LEASING FINANCE FACILITY
 

 
Product Description
 

Leasing finance is an asset financing facility allowing customers the use but not the ownership of a wide range of assets where the full capital cost of the asset is amortised by way of lease rentals.

 

  

 

Sectors  

Features 


Medium term finance which enables the customer to acquire the use of assets without initial burden of the cost of purchase

The Bank and the customer at the outset agree rental costs and period of the lease.

The primary lease period provides for full recovery of the cost of the equipment/asset

The primary rental period is usually less than or equal to the estimated life of the assets on lease

A secondary lease period could be considered after the primary lease

Customers using the assets are responsible for insurance and maintenance

Equipment is sold at the end of the lease period(s) to a third party.

Benefits to the customer

 

·         There is no immediate cash outflow from the business leaving the working capital intact

·         A lease can be tailored to suit most requirements and hence it is a flexible arrangement

·         Lease rentals are tax deductible

Customers credit facilities remain unaffected while the new equipment should improve the customer’s operating

efficiency

      The Bank and customer agree the lease rentals from the outset and since this cost is known it creates budgetary advantages

 

Administration of the facility

Amount
Currently the minimum amount that the Bank considers is US$ 20,000 or the Kwacha equivalent. However, this amount will be reviewed from time to time. Assets should be new, the Bank will use its discretion whether to consider a lease on used assets.

Tenure / Period
This ranges from 12 months to 60 months. However, the period is determined by:

 

·         Cash flow projection

·         The nature of the business

·         The nature of the assets/equipment

 

Charges
Rentals are based on an agreed repayment schedule

 

·         A deposit of up to 20%of the cost of the asset/equipment is required as contribution

·         Appraisal fee of 1%, non-refundable

·         Arrangement fee of 1% of facility amount

·         A commitment fee of 3% on undrawn balances will be levied after 90 days from the date of approval

 

Security
Although a lease is self-securing, depending on the asset purchased, the Bank may seek additional security such as:

 

·    Joint and several guarantees of the Shareholders/Directors

·    First legal mortgage on land and buildings

Debentures: where these already exist with other lenders, the Bank will request for pari-passu ranking


(See application procedures and guidelines)