The Interest rates on loans to the Small and Medium Enterprises to cushion the effects of the coronavirus on their operations introduced by the Central Bank of Nigeria will rise to nine per cent from five per cent in March 2021.

The CBN disclosed this in its guidelines for the implementation of the N50bn Targeted Credit Facility.

Part of the guidelines stated, “Interest rate under the intervention shall be five per cent per annum all-inclusive) up to 28th February 2021 and thereafter, the interest on the facility shall revert to nine per cent per annum (all-inclusive) as from 1st March 2021.”

Banks have been sensitising borrowers to the plan to increase the interest rates with effect from 2021.

Fidelity Bank in a mail to its customers, stated, “The Central Bank of Nigeria has established a N50bn Targeted Credit Facility to help households and small businesses mitigate the impact of COVID-19.”

It added, “The offer is valid until February 2021 after which interest rates will revert to nine per cent.”

The CBN introduced the N50bn credit as a stimulus package to support households and Micro, Small and Medium Enterprises affected by the COVID-19 pandemic.

The loan tenor has working capital of a maximum period of one year, with no option for rollover, and a maximum tenor of not more than three years with, at least, one-year moratorium.

Repayment, it added, would be made on an instalment basis by the beneficiaries to the NIRSAL MFB, according to the nature of enterprise and the repayment schedule/work plan provided at the application stage.

The CBN said the loan amount would be determined based on the activity, cash flow and industry/segment size of the beneficiary, subject to a maximum of N25m for the SMEs; and households could access a maximum of N3m.

The banking regulator stated that the coronavirus pandemic had led to unprecedented disruptions to global supply chains, sharp drop in global crude oil prices, turmoil in global stock and financial markets, massive cancellation of sporting and entertainment event, the lockdown of large swath movement of persons in many countries, and intercontinental travel bans/restrictions on critical air routes across the world.

These outcomes, it added, had extreme consequences on households’ livelihoods and business activities, resulting from a drop in global demand, declined consumer confidence and slowdown in production.

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