The Bank of Agriculture Loan (BOA) is a Nigerian government-sponsored development bank that focuses on providing credit/loan facilities to both small and large-scale farmers and other small businesses within rural areas.
It is Nigeria’s largest development Finance Institution (DFI) in Agricultural Financing. It was incorporated in 1972 and became operational in 1973. rated The BOA partners with many other development finance institutions such as the Bank of Industry (BOI), the Development Bank of Nigeria (DBN), and the Central Bank of Nigeria
In this article, we will provide a guide on how to get a Bank of Agriculture loan and everything you need to know about the Bank of Agriculture.
Table of Contents
What Is The Bank of Agriculture (BOA)
Banks of Agriculture is a Nigerian government-sponsored development bank that makes provisions of offering credit to support Agricultural and Non-Agricultural value chain activities
BOA offers opportunities for self-employment in rural areas, thereby reducing rural-urban migration, as well as Providing Financial Inclusion services. It also has Capacity Development through the promotion of co-operatives, agricultural information systems, and the provision of technical and extension services
What Are The Types Of Loans Available Through The Bank Of Agriculture?
The Bank of Agriculture finances any business involved in productive Agro-allied activities. Unlike other finance institutions, the BOA does not typically fund individuals or lend directly to the end customer. If your business is not already registered with the Corporate Affairs Commission (CAC), you will need to do that first.
Some types of loans available through the BOA include:
1. Equipment Leasing Product (Elp)
This type of loan is only available to individuals, registered cooperatives, and self-help groups
2. Export Finance Facility
A short-term facility that provides credit financing at pre-shipment and invoice discounting. This credit facility is designed to encourage the exportation of agricultural produce, to bring valuable foreign exchange into Nigeria.
3. Agro-Processing Facility
This type of loan Provides funds for the establishment of cottage or urban agro-processing businesses
4. Direct Credit Product
This type of loan is designed to finance agricultural production and other agro-allied activities. The facility is available to both individuals and corporate organizations.
5. Input Procurement Credit Facility
The Input Procurement Credit Facility is focused on helping businesses finance their purchase of inputs to agricultural production across the value chain.
6. Haulage Credit Facility
This credit facility is developed to support businesses engaged in the transportation of agricultural-related goods. Business owners can access this loan to acquire trailers, lorries, and related vehicles
7. Hides And Skin Revival Credit Facility
The Hides and Skin Revival Credit Facility is Developed to provide investors access to funds that can be used to develop businesses across the hide or leather value chain.
8. Grow And Earn More (Gem)
The GEM Credit Facility was developed as a vehicle to get more Nigerian women into agribusiness. A maximum of N1 million can be borrowed.
The BOA also offers other types of loans and products such as Commercial Agricultural Products and Women & Youth Products.
How To Get a Bank Of Agriculture Loan
The requirements for a Bank of Agriculture Loan vary according to factors such as the size of your business and the loan amount you requested. If your business is interested in applying for a BOA loan, you can go to your nearest Bank of Agriculture branch.
Here is a guide on how to get a Bank of Agriculture loan:
1. Completed Application Form
To get the Bank of Agriculture loan, it is crucial that you request the application form and fill it out carefully. The application form can be requested physically or on their official platform.
2. Company Profile
As an agro-business owner seeking a Bank of Agriculture loan, you must have a company profile. Your company profile is most likely your identity which will help in processing your loan faster.
3. A Business Plan
One of the ways to easily get a Bank of Agriculture loan is by drafting a good business plan for your business. When requesting a loan, your business plan will enable BOA to gain insight into your business and why it is crucial to grant you the loan.
4. Bank Statement
When requesting a business loan from the Bank of Agriculture, it is paramount that you prepare your corporate/personal bank statement. This bank statement must be 12 months or more than that. The purpose of this is to evaluate the financial credit of your business and check if you are eligible for the loan.
5. Valid Means Of Identification
Some of the basic means of identification that will be requested are your driving license, NIN, passport, and other valid means of identification. The purpose of this identification is for Boa to assess if you are fit for the loan and check for any form of fraudulent activity.
6. Audited Financial Accounts
To get a Bank of Agriculture loan for your business, your financial accounts must be properly audited by an external and internal auditor. Also, you must provide a Tax clearance certificate and a Certificate of Incorporation during the loan process.
7. Proof Of Address And Collateral
As an agro-business owner seeking a loan, it is crucial you provide real proof of your business address. This will help BOA to confirm your Genuity. Also, if you have collateral(s) to offer, ensure to state it, as well as other relevant information and documents.
What Is The Interest Rate Charged On a Bank Of Agriculture Loan?
The interest rates attached to loans from the Bank of Agriculture vary depending on the purpose of the loan and the type of business activities being financed. Below are some of the interest rates charged on a Bank of Agriculture loan:
- Grow and Earn More (GEM): 12% interest rate
- Agricultural production and agro-processing: 14% interest rate
- Commodity marketing: 20% interest rate
Note that Interest rates can be lower than this for other types of BOA loans or higher.
Does The Bank Of Agriculture Require Collateral?
Yes, the Bank of Agriculture does require collateral for loans and financing. Though some credit facilities do not, the vast majority do. Acceptable forms of collateral may include:
- Third-party guarantors
- Obligations of the Federal Government of Nigeria (FGN Bonds, FGN Eurobonds, FGN Treasury Bills, and others)
- Physical assets, such as real property
- Obligations of state governments or agencies of the Federal Government of Nigeria
- Other non-government debt instruments
What Is The Maximum Loan I Can Borrow From The Bank Of Agriculture?
Generally, the amount you can borrow from the Bank of Agriculture is dependent on both the size of your organization and the credit facility applied for. Individuals can borrow significantly less than large businesses. Individuals may only be entitled to a few million, while large businesses can get up to a billion.
In most cases, Individuals Can borrow up to N5 million, while Corporate organizations Can borrow up to N50 million. In both cases, the loan term is no more than five years
Does The Bank Of Agriculture Require Guarantors For a Loan?
Yes. the Bank of Agriculture (BOA) requires two reputable guarantors for a loan. Other requirements for a BOA loan include:
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A minimum savings balance
A Bank Verification Number (BVN)
A global standing instruction (GSI)
A company profile
A cash flow budget
How Long Will It Take Before Receiving Funds From The Bank Of Agriculture?
The duration of application processes varies according to the exact credit facility applied for and how much funding you requested. The confirmation process usually takes up to three days, and once approved, the funds are deposited into the applicant‘s bank account. Typically, the larger the fund you need, the longer it will take to get a loan.
Conclusion
When preparing to apply for a Bank of Agriculture loan, figure out how much money you need and the amount of monthly payments you can afford so you avoid taking out too large a loan. Finally, put together copies of the required documents to save time when applying to get a BOA loan. Make sure all your paperwork is legible to avoid potential funding delays.
Not all loan amounts have the same requirements, so make sure you know the general documentation criteria before applying. This way, you can increase your chances of approval and receive your funds more quickly.
Reference
- Sukfin.com
- Wikipedia.org
- Boanig.com
