The CBN Agricultural Loan under the Agricultural Credit Guarantee Scheme helps farmers access credit with government support. Learn about eligibility, the application process, the loan guarantee, IDP claims, and default settlement.
The CBN Agricultural Loan, managed under the Agricultural Credit Guarantee Scheme Fund (ACGSF), was created to improve farmers’ access to credit and reduce the risks banks face when lending to the agricultural sector. Established in 1977 and operational since 1978, the scheme is backed by the Federal Government of Nigeria and the Central Bank of Nigeria (CBN). Its share capital stands at ₦50 billion, with the Federal Government contributing 60 percent and the CBN 40 percent.
What is the CBN Agricultural Loan?
The CBN Agricultural Loan is a facility supported by the Agricultural Credit Guarantee Scheme Fund (ACGSF). It provides loan guarantees for farmers by covering 75 percent of the amount in default. This system encourages banks to lend more to the agricultural sector, supporting activities like crop farming, livestock, plantation management, and processing across the agricultural value chain.
The CBN acts as the managing agent of the scheme, working through the Agricultural Credit Guarantee Scheme Fund Board.
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Objectives of the CBN Agricultural Loan Scheme
The key goals include:
- Increasing the level of bank credit available to agriculture.
- Reducing the risk banks face when lending to farmers.
- Supporting smallholder farmers, medium-scale farmers, and agro-processors.
- Financing activities across the agricultural value chain, from production to processing and transportation.
How to Apply for a CBN Agricultural Loan
- Fill out the ACGSF loan guarantee application form from your lending bank.
- The lending bank signs, stamps, and forwards the application to the nearest CBN office in the state.
- The farmer bears the cost of mapping or tagging the agricultural enterprise.
- The lending bank performs credit checks through the Credit Bureau and Credit Risk Management System.
- CBN’s Development Finance Office visits the project site, attaches a report, and submits it for approval.
- The bank forwards the completed application to the CBN within 30 days of receiving it from the farmer.
Eligible lending institutions include Deposit Money Banks and Microfinance Banks regulated by the CBN.
Interest Drawback Programme (IDP)
Introduced in 2003, the Interest Drawback Programme (IDP) helps reduce the cost of borrowing for farmers. It provides a rebate of up to 40 percent on interest paid on loans under the ACGSF.
Eligibility for CBN Loan for Farmers
- Farmers who fully repay both the principal and interest within the agreed loan period qualify.
- A grace period of 3 months may be allowed, but interest accrued during this period will not be refunded.
- The lending bank files claims on behalf of eligible farmers.
Required documents include Form IDP/1 in triplicate and the original ACGSF guarantee certificate. Claims are processed within 10 days once all documents are submitted, and rebates are paid directly into the farmer’s bank account.
Who Can Apply for a CBN Agricultural Loan?
- Smallholder farmers cultivating crops or rearing animals.
- Medium-scale farmers and processors within the agricultural value chain.
- Agribusinesses engaged in storage, transportation, and processing of farm produce.
Collateral Requirements for CBN Loans
Non-collateralized loans: maximum of ₦100,000.
Collateralized loans: up to ₦50 million.
Acceptable collateral includes farmland, movable property, life insurance policies, personal guarantees, or assets registered on the National Collateral Registry.
CBN Agricultural Loan Default Claims Settlement
If a farmer defaults:
- The bank notifies the CBN within six months of default.
- The bank must attempt recovery before submitting a claim.
- CBN pays 75 percent of the outstanding loan balance after verification.
The borrower remains fully liable, and if repayments are later made, 75 percent of recoveries are returned to the Fund.
Frequently Asked Questions about the CBN Agricultural Loan 2025
Who can access the loan?
Smallholder farmers, medium-scale farmers, and agribusinesses along the agricultural value chain can access loans through Deposit Money Banks and CBN-regulated Microfinance Banks.
What activities are covered?
The loan covers crop cultivation, plantation management, animal husbandry, farm machinery, processing, storage, and transportation of agricultural produce.
Do I need collateral?
Yes, but requirements vary. Non-collateralized loans are capped at ₦100,000, while collateralized loans can reach up to ₦50 million. Acceptable collateral includes farmland, movable property, insurance policies, shares, personal guarantees, or assets registered with the National Collateral Registry.
Are there service charges?
No, application forms are free and provided by the CBN.
Can the loan guarantee be revoked?
Yes, if the bank or borrower fails to comply with ACGSF guidelines.
Conclusion
The CBN Agricultural Loan through the Agricultural Credit Guarantee Scheme provides farmers with access to credit at affordable terms. With the additional support of the Interest Drawback Programme, farmers can reduce borrowing costs and grow their businesses sustainably.
By applying through approved banks and meeting the eligibility requirements, farmers and agribusinesses can benefit from this long-standing support system designed to strengthen Nigeria’s agricultural sector.
