Nigeria currently offers a broad mix of financing options for micro, small and medium enterprises, with affordability largely driven by government intervention funds and development finance schemes, while commercial, microfinance and digital lenders compete on speed and flexibility at higher cost.
Across the market, interest rates vary widely. Government and development finance loans remain the cheapest, typically priced between 5 and 9 per cent per annum, making them the most attractive options for eligible MSMEs. Commercial banks usually charge significantly higher rates, often above 18 per cent annually, while microfinance banks and online lenders record the highest effective costs when calculated on a yearly basis.
For most small businesses, the choice of funding comes down to a trade-off between cost, speed and eligibility requirements. Facilities from institutions such as the Bank of Industry and NIRSAL Microfinance Bank offer the lowest rates, but access is tightly controlled. Businesses are expected to meet strict criteria, including formal registration, sector alignment, viable business plans and, in some cases, compulsory entrepreneurship training.
The Bank of Industry’s MSME fund targets small and medium-scale enterprises in priority sectors, with interest rates ranging from 5 to 9 per cent per annum and loan sizes of up to ₦10 million per business. Similarly, the Agri-Business and Small and Medium Enterprise Investment Scheme, implemented through NIRSAL Microfinance Bank, provides loans of up to ₦10 million at 9 per cent per annum, with repayment periods extending to seven years and an 18-month moratorium. The scheme does not require physical collateral, but applicants must complete approved training, operate registered businesses and meet documentation standards.
At the state level, schemes such as the Lagos State Employment Trust Fund remain among the most competitive options for MSMEs operating within Lagos. The fund provides loans at single-digit interest rates, usually between 5 and 9 per cent, with facilities capped at ₦5 million and a strong focus on job creation and local enterprise growth.
Commercial banks, while more expensive, appeal to businesses seeking larger loan sizes and faster turnaround times. Institutions such as UBA, Access Bank, FCMB, Wema Bank and Stanbic IBTC offer a range of SME products, including working capital loans, overdrafts and sector-specific facilities. Interest rates vary by product, customer profile and tenor, with monthly rates sometimes translating into double-digit annual costs. These loans typically require existing account relationships, consistent cash flow and personal or corporate guarantees.
Gender-focused financing has also gained traction. Wema Bank’s SARA initiative and FCMB’s SheVentures platform support female-owned businesses with access to loans, training and mentorship. Some of these facilities are offered at single-digit interest rates, while others are linked to larger Bank of Industry funds with moderate pricing and longer tenors.
Microfinance banks and digital lenders continue to play a role in improving access to credit, especially for micro and small businesses with limited collateral. Institutions such as BOI Microfinance Bank and Baobab Microfinance Bank offer short- to medium-term loans with flexible requirements, but interest rates are typically higher, reflecting the risk profile and convenience of these products.
Analysts note that while Nigeria’s MSME financing landscape is increasingly diverse, affordability remains closely tied to government-backed schemes. Businesses that can meet eligibility conditions and navigate application processes stand to benefit most from intervention funds, while those prioritising speed and flexibility often pay a premium through commercial or digital lenders.
MSMEs are advised to verify current interest rates, loan terms and requirements directly with banks and fund administrators, as conditions are subject to change and may vary by sector, location and credit profile.
