LOANS AND ADVANCES PRODUCTS

LOANS AND ADVANCES PRODUCTS

Loans and Advances Products

A. Trade Finance Products

Trade Finance products help mitigate risks associated with local and international trade, such as payment risks, currency fluctuations, and political instability. The products also enhance cash flow management and improve the efficiency of transactions. Our Trade Finance solutions include the following:

Letters of Credit (LC):

LCs ensure that the seller gets paid if they meet the specified terms and conditions. This provides security for both the buyer and the seller, in both local and international trade.

Requirements:

• An approved Letters of Credit facility or cash equivalent.
• Import declaration form, where applicable.
• Pro-forma invoice.
• Insurance e.g., marine insurance for sea transport.
• DBK LC application form.
• The bank also advises and confirms LCs for its clients as well as non-customers.

Documentary Collections:

This product is used to control the payment and transfer of ownership of goods. The seller gets paid once the buyer receives the shipping documents as follows:

• Documents Against Payment (D/P): The exporter sends shipping documents to the buyer’s bank, which releases them to the buyer only upon payment. This ensures the exporter receives payment before the buyer gains control of the goods.
• Documents Against Acceptance (D/A): The shipping documents are released to the buyer upon acceptance of a time draft, meaning the buyer commits to paying at a future date. This allows the buyer to take possession of the goods and sell them before payment is made.

Bank Guarantees:

The Bank issues a commitment on behalf of a client to pay a certain sum of money if the client fails to fulfill a contractual obligation. It takes the following forms:

• Bid Guarantee / Bond: Issued by the bank on behalf of a bidder to a project owner. It is a surety that the bidder will honor their bid and provide the required performance and payment bonds if awarded the contract.
• Performance Guarantee: Issued by the Bank on behalf of the Contractor to ensure that the contractor or supplier fulfills their contractual obligations.
• Advance Payment Guarantees: Used to secure the release of advance payments for mobilizing a project or contract.
  • Benefit to Buyer: Provides assurance that they will get their advance payment back if the contractor or supplier does not deliver as per the contract.
  • Benefit to Contractor / Supplier: Facilitates obtaining advance payments, which can be crucial for starting a project or manufacturing goods.

Requirements for Guarantees:

• Letter of application.
• Guarantee Application form.
• Copies of Invitation to tender document, Letter of award, and Contract for the Guarantees respectively.
• The format of the required Guarantee (if available).
• An approved Guarantees facility or cash equivalent.
• Indemnity executed by the client.
• Charges according to tariff.

Other guarantees offered by the Bank include Customs Bonds, Retention Bonds, Shipping Guarantees, Payment Guarantees, and Security Bonds.

B. Term Loans

Supply Chain Financing (SCF):

This solution is designed to optimize cash flow and improve efficiency in the supply chain. Suppliers receive payments faster, reducing cash flow constraints. Buyers, on the other hand, can negotiate longer payment terms, optimizing their working capital. This ensures stronger buyer-supplier relationships.

Requirements:

• A letter of request.
• An approved Supply Chain facility.

Invoice Discounting:

The business enters into an agreement with DBK and submits its unpaid invoices to the bank. The Bank advances a percentage of the invoice value to the business. The business continues to collect payments from its customers as usual. When the customer pays the invoice, DBK releases the remaining balance to the business, minus a fee.

Requirements:

• A letter of request.
• An approved Invoice Discounting facility.

Pre-Shipment Finance and Pre-Export Finance:

These solutions are designed to support exporters before the goods are shipped to the buyer. Repayments are tied to export proceeds or receivables.

Project Finance:

This financing solution from the Bank is designed for long-term infrastructure and industrial projects. The primary source of repayment is the project's cash flow, with the Bank holding a claim on the project's assets. To manage this effectively, a Special Purpose Vehicle (SPV) is created, isolating the project's assets and liabilities.

Overdraft Facility:

This product meets working capital needs by permitting businesses to overdraw their accounts up to a pre-approved limit. All business income is deposited into the account, allowing it to fluctuate within the specified limit. The facility is a short-term arrangement, with a term of up to 12 months, subject to renewal.

Term Loan:

This is a secured facility provided for a specific amount, with a fixed or variable interest rate, and is repaid over a predetermined period.

Asset Finance:

This product enables businesses to utilize essential equipment and machinery without the need for outright purchase. Qualifying assets include:

• School buses
• Vehicles
• Machinery
• Trucks
• Heavy commercial vehicles
• Agricultural equipment
• Medical devices
• Construction equipment

Mortgage Finance:

Provided to businesses or individuals for the purchase or construction of residential or commercial properties.

Personal Secured Loan:

Allows clients to access funds against title deeds, logbooks, share certificates, fixed deposits, government securities, and more.

Personal Car Loan:

Facilitates the purchase of personal cars.

C. Requirements

Minimum Requirements for Personal Borrowings:

• Pay slips for the last 3 months.
• Letter from employer confirming employment status.
• Bank statements for the latest 6 months.
• National ID or valid Passport.
• Your KRA PIN certificate.
• Three passport-size photographs.
• Sale agreement duly signed by both parties and witnessed by a lawyer.
• Title to the property being purchased/charged (minimum lease term must be at least 35 years).
• Logbook in case of car loans.
• Valuation and report on instruction by the bank. The Borrower to meet the costs.

Minimum Requirements for Construction Financing:

• Approved building plans.
• Approved structural drawings.
• Priced bills of quantities.
• Profiles for the architect, contractor, and quantity surveyor.
• NEMA approval.
• NCA Certificate.
• Cash flow forecasts.
• Bank statements for the latest 6 months.
• Title to the property being purchased/charged (minimum lease term must be at least 35 years).
• Valuation and report on instruction by the bank. The Borrower to meet the costs.

Minimum Requirements for Corporate Borrowers:

• Letter of application stating the type of credit facilities required, amount, purpose, and duration, with supporting documents.
• Certified copies of incorporation documents (Certificate of Incorporation, & Memorandum & Articles of Association).
• Copy of PIN certificate for the company.
• Copy of the latest annual returns to the Registrar of Companies, & filing receipts.
• Copy of the current company official search (CR12).
• Audited accounts for the immediate past three years and the latest management accounts.
• Aged analysis schedule for debtors and creditors.
• Projected financial statements (full set) for at least the next three years.
• Month-on-month cash flow forecasts for the next 12 months.
• Certified (by Bank) copies of Bank statements for the immediate past 12 months. The account(s) through which all the company’s transactions are conducted.
• Statements of accounts for any existing loans & copy of the letter of offer by the financing institution or bank specifying the terms under which the credit facilities were provided.
• Copies of PIN certificates and National IDs / or passports of the Directors.
• Company profile, organization chart, as well as brief profiles / Curriculum Vitae of the Directors and key management team. Include a brief on any new strategies the company intends to pursue or a business plan.
• A brief on the key production processes/solutions deployed by the company.
• A brief on the market feasibility, marketing, and competition.
• Copies of the certificates of title to the properties offered as collateral.
• Valuation & report for the subject property offered as security – to be undertaken by a valuer in the bank’s panel at the Borrower’s cost.
• Copies of approvals and business permits by the regulatory authorities for ongoing operations (NEMA, Local Authority, etc.).
• Any other information considered relevant for the proposed borrowing.