The President of theNigerian Bar Association ( NBA)Olumide Akpata has announced that the NBA has has set up an access to finance scheme for lawyers who may require loans, at single digit, or less than market, interest rates, for their working capital and operational needs. The scheme involves enabling borrowing by eligible lawyers from two designated commercial banks (First Bank of Nigeria and Access Bank PLC) under an arrangement that is backstopped or cash-backed by the NBA.
There are six things every lawyer should know about this scheme.
- Maximum amount available to each lawyer
This depends on a needs assessment and creditworthiness of the lawyer and will be agreed between the lawyer and the participating bank, but for proper risk management, will not exceed the sum of N2million per borrower.
- Cash collateral provided by NBA Up to N1.5billion linked to the NBA Stabilisation Fund
- Tenor
Up to 3 years
4.Interest rate
9.5% per annum
5.Some loan conditions
Among other things, to be eligible, the lawyer will need to provide the following to the participating banks:
Evidence of payment of practising fees and NBA branch dues for three years (the year of application and the two years preceding that)
Signed but undated cheques from the lawyer’s bankers for the value of the amount borrowed
A letter from the lawyer irrevocably domiciling his/her salaries, or law firm receivables with the participating bank
A letter of good standing from the NBA
A copy of call to Bar certificate of the borrower (in the case of an individual), or of the partners (in the case of a partnership)
A Global Standing Instruction to the participating banks to set off any amount owed on the balance of the lawyer both within the bank and in any other bank
A credit insurance cover
6.How to access the loan
· Disbursements under the scheme will commence in January 2022. Relevant contact details of the Access Bank and First Bank team members will be circulated in January 2022.
· Before approaching either participating bank, be sure of the amount that you wish to borrow under the arrangement and of your ability to repay as and when due.
· Read the offer letter and loan documents carefully. Members of the NBA Finance Committee have agreed the general terms of the template offer letter with each participating bank, but lawyers should read through the terms themselves before making any commitments.
- What if a Lawyer defaults?
The NBA and the participating banks have agreed a tiered mechanism for enforcement in the event of default on the loan, which includes the possibility of deeming a default as professional misconduct. Members are encouraged to borrow prudently and only for purposes that will help expand their operations, improve their practices, grow their revenues, and ultimately better their professional lives.