Federal Government Grant and Loan: Application Process

If you are looking to get a federal government grant or loan for your business, please carefully read the article to the end.

As an individual or enterprise that needs money to grow or start a business, getting the adequate funds needed can be challenging.

Sometimes, getting loans from banks and other lenders can also prove difficult because of the high interest rate.

Additionally, the repayment plan might not give the business the needed time to grow and expand.

A whole lot of other factors can also pose a challenge to making that dream of growing your business possible.

The federal government has provided a means to help businesses get the needed assistance through loans and grants.

The purpose of this scheme is to help businesses achieve their goals, so the federal government loan and grant can be a very good option for your business.

It is important to understand all that is needed to successfully qualify for the loan and grant from the federal government.

So, in this article, we will detail everything you need to know about federal government loans and grants.

This includes the difference between loans and grants, their requirements, the application process, and frequently asked questions.

Overview of Federal Government Loan and Grant

Federal government grants and loans are financial assistance made available by the government to its citizens.

Individuals in various fields, such as businesses, non-profit organizations, and state or local government, are qualified for the grant and loan.

These loans are provided by the government to assist businesses, which contributes to economic development and also brings about innovation and social welfare.

The federal government grant and loan are two different schemes introduced that are aimed at assisting businesses to thrive.

Furthermore, qualifying for either the loan or grant requires that you meet the requirements, because that is what will make you eligible.

Applying for a loan or grant is a simple process, which we will discuss later in this article.

But before we go into that, let’s discuss the differences between both schemes.

Difference between the Federal Government Grant and Loan

The loan and grant are different, and it is important to understand them in order to make an informed decision.

Federal Government Grants

These are funds provided by the government and do not require refunds or repayments.

Individuals can get up to N50,000 as grants to support their businesses.

This scheme designs for one million NANO businesses in the 774 local government areas of the country.

So, you can access these funds depending on their purpose, and federal government will release them based on criteria and eligibility requirements.

Federal Government Loans

Government loans are funds given to individuals, businesses, or other establishments, and they must be repaid with interest.

These loans are used for purposes like starting or expanding a business, purchasing a home, and so on.

Individuals can get up to N1 million in loans from the government, and manufacturing organizations can get up to N1 billion in loans.

Furthermore, the loan has more favorable loan terms and relatively low interest compared to private lenders.

They also have a more flexible repayment option, and there is debt forgiveness or deferment in some cases.

Eligible Business for the Federal Grant and Loan

The federal government has mentioned the businesses that these schemes are meant for.

So, if your business falls into any of these categories, it means that you are eligible and qualify for the loans.

Below is the list of businesses that qualify for federal government grants and loans.

Traders: These are those who run day-to-day businesses, like market men and women, retail marketers, petty traders, and corner shop owners.
Food Vendors: They include food sellers and also those who sell fruits and vegetables.
ICT: Businesses that qualify for this scheme include business center operators, battery chargers, POS operators, call centers, and recharge card vendors.
Transportation: Businesses in this category include wheelbarrow pushers and dispatch riders who run an independent business.
Creatives: if you are a fashion designer, dry cleaner, make-up artist, or baker, you qualify for this scheme.
Artisans: These are for those who are good with their hands; they include painters, repairers, shoemakers, vulcanizers, and others.

Criteria for Federal Government Grant

To qualify for the federal government grant, you have to meet the following criteria:.

You must own a NANO business. This means you must own a small-scale business valued at around N1 million or less and employ no more than 4 employees. Your annual turnover should also be less than N1 million.
You must have the desire to grow the business, and it should have economic potential.
Be willing to employ at least one person as your turnover increases.
Provide proof of address, like an electricity bill, rent receipts, and waste disposal receipts.
A valid bank account information along with your BVN (bank verification number) and NIN (national identity number)

Criteria for Federal Government Loan (Small Businesses)

To be eligible for the federal government loan, you have to meet the following requirements:

You must have a business that has been in operation for up to a year.
For new businesses, you must register them with the CAC (Corporate Affairs Commission) because the bank will requires you to provide the business registration documents.
Provide bank statements for a period of 1 year for companies, and for startups, the business owner will have to provide his bank statement for the last one year.
Have good monthly turnover as requested by the bank.
Individual must provide a personal guarantee of the promoter.
Individuals must accept the BVN covenant (GSI) and any other thing requested by the bank.

Criteria for Federal Government Loan (Manufacturing Industry)

It must have at least 6 months of business or corporate banking relationship.
You must provide a CAC business registration document.
Provide a 12-month bank statement.
Be ready to make available any other document that the bank will require.
The bank will also determine the security to be provided by the borrower.

The Federal Government Grant and Loan Application Process

Applying for the loan and grant is a simple process. Below is the step-by-step application process.

Visit the federal government website: www.fedgrantandloan.gov.ng.
Click on ‘apply for grant’ or ‘apply for loan’
Follow the instruction by providing all the necessary details, which include your personal information and business information.
The application process is free, so ignore any website requesting money. Only apply on the federal government official website.

Note that this scheme will benefit 70% women and youth, 10% people with disabilities, and 5% senior citizens, while we will distribute the remaining 15% to other geographic areas.

Repayment Period for a Federal Government Loan

The repayment period is flexible and one of the best. It allows borrowers time to repay without any difficulty.

For small businesses where borrowers can get up to N1 million in loans, the bank determines the monthly installment of the repayment plan, which the borrowers repay over 3 years.

Manufacturing industries begin repayment after 6 months of securing asset loans, and they repay the loan over 5 years with a monthly equal payment throughout the repayment period.

Frequently Asked Questions (FAQs)

When is the final day for the submission of the application form?

The federal government will announce the date of the final submission.

Does my business need to be registered to apply for the federal government grant?

The grant targets small businesses, so registration is not necessary.

What will happen if I cannot repay the federal government loan?

The bank will take the necessary legal action to recover the loan from you.

What is the interest on the federal government loan?

The interest on the loan is 9% per year.

Does the federal government loan have any age limit?

Yes, those under the age of 18 are not eligible for the loan.

In Conclusion

The federal government loan and grant is aimed at helping individuals start up and expand their businesses.

This also improves the economy of the country and the standard of living of its citizens.

Furthermore, you can repay the loans without difficulty because they come with a very good repayment plan and a low interest rate.

Additionally, the federal government loan does not require any form of payment for you to apply.

Their official website is where the application process, and it is simple and straightforward.

Visit their official website now, fedgrantandloan.gov.ng, to apply for the federal government grant and loan.

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