SENATE PASSES LANDMARK BILL TO BOOST FINANCING FOR SMALL BUSINESSES

SENATE PASSES LANDMARK BILL TO BOOST FINANCING FOR SMALL BUSINESSES

The Nigerian Senate has passed the Factoring, Assignments and Receivables Financing Bill, 2026, a significant piece of legislation aimed at improving access to finance for businesses, enhancing liquidity, and supporting both domestic and international trade.

The bill scaled third reading during plenary and is expected to create a comprehensive legal framework for receivables financing, a financial arrangement that enables businesses to convert unpaid invoices into immediate working capital by selling them to financiers at a discount.

Lawmakers considered and adopted the legislation during the Committee of the Whole before proceeding to its final passage.

Senate Leader, Senator Opeyemi Bamidele, who led debate on the bill, urged lawmakers to support the measure, describing it as an important step toward strengthening Nigeria’s business environment and expanding access to credit.

The motion for the third reading was seconded by Senate Minority Leader, Senator Abba Moro, who highlighted the potential benefits of the proposed law for businesses and the broader economy.

Following a voice vote, Senate President Godswill Akpabio announced the passage of the bill.

Before the final approval, the Clerk of the Senate read the long title of the legislation, which seeks to establish legal certainty, transparency, and modern regulatory standards for receivables financing transactions in Nigeria.

The bill is formally titled: “A Bill for an Act to provide for the assignment of receivables, establish legal certainty, promote transparency, modernise assignment laws, facilitate access to credit, enhance domestic and international trade and for related matters.”

Speaking after the bill’s passage, Akpabio commended lawmakers and the House of Representatives for advancing the legislation, expressing optimism that it would contribute to economic growth and improve Nigeria’s trade competitiveness.

He noted that the measure could strengthen commercial activities, support enterprise development, and assist efforts aimed at improving Nigeria’s position in international trade.

Factoring is widely recognized globally as an alternative financing tool that allows businesses—particularly Micro, Small and Medium Enterprises (MSMEs)—to access funds tied up in unpaid invoices without relying solely on traditional bank loans.

Industry experts have long argued that the absence of a dedicated legal framework has limited the growth of receivables financing in Nigeria despite its potential to improve cash flow, strengthen business operations, and expand access to capital.

With the Senate’s approval, stakeholders expect the legislation to increase confidence among financiers, investors, and businesses by providing legal clarity and reducing uncertainties associated with receivables financing transactions.

Supporters of the bill also believe the framework will help businesses access working capital more easily, enabling them to meet operational obligations, expand production, create jobs, and compete more effectively in both local and international markets.

Economic analysts have identified access to finance as one of the major challenges facing Nigerian small and medium-sized enterprises, making the proposed law a potentially important tool for stimulating private sector growth.

The passage of the bill marks the completion of legislative consideration at the National Assembly. It will now be transmitted to President Bola Ahmed Tinubu for presidential assent.

If signed into law, the legislation is expected to modernize Nigeria’s commercial financing framework, improve credit accessibility, and support broader economic development objectives by unlocking new funding opportunities for businesses across the country.