SMEDAN Launches N500m Zero-Interest Loan Scheme to Expand Access to Finance for MSMEs

The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has launched a N500 million interest-free revolving loan fund to provide affordable financing for Micro, Small and Medium Enterprises (MSMEs), as part of efforts to strengthen entrepreneurship and drive economic growth.

The Director-General of SMEDAN, Charles Odii, unveiled the initiative, tagged the Grow Fund for Small Businesses in Nigeria, during an engagement with market traders, saying the scheme was developed in response to the financing challenges confronting many entrepreneurs.

According to him, the agency adopted a grassroots approach by consulting directly with traders before designing the intervention.

“It is not enough to remain in our offices making policies without understanding the realities of those we are meant to serve,” Odii said.

“We visited traders to hear their concerns firsthand, and one issue stood out clearly—access to affordable finance. That is why we are launching the Grow Fund for Small Businesses in Nigeria.”

He noted that many small business owners have remained excluded from conventional lending because of high interest rates, collateral demands and stringent lending requirements, limiting their ability to grow and create jobs.

Odii explained that the new fund would provide interest-free loans that beneficiaries can use to increase working capital, acquire business equipment, purchase tools and secure better business spaces.

In a departure from previous intervention programmes, SMEDAN said the loans will not be disbursed directly to individuals. Instead, registered trade and business associations will receive and administer the funds on behalf of their members.

According to the agency, the model is intended to strengthen accountability, improve loan repayment and ensure that the revolving fund remains sustainable.

“We are partnering with associations because they know their members and are in a better position to ensure responsible management and repayment of the loans,” Odii said.

He added that repayments from beneficiaries would be reinvested into the fund, allowing more entrepreneurs across the country to benefit over time.

The agency said the initiative forms part of its broader strategy to deepen financial inclusion, support enterprise development, stimulate employment and enhance the contribution of the MSME sector to Nigeria’s economy.

The launch comes at a time when access to affordable credit remains one of the most significant challenges facing Nigeria’s small business community, with many entrepreneurs unable to access commercial bank loans due to prohibitive borrowing costs and strict lending conditions.