PROJECT FINANCE FACILITY

 
Product Description
This is a medium to long-term facility under which the Bank provides finance for new, modernization, rehabilitation, diversification, rationalization and expansion

projects in the following sectors:

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Tourism
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 Mining and quarrying
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Agriculture
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Manufacturing and Processing Industries
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Transport and Haulage
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Fisheries
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Infrastructure
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Objectives of the facility

To finance projects that contribute towards:

· Foreign exchange savings and / or earnings

· Development of local technology and of manpower skills

· Creation and expansion of permanent employment

· Use of local raw materials

· Development of a robust indigenous private sector

Terms and Conditions

The Bank only finances projects that are technically feasible, economically viable and capable of yielding an acceptable rate of return.

Eligible Borrowers
Any private sector company/parastatal organization/cooperative. It is mandatory that the promoters make a contribution of 20% towards the total project financing cost.

Loan Amount
The minimum loan amount is US$50,000 or the Kwacha equivalent. These amounts are reviewed from time to time.

The loans can be funded in two modalities:

· The bank as the single financier and / or

· The bank co-financing