, the agric loan without collateral. It also explained poultry farm loans in Nigeria and how to apply for an agriculture loan in Nigeria. Isn’t that interesting?
What is Agriculture Loan?
An agriculture loan is a fund or resource given for farming and other related purposes. It also helps them in hiring laborers in the cultivation and harvesting of farm crops.
In addition, agricultural loans enable farmers to cover the cost of irrigation systems, crop storage, and transportation. These loans have low-interest rates starting at 7% p.a and a processing fee range of zero to four percent.
Agriculture Loan Scheme
Before digging further into the agriculture loan scheme. There are two major problems citizens face especially the young people when they think of going into farming. These problems include, (1) the kind of agriculture business to start and (2) raising capital for the business.
However, these challenges have been major reasons many have erased the need of investing in agricultural business from their mind.
So, in regard to these challenges, the federal government of Nigeria has created avenues, an agriculture loan scheme, and programs for citizens. Moreover, citizens who are into small and large-scale farming now have access to government loans through these schemes. Below are some of these schemes you need to know as an agriculture business owner.
Agricultural Credit Support Scheme (ACSS)
ACSS is an initiative established by the federal government in collaboration with the Central Bank of Nigeria. The Commercial Banking committee also participates in the initiative to enable farmers to explore more in the agricultural sector in Nigeria.
ACSS also helps in the reduction of inflation and lower agriculture production costs. It generates also enough for the export of agricultural products to increases Nigeria’s foreign earnings.
The scheme operates through a Central Implementation Committee (CIC) at the national level. But, at the state levels, the scheme operates through State Implementation Committees (SICs) which to ensure that the objectives of the scheme are carried out effectively.
ACSS loans can be accessed at banks through the state chapters of farmers associations for small scale farmers. But, the large scale farmers can apply directly to the banks in alien with the scheme guidelines.
ACSS funds are given to farmers and agro-allied entrepreneurs at a single-digit interest rate of 8.0 percent. While the project support commences, banks will grant loans to qualified applicants at a 14.0 percent interest rate. Applicants who pay back their facilities on the schedule are to enjoy a rebate of 6.0 percent.
Commercial Agriculture Credit Scheme (CACS)
As an agricultural business owner, you can benefit from the CACS N200 billion Fund. Basically, the facility was established by the CBN, Federal Ministry of Agriculture, and Water Resources in 2009. Meanwhile, the aim is to enrich the development of the agricultural sector in Nigeria by giving financial supports to farmers.
The benefit of CACS is farmers are grant loans at a single-digit interest rate of 9% maximum. The fund is available till 2025 so both existing and new agricultural entrepreneurs can benefit from it.
Who Can Apply For CACS Loans?
Apparently, both medium and large-scale farmers involved in the cultivation of crops, fisheries, animal husbandry, etc, can apply for the loans.
Liability companies who are also into agricultural production and its related activities are also eligible to apply for CACS loans.
Agricultural Credit Guarantee Scheme Fund (ACGSF)
Basically, the ACGSF was established in the year 1977 by Degree no 20. It started its full operation in 1978. The Federal Government and the Central Bank of Nigeria hold the share capital of this fund. However, the scheme is mainly managed by the Central Bank of Nigeria.
From studies on ACGSF in Nigeria, the scheme has increased the chances of funds flow to agricultural development. However, the leading shareholders in the scheme have shown greater commitment for the scheme to achieve its massive objectives. They encourage farmers to apply for loans from the participating banks involved in the scheme to enhance their agricultural activities.
In addition, every farmer needs to have knowledge of the agriculture loan scheme and how it works. Get the list of federal government agriculture grants here.
List of Agriculture Loans in Nigeria 2022 (Including Bank of Agriculture Loan)
The government has provided many avenues and schemes to individual farmers and corporate bodies to access agricultural loans. Meanwhile, there is a number of these avenues by the federal government including some commercial banks to grant farmers access to loans. But, we take a look at two major agriculture loans for farmers in Nigeria and how they work.
Read more: List Of Top Agriculture Grants This Year
(1) BANK OF AGRICULTURE (BOA) LOANS
The Bank of Agriculture of Nigeria stands as a major avenue provided by the federal government to dispatch loans to farmers. Also to other agriculture business owners who seek a loan in terms of raising capital for their agricultural activities.
Originally, BOA activities are run by the federal government. The Central Bank of Nigeria and Federal Ministry of Finance Incorporated acts as supporting shareholders of the bank.
BOA should be the first choice of every Nigerian farmer, individual, or corporate body seeking government loans. As we further, we will look at the requirements for this loan and other government agriculture loans, so keep reading.
(2) CENTRAL BANK OF NIGERIA AGRICULTURAL LOANS
The Central Bank of Nigeria partners with the federal government to give loans to farmers in Nigeria at low interest.
Basically, to achieve this, the Central Bank of Nigeria has recently made available a close sum of 75billion naira as grants. These loans can be accessible to farmers and other corporate bodies across the states directly from the Bank of Agriculture.
How to acquire Agricultural loans aside from BOA and CBN
Generally, the federal government also gives farmers access to agriculture loan with requirements, from commercial banks by partnering with them through BOA. Some of these commercial banks include; Zenith Bank, Union Bank, UBA, First Bank, and Stanbic IBTC.
