Guide to Securing an Agricultural Loan in Nigeria

Farmers need loans for assistance, establishing or expanding property. The cost of working capital is high and borrowing might be the only option.
To acquire loans you need to understand what it entails. Borrowing money is not a simple process and it could involve assets loss on default. Things to consider are loan type, rates, terms and conditions. Others are eligibility status, purpose for the loan, your business plan and how to apply for the loan.
Why Farmers Need Loans
The reason farmers need financial assistance is diverse. They may need the loan to purchase or lease property. Other reasons include expansion, purchase of equipment and increase livestock.
Types of Loans
There are different types of loans such as the direct loan and guaranteed loan. Other loan types are operational loans, farm ownership loans. There are also emergency loans and conservation loans.
Before seeking a loan you need to determine the type of loan you need. Study the loan requirements and application process. The next step is to prepare the documentation to support your loan application.
  • direct loan
  • guaranteed loan
  • business loans
  • personal loans
  • operational loans
  • farm ownership loans
  • emergency loans
  • conservation loans
Agricultural Loans
There are only a few sub sectors of agriculture that have access to loans. The sectors given priority are rice, maize, fish and cotton farming. Others are poultry, cassava, snail and oil palm farming.
Priority Sub Sectors
  • rice farming
  • maize
  • fish farming
  • cotton farming
  • poultry
  • cassava
  • snail
  • oil palm farming
Why you need a Business Plan
A good business plan highlights your company structure and financials. It focuses on product, future goals and expansion.
To acquire a loan you need a detailed business plan. The plan should state your mission, and vision statement. Other features are amount of income and future projections.
Commercial Bank Loans
There are some things you need to access commercial bank loans. You need a comprehensive business plan and supply contract. Others are collateral and good credit history with the bank.
The bank would require at lease 20% of the loan request. .You need to produce a guarantor. Top banks that give loans are Zenith bank, First Bank Plc and Diamond Banks.
Bank of Industry
The bank of industry gives priority to the following industry. The support foundries, solid minerals and information technology services. Other sub sectors are polymer based industry and agro industries.
Criteria to access their loans are sustainable capacity and ability to expand operations. Others are franchise businesses, industries with high employment potential, good management team and project that are environmentally friendly.
Bank of Agriculture Nigeria
Products and Services
A small scale farmer can obtain loans from the bank of agriculture. They offer different products and services. You have the micro loan scheme, on-lending loan and SME agribusiness loan.
The agribusiness loan is for agricultural projects while the micro loan both micro agric and non micro agric activities. On-lending scheme is a partnership with NGOs, local governments, communities and agricultural farming agencies.


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