Business Loan
Working Capital Loan
Term Loan
A one-time business term loan for customers used to finance their temporary working capital needs and/or meet other short term financial constraints of the business.
Product Features
- To finance the working capital expenditures or current assets
- The loan can be used to finance any operational activity
- Offered for a minimum of 3 months or maximum of 5 years
- Depending on the nature of the business and its cash flow pattern, the repayment can be in monthly, quarterly, semiannually or at lump sum.
- Regular repayment amount should include principal and interest of the loan.
- Maturity: 5 years or less
Basic Requirements
- Recent business registration documents, renewed business/investment licenses, TIN certificates, recent tax clearances; at least three preceding fiscal years’ financial statements and recent financial statement not-older than three months.
- Present acceptable and adequate collateral that sufficiently covers the credit requested.
- Healthy credit relationship with other banks
- Loan requests for Birr 5.0 million and above should be backed by audited financial statements
Overdraft Facility
A credit facility by which a customer may be allowed to withdraw beyond the available balance of its current account to a prescribed limit.
Product Features
- Help the customer bridge its short-term working capital constraints arising b/n receipt and disbursement of funds
- Usually requires strong collateral in the form of building, cash & cash substitute collaterals but exceptionally clean base or other collaterals may be considered for credit worthy customers
- Interest on the facility shall be charged on monthly basis calculated on daily ending balance
- Particular O/D account must show at least 5% of the approved limit [or credit balance] during the year
- Outstanding balance of the facility should not exceed the approval limit unless there is approval for overdraws.
- The customer shall submit a renewal request at least one month ahead of O/D facility expiry date
- Payment Mode: Lump sum unstructured payments
- Maturity: Open facility with up to 12 months after date of approval
Basic Requirements
- Recent business registration documents, renewed business/investment licenses, TIN certificates, recent tax clearances; at least three preceding fiscal years’ financial statements and recent financial statement not-older than three months.
- Businesses with proper utilization of Current Accounts and regular inflows and outflows of funds
- Business should have at least one year business experience and banking relationship
- Good scores in its turnover and swing in order to be eligible for renewal.
- Shall be secured by strong collateral in the form of building, cash and cash substitutes
- Healthy credit relationship with other banks
- Loan requests for Birr 5.0 million and above should be backed by audited financial statements
Advance on Letter of Credit (Advance on L/C)
A short term credit instrument [usually a facility limit] issued by the Bank on behalf of the importer to facilitate importation of goods against valid import documents. The Bank pays to the seller [exporter] the specified amount at the specified date
Product Features
- Help create trust with the exporter and facilitate the importation of goods in to Ethiopia.
- The amount of facility and margin depends on financial strength & creditworthiness
- Used to facilitate receipt of the goods from customs office after fulfilling the custom formalities
- The L/C facility could be advanced in a revolving basis, either simultaneously or in sequence up to the approved limit
- The facility shall be reviewed and renewed every year by the approving committee
- Payment mode: lump sum
Basic Requirements
- Import trade license
- For non-importers: investment certificate and a Performa invoice may be accepted.
- Recent business registration documents, renewed business/investment licenses, TIN certificates, recent tax clearances; at least three preceding fiscal years’ financial statements and recent financial statement not-older than three months.
- Present acceptable and adequate collateral that sufficiently covers the credit requested (i.e. Import LC documents)
- Healthy credit relationship with other banks
- Loan requests for Birr 5.0 million and above should be backed by audited financial statements
- Valid import documents.
Merchandise Loan
It is a short term credit facility that alleviate the problem of inadequate cash flow resulting from working fund being tied up by the merchandise purchased for resale [locally or internationally] or to be used as input for production.
Product Features
- Allow customers to have working fund for operating expenses and continue production and/or selling of their goods
- Can be advanced in a revolving facility or one-time merchandise loan
– The tenure for each advance is 6 months from the date of disbursement - The merchandise goods is kept under dual lock [borrower and representative of the Bank] in well secured premises
- The merchandise or documentary evidence [railway receipt, warehouse receipt, airway bills] shall serve as collateral for the credit facility to be advanced
– When it is advanced against warehouse receipt, it shall adhere to the requirements stipulated under Warehouse Receipt System Proclamation No. 372/2003 - Repayment is settled from the proceeds of the merchandise sold
- Lump sum possibly non-equal repayments. Depends on the sale of the goods under consideration.
- Maturity: 3-6 month
Basic Requirements
- Recent business registration documents, renewed business/investment licenses, TIN certificates, recent tax clearances; at least three preceding fiscal years’ financial statements and recent financial statement not-older than three months.
- Stock lists that show type, quantity, unit cost and sales prices of each merchandise item shall be presented as collateral
- The goods shall be marketable, non-perishable and have a stable price
- The merchandise items shall be insured against fire, lightening, burglary and other risks
- Healthy credit relationship with other banks
- Loan requests for Birr 5.0 million and above should be backed by audited financial statements.
Investment / Project Loan
Term Loan
Is a long term form of debt financing, which may be availed for real estate development and project finance.
Product Features
- Relies primarily on the project’s cash flow for repayment
- The project’s assets, rights, and interests held as secondary collateral.
- Customers should put in place the required equity contribution on the project/investment
- Payment mode: Monthly equal installments (annuities); quarterly, semi-annual. The Credit Committee may approve other repayment plans.
- Maturity 5-20 years
Basic Requirements
- Recent or renewed investment license,commercial registration certificate and/or trade license
- Project plan
- Present acceptable and adequate collateral that sufficiently covers the credit requested.
- Able to contribute as specified in the credit appraisal and analysis procedure (at least 30% of the loan)
- Healthy credit relationship with other banks
- Loan requests for Birr 5.0 million and above should be backed by audited financial statements