AGRICULTURE LOAN REQUIREMENTS
The agriculture loan requirements may vary depending on the type of schemes that you apply for. But below are some general requirements you will need.
- Must have a good business plan
- Must have a land property as a collateral
- Formal application for a credit facility
- Certificate of Incorporation
- Memorandum and Article of Association
- Board Resolution to Borrow
- Have available, a 20% partial payment of the loan.
- Meanwhile, have at least a six-month relationship with the bank in terms of making payments into your account.
Agric Loan Without Collateral
Central Bank of Nigeria has established an initiative called Agric-Business Small and Medium Enterprise Investment Scheme (AGSMEIS). However, the initiative’s aim is to grant loans to farmers and other agricultural businesses without collateral at a 5% interest rate.
What is AGSMEIS?
AGSMEIS is an initiative of the Central Bank of Nigeria as support to the federal government to promote Agricultural businesses. Basically, the initiative serves as a vehicle for sustainable economic development and employment generation.
Basically, the scheme was approved at its 331st meeting held on 9th February 2017. It requires all banks in Nigeria to set aside 5% of their profit after tax (PAT) annually.
AGSMEIS’s ensure that Small and Medium Enterprises (SMEs) have access to finance, generate employment opportunities in Nigeria. However, it ensures also adequate development of agricultural value and also sustains agricultural practices in Nigeria.
How Does AGSMEIS Work?
- All interested applicants must attend compulsory training with the CBN-certified Entrepreneurship Development Center (EDC) or institute (EDI).
- Meanwhile, interested applicants should apply for loans through EDI.
- However, all applications are sent to the CBN for processing and approval.
- Those applied will be called for an interview regarding his/her business
- Then, loans are paid into the account of beneficiaries.
- All applicants should get business support services. EDI is there to assists and implement a business plan and provide business support services commercially to applicants.
- Make sales, run your business, keep proper records, monitor sales, and expenses to maximize profit, and pay back the loan.
Requirements for CBN AGSMEIS Funds
- Registered business with CAC
- Evidence of tax payments
- Letter of Introduction
- Letter of Guaranty
- Certification by an EDI
- Passport photo of you and guarantor
- Valid ID card
Poultry Farm Loan in Nigeria
A poultry farm loan in Nigeria is one of the most lucrative agricultural business loans today. It is a business anyone can think of getting agric loans for. However, this type of livestock business does not come easy. The process involves huge capital which is why it’s on the list of farming that can be considered for grants. The grant is known as a poultry farm loan in Nigeria.
Lately, the demand for livestock products is fast expanding across Africa as a result of population growth and increased urbanization. According to ThisDay Newspaper, Nigeria’s poultry industry is worth over N1.2tn as of 2017.
What is Poultry farm Loan?
It is promissory capital given to poultry farmers to buy capital assets to run a poultry farm. Nevertheless, the agreement binding poultry farm loan in Nigeria leaves a clear commencement and termination of the loan.
In general, this type of loan is obtained through the Bank of Agriculture (BOA). Also, from the Central Bank of Nigeria, and other related Agriculture scheme programs and initiatives. Meanwhile, there are general Agriculture Loan requirements as discussed above but can differ for some businesses.
How To Apply For Agriculture Loan In Nigeria
Below, are some major loans and quick tips on how to apply
Bank of Agriculture Loans
In our world today, BOA loan processing is fast and easy. Meanwhile, you just need to go to one of the branches of the bank. Ask a manager to give you a loan application form. After filling it, submit the form. Then, look for a manager to discuss all loan requirements.
When everything is good, the applicant will go through loan processing. Meanwhile, this is what you need to know about Bank of Agriculture loans.
Generally, an Agric loan is not exclusive to the Bank Of Agriculture. Central Bank of Nigeria and its initiatives with other commercial Banks have been partnering with the FG to assist Farmers.
Generally, the agricultural sector in Nigeria is expanding its wing and productivity through the help of certain bodies. These bodies by the Federal Government are the Bank of Agriculture, Central Bank of Nigeria, and Commercial Banks. However, they help in granting loans to farmers and other agriculture businesses at a low-interest rate. The purpose is to support and fast track the Agriculture sector in the country, through its other Federal Government business grants. Poultry farm loan is not exceptional in Nigeria.
Agriculture Loan FAQs
Which bank is best for agriculture loan?
The following are some of the best Agriculture Banks
- State Bank of India (SBI) State Bank of India (SBI) is the market leader when it comes to agriculture-related financing. …
- ICICI Bank. …
- HDFC Bank. …
- Punjab National Bank (PNB) …
- Allahabad Bank. …
- Axis Bank. …
- Oriental Bank of Commerce (OBC)
What is a agriculture loan?
Agricultural lending involves loans for the acquisition or refinancing of capital assets like lands, machinery and equipment, breeder livestock, and agricultural real estate upgrades. It also includes loans to fund the production of crops, fruits, vegetables, and livestock.
Is it hard to get an FSA loan?
Like any business, it can be challenging to secure financing if you don’t have a proven track record of sales. Fortunately, there are many solutions available that can assist you in becoming qualified. When used effectively, loan financing may be a powerful tool. Federal backing ensures the low interest rates of USDA agriculture loans.