Agriculture
The right banking services to help you scale your agri-business efficiently.
Commercial Agricultural Credit Scheme
The scheme is aimed at fast tracking the development of the agricultural sector by providing credit facilities to large scale enterprises with a minimum asset size of N50m at a single digit interest rate of 9%. This is to enhance national food security, increase food supply and affect agricultural produce and product prices, thereby promoting low food inflation, reducing cost of credit in agricultural production and enabling farmers to exploit the potentials in the sector.
Target
• Medium scale Farms/Agric. Enterprise
• Corporate and Large scale Commercial Farms/Agric. Enterprise
• State Governments: For states to participate in on-lending to farmers’ cooperative societies and other areas of agricultural development.
Specific Requirements
Medium scale Farms/Agric. Enterprise
• It must be a limited liability company with an asset base of not less than N50million and having a prospect to grow the net asset to N150million in the next three years as well as full compliance with the provision of the Companies and Allied Matters Act (1990).
• Corporate and Large scale Commercial Farms/Agric. Enterprise
It must be a limited liability company with an asset base of not less than N100 million and having a prospect to grow the net asset to N250million in the next three years as well as full compliance with the provision of the Company and Allied Matters Act (1990).
State Governments
• State Governments/FCT could borrow up to N1.0billion for on-lending to farmers’ cooperative societies and other areas of agricultural development.
• The State must submit an expression of interest.
• Applications for credit facility must be submitted along with a letter of application stating amount, purpose, repayment plan and execution of an Irrevocable Standing Payment Order (ISPO) [in favour of Central Bank of Nigeria and Sterling Bank] to deduct at source, the total monthly loan repayment obligation from the State Statutory Revenue on behalf of the Bank.
• State should have appropriate/functional structures on ground or set up structures for the deployment of funds, which must include existing and registered Cooperative Societies/Unions.
• The cooperatives must be at least six (6) months old with proven track records of repayment. Clearly specify the areas/projects to which the funds would be deployed.
• The Cooperatives’ Societies and unions are to open their accounts with Sterling Bank Ltd. for the purpose of the transaction
• Other documentation/conditions as may be required by the Bank upon approval
• Maximum Credit: N2bn for Agricultural enterprises and N1bn for State Governments
• Interest rate: 9% inclusive of all charges
• Tenor: 3years inclusive of Moratorium (as at 2013)
• Equity Contribution: 30%
• Clear business plan
• Provide an up-to-date record on the business operation
• Have an out-growers program, where appropriate
• Insurance policy on all assets purchased noting Sterling Bank as loss payee beneficiary where assets are funded under the funds disbursed by the Bank’s nominated insurance company\
• NAIC Agric. Insurance for production related products like Poultry, Crops and Livestock etc.
• Adequate and realizable collateral in line with the Bank’s CPG
• Disbursement Schedule
• Repayment Schedule
• Memorandum of Articles
• Certificate of Incorporation
• Cash flow of the project must be sufficient to liquidate the facility over its life time
• Satisfy all other requirements specified by the bank
Agricultural Credit Guarantee Scheme Fund
The Scheme provides guarantee cover (up to 75% of any outstanding balance upon default) in respect of loans granted to the agricultural sector by banks and also has a farmer-friendly scheme called “Interest Drawback Program” (IDP) of up to 40% interest refund upon liquidation of the facility.
Target
• Individual farmers
• Cooperative Societies
• Corporate Bodies
General Requirements
• Must be a farmer with verifiable investment in the enterprise of interest
• Ability to bear the cost of agricultural insurance cover by NAIC
• Must have a current account for the servicing of loan interest
• Should provide acceptable collateral in the form of landed property with adequate title, shares, life assurance policy, or third party guarantee supported by assets (for requests over N1million)
• Activities to be sponsored MUST be during the season and within the list of eligible enterprises
• Insurance policy by the Bank’s nominated insurance company on all assets purchased, noting Sterling Bank as first loss payee beneficiary
• Maximum Credit: N1m for Individual and N10m for Corporate and Cooperative Societies
• Maximum Tenor: 2 years (inclusive of moratorium)
• Pricing: Commercial rate
Sterling Agricultural Input Scheme
This product is intended to offer credit facilities to Nigerian Agro Input Dealers (Seeds Companies and Fertilizer Agro Dealers) under the Federal Ministry of Agriculture Transformation Agenda.
Target
This product is targeted at Agro Input Dealers in Nigeria who are engaged in the distribution of Farm Inputs such as Fertilizers and Seeds. They must be registered on the Cellulant Platform and assigned codes and National Seed Council (NASC) of the Federal Ministry of Agriculture and Rural Development.
