Reps Seek Emergency SME Loans at Single-Digit Interest Rates as Borrowing Costs Remain High

The House of Representatives has called on the Federal Government to establish an emergency financing scheme for small and medium-sized enterprises (SMEs), with loans offered at single-digit interest rates to help businesses cope with Nigeria’s high borrowing costs. The lawmakers also urged the Central Bank of Nigeria (CBN) to review lending policies and risk-pricing practices affecting small businesses, while asking the Federal Ministry of Industry, Trade and Investment to convene a national summit to develop practical solutions to the country’s affordable credit challenges. The resolutions followed the adoption of a motion sponsored by Bamidele Salam, who represents Ede North, Ede South, Egbedore and Ejigbo Federal Constituency of Osun State, during plenary on Tuesday. According to a report by *The PUNCH* published on October 13, 2026, the proposed intervention would involve special funding for the Bank of Industry (BOI) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) to support affordable lending to eligible businesses. The House also called for consultations involving the CBN, deposit money banks, development finance institutions and SME associations to establish a transparent framework for single-digit or other concessional lending rates for productive businesses without undermining financial system stability. However, the resolutions represent a legislative call for government action rather than confirmation that a new nationwide loan scheme has been funded or opened for applications.

House seeks emergency summit within 30 days

As part of the proposed response, lawmakers asked the Ministry of Industry, Trade and Investment to organise an Emergency National Summit on Affordable SME Finance within 30 days. The summit is expected to bring together government officials, financial institutions, business associations and other stakeholders to agree on time-bound measures to reduce borrowing costs and improve access to credit. The House said the discussions should address barriers that prevent businesses from obtaining loans, including complicated application procedures and delays in disbursement. It also wants the stakeholders to consider ways to expand access to existing government-backed credit facilities. The proposed summit comes amid continuing concerns from business groups that high lending rates and restrictive credit requirements are limiting investment, production and expansion. In September, the CBN reduced its benchmark Monetary Policy Rate from 26.5 per cent to 23 per cent. However, that reduction does not automatically require commercial banks to offer loans at the same rate, as lenders also consider borrower risk, collateral, operating costs and other factors when determining interest charges.

Salam highlights SMEs’ contribution to the economy

Moving the motion, Salam described small and medium-sized businesses as central to Nigeria’s productive economy, entrepreneurship and employment generation. He cited the 2021 National Survey of Micro, Small and Medium Enterprises, conducted jointly by SMEDAN and the National Bureau of Statistics, which estimated that micro, small and medium-sized enterprises accounted for approximately 96.9 per cent of businesses in the country. The survey also put their contribution at 46.32 per cent of gross domestic product and 87.9 per cent of employment, while accounting for 6.21 per cent of exports. Salam argued that the survival and growth of these businesses depended substantially on access to affordable and predictable financing. Businesses require credit for working capital, machinery, wages, inventory purchases and expansion. When borrowing becomes too expensive, operators may struggle to maintain production, meet financial obligations or invest in new opportunities. The lawmaker expressed concern that the cost of credit remained prohibitive despite the CBN’s September rate reduction. He said commercial lending rates reportedly ranged between 20 and 46 per cent annually, leaving many SMEs facing a significant gap between the cost of borrowing and their ability to generate profits. The figures on lending rates were presented in the lawmaker’s argument for intervention; actual rates vary according to lenders, loan products and borrowers’ risk profiles.

High borrowing costs threaten business expansion

Salam warned that expensive loans could create a cycle in which businesses raise the prices of their goods and services to cover repayment costs, potentially losing customers whose purchasing power is already under pressure. Reduced sales could then weaken profitability and make it more difficult for businesses to repay their loans, threatening their continued operations. He also identified stringent collateral requirements and extensive documentation as major obstacles to accessing formal credit. For smaller businesses without substantial assets, established financial records or long operating histories, meeting conventional lending requirements can be particularly difficult. The financing challenges are not new. In April 2026, business owners and economic stakeholders called for easier access to credit and policy reforms, while SMEDAN said it was working to expand financing partnerships and review the national MSME policy framework. Salam argued that improving access to affordable loans could help businesses invest, expand their operations and create employment, particularly for young Nigerians facing limited opportunities in the labour market. He also referenced Sections 16(1)(a) and 17(3)(a) of the 1999 Constitution, as amended, which address national prosperity, economic development and citizens’ opportunities to secure adequate livelihoods.

Calls for targeted support gain attention

The House’s proposal adds to wider calls for financing arrangements that better reflect the needs of smaller businesses. Some existing initiatives already provide funding at single-digit rates. In May 2026, for example, the Lagos State Government announced the release of ₦5bn under its MSME financing programme, designed to provide qualifying cooperative-based businesses with loans at an annual interest rate of nine per cent. Such programmes demonstrate that concessional lending can be delivered through specific arrangements, but their eligibility requirements, geographical reach and available funding differ. The federal proposal would require further action to determine the size of the emergency fund, its financing structure, eligibility criteria, participating lenders and repayment conditions. The House’s call also leaves open how a nationwide scheme would balance lower interest rates with lenders’ need to manage defaults and maintain financial stability. For businesses, the practical impact will depend on whether the resolutions lead to a funded programme with accessible application procedures and timely disbursement. For now, the lawmakers have urged the Federal Government and relevant financial authorities to treat affordable SME finance as an urgent economic priority, with the proposed 30-day summit intended to bring stakeholders together to develop concrete measures.