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.
- purchase or lease property
- expansion
- buy equipment
- increase livestock
- disaster management
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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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