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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
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