General Requirements
• The product is available to Seed Companies certified by Nigerian Agricultural Seed Council (NASC) and Primary Agro Dealers trained and accredited by International Fertilizer Development Centre (IFDC).Customer must open an account with the Bank
• Interest rate of 18% (inclusive of insurance cost) is broken down as follows; Interest Rate 16.5%. CRG Fee 1%. Insurance 0.5% 50% IDP. 75% NIRSAL Guarantee.
• The bank Guarantees buy-back of 30% unsold stock from the Agro Dealers and Seed Companies
• Equity contribution of 10%
• Tenor is 6 months for both Seed Companies and Fertilizer Agro Dealers
• Borrower must have an Insurance Policy from Nigeria Agricultural Insurance Corporation (NAIC) or other approved NAICOM agents
• Tripartite warehousing agreement or Equitable Mortgage as collateral
• Monitoring of the project by the supply chain managers appointed by the Federal Ministry of Agric
• Maximum Credit: Fertilizer-N400m Seed Companies-Open ended
• Maximum Tenor: 6 months for both Seed Companies and Fertilizer Agro Dealers
• Pricing: All in rate of 18% inclusive of Insurance
General Requirements
• The product is available to Seed Companies certified by Nigerian Agricultural Seed Council (NASC) and Primary Agro Dealers trained and accredited by International Fertilizer Development Centre (IFDC).Customer must open an account with the Bank
• Interest rate of 18% (inclusive of insurance cost) is broken down as follows; Interest Rate 16.5%. CRG Fee 1%. Insurance 0.5% 50% IDP. 75% NIRSAL Guarantee.
• The bank Guarantees buy-back of 30% unsold stock from the Agro Dealers and Seed Companies
• Equity contribution of 10%
• Tenor is 6 months for both Seed Companies and Fertilizer Agro Dealers
• Borrower must have an Insurance Policy from Nigeria Agricultural Insurance Corporation (NAIC) or other approved NAICOM agents
• Tripartite warehousing agreement or Equitable Mortgage as collateral
• Monitoring of the project by the supply chain managers appointed by the Federal Ministry of Agric
• Maximum Credit: Fertilizer-N400m Seed Companies-Open ended
• Maximum Tenor: 6 months for both Seed Companies and Fertilizer Agro Dealers
• Pricing: All in rate of 18% inclusive of Insurance
Nigeria Incentive-Based Risk Sharing System for Agricultural Lending
The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) is an initiative of the Central Bank of Nigeria (CBN), the Bankers Committee (BC) and the Federal Ministry of Agriculture & Rural Development (FMA &RD).
It provides guarantee in form of Credit Risk Guarantee (CRG) as a comfort for the Banks to lend and also incentivize the farmers through provision of Interest Drawback Program (IDP) to be paid quarterly based on the agricultural project. The Guarantee ranges from about 30-75% depending on the Agricultural value chain involved. IDP also ranges from 20-40% depending on the category.
Target
All actors in the agricultural value chain can benefit under NIRSAL. It’s a financing initiative that will provide farmers with affordable financial products and reduce the risk of granting bank loans to farmers.
General Requirements
• You will have to open an account with the Bank
• The Agricultural value chain where you operate must be clearly identified
• Availability of off takers must be identified and contract agreements must be sought
• Payment of annual 3% CRG for guaranteed portion based on the classification of the client project
• Eligibility for IDP on the commercial interest charged is at the NIRSAL’s discretion and to be paid quarterly
• Equity contribution between 0 – 20%
• Interest rate is at commercial rate
• The borrower must have an Insurance Policy from Nigeria Agricultural Insurance Corporation (NAIC)
• Collateral Required
• Maximum Credit: Subject to the request
• Maximum Tenor: Not fixed, based on the request
• Pricing: Commercial rate
Sterling Tractor Acquisition Scheme
Tractor Lease finance facility for Individuals, Corporate Enterprises, Cooperatives, Individuals, State Governments and Tractor Associations to purchase tractors to be supplied by the appointed Vendors.
Target
• Individual
• Members of Groups or Associations/Cooperatives
• Corporate Enterprises/ Individuals with evidence of land ownership with minimum of 20 hectares
• State Government
General Requirements
• Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) Guarantee of 75%.
• 20% of the tractor value will be contributed by the benefiting operator as equity. This would be deposited in the savings account and put on lien throughout the loan period.
• Bank’s funding of the tractor is 100%.
• Tractor will be registered in Sterling Bank/Customer’s name until the loan is liquidated and finally transferred to the owner.
• Comprehensive auto insurance noting Sterling Bank as first loss payee. Insurance premium will be paid (to match loan tenor) and remitted by the bank as they fall due.
• Tractor to be discharged on final liquidation of loan. Payment of 0.5% of credit as transfer fee is made upfront by the beneficiary.
• Vendor to undertake buy-back of the tractors in case of default.
• Maximum Tenor: 3 years
• Pricing: Commercial rate
