Bank of industry was founded by the federal government of Nigeria to help indigenous company with loan, cash or grant to finance the machinery they needed for their operation.
The bank was established in year 1959, to provide loans credit facilities to enterprenuer who may be facing financial difficulty in running his industry or business.
Their loans is not for all business and there are some requirement the applicant must meet in order to enjoy the support of BOI.
It focus mainly on business that produce goods by making use of domestic raw materials . Agriculture, oil and gas etc are some of the industries qualified to obtained BOI loans.
There are many ways of obtaining loan to start a business and one of them is approaching BOI for help.
This article will provide answer to the question ask by many about : what it is all about and their mode of operation; there is no need for anybody who want answer to the question, to stress himself as long as he can take time to read this article to an end.
Bank of industry abbreviated as BOI is financial institution founded by federal government of Nigeria in year 1959, to help people who are in business with loans to buy equipment.
The loan provided by BOI is not for everybody and their requirement may be different from other financial institution known by many but without much ado, everything you need to know about boi will be provided in this article, just sit and relax and read with fun.
Bank of Industry ~ Meaning & Functions
It is a financial institution founded by federal government of Nigeria to provide loans to finance industry equipment.
This loans is not presented to the burrower but to vendor who supplies the equipment that the loans is meant for.
The federal government of Nigeria established this bank to help people with business mind with equipment needed to get their business running but the cash is not given to the burrower rather it is given to the vendor who will supply the equipment the loans is needed for.
This loans credit facilities is obtainable only if the applicant meet their requirement.
6 Things to know About BOI
1.) It provide loans for industrial sector of economy only.
The targeted sub-sectors are agricultural and agro-allied business, oil and gas, solid minerals and other business that are based on production and creation of value.
This bank is founded to encourage local manufacturers with cash they needed to buy machinery.
2.) It provide loans for plant and equipment only.
The loans provided is for plant and equipment and not for raw materials, land, working capital and even building.
This is not bank to approach for loans to buy land and raw materials though they can guide anybody who approached them by recommend a financial institution for him.
They only finance the equipment needed to produce the goods. For instance if the applicant want to start cassava production what they do is to help him finance the equipment used for cassava production.
3.) Give the loans to vendors and to not the burrowers.
The loans will be given directly to the vendors who will supply the equipment after it has been approved.
The bank will ensure that the price quotation from the vendor is ideal for the equipment quoted. This is to ensure the equipment purchased through the loans is valuable.
4.) It also help to source for working capital.
Though this bank main duty is to help manufactures finance equipment needed for their business but they can also help source for working capital through their partners.
The bank has many partners who are providing loans for working capital.
So, what anybody who need working capital have to do is to also applying to be connected to one of their partners who is providing loans for working capital.
5.) It will not help to refinance equipment
There are many people who have obtain loans from other sources to finance their equipment procurement but now applying for boi to help them refinance it.
BOI will never do this once applicant has source for fund to get his equipment there is no need to approach them again because they will turn such application down.
So, it is pertinent for applicants to get their calculation right before they approach other sources other than BOI for equipment loans.
6.) The collateral require is flexible
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The reason why so many people afraid to approach financial institution for loans is because of requirement of collateral they need to back their loans.
Many financial institution prefer land as collateral and the difficulty of obtaining certificate of occupancy is not small.
The good news is that it accept property other than land because they are aware of how difficult it is to obtain certificate of occupancy.
Another interesting thing about boi is that if the applicant has used his property as a collateral to obtain loans from other bank, boi are willing to share collateral with the first lender provided the collateral cover the total requirement of both loans.
There are some measures it has taken to prevent unpleasant story from the burrower and without meeting these their criteria the applicant will not get the loans.
Requirements For Obtaining Bank Of Industry Loans
- Collateral must worth more than 100% of the loan
- Price quotation of equipment the borrower want to use the loans to buy
- Audited account of the company for at least 3 recent years.
- The business must be Nigeria business
- The applicant must have knowledge and skill in his choosing field
- The applicant must be financial disciplined and prudent
- Ability to compete and take risk is also needed .
- The purpose of applying for the loans must be clear and concise
- Applicant must not have history of unpaid loans
- The business must have skilled and dedicated workers
- The business must use domestic raw materials
- The business must be permissible by law
- The location of the business must be safe and secure
- The business must fall under the following sub economy ; agriculture , production and chain services
- The applicant must be member of organized private sector association such as manufacturers association of Nigeria (MAN) , Nigeria Association of small industries(NAIS) and others
The requirement to obtain loans from boi varies depending on the amount intended to burrowed.
- Application letter which must be formal
- Photocopy of certificate of registration
- Passport photography
- Photocopy of international passport or national ID card or voters cad.
- The biometric verification of major shareholders of business
- Two external guarantors with their means of identification like BVN, passport etc.
- The sources and quotation for raw materials used in the company
- The bank statement of the company for one year
- Audited account of the company
Other Services they Provide
It also offer some product other than small and medium enterprise loans and this product include:
1.) Youth empowerment
It is one of the duty of BOI to empower youth most especially those that have no job to be able to stand on their own without involving in crime.
2.) Government empowerment program
BOI provide various empowerment to people ranging from elderly people to young. The empowerment program may be training or giving of machinery to people
3.) Entrepreneurship fund for graduate
As a way of reducing the rate of unemployment among graduate, BOI provide funds for graduate to start business.
Having explained the various requirements for obtaining loan, the next thing to known is steps to obtain this loans.
Steps To Obtain Loans From BOI
The first thing is to get the document ready.
After getting the document at hand there are two ways to apply depending on the choice of the applicant.
1.) Apply online: after the applicant must have get all the document scanned, the next thing is to go to their website, register, obtain the login details and login to his account. Click the link below to visit their website.
READ MORE: How To Get Student Loan In Nigeria
2.) Another way to apply is by visiting their branches: Another way is to visit their branches with the document to obtain their forms.
The final step is to submit the application and wait for approval.
Every other action required from the applicant is going to be after the application has been approved.
- They have high loans amount: Nigerian can obtain up to 10 million naira for small medium enterprises with BOI.
- The collateral require by them is flexible
- Their interest rate is low.
- They require legal mortgage for land property
- They don’t provide loans for business bellow 3 years of operation.
Bank of industry was founded mainly to provide loan for procurement of company machinery.
The bank main objective is to help indigenous company so that the rate of employment can increased.
It has many advantages such as low interest charges and flexible collateral but it also worth know the bank has many so many requirement and some of this requirement are not easy to meet.
Some of the requirement for obtaining loan from BOI has being given in this article but it is pertinent for any interested person to visit their branches or website to know more and have clarification on things not clear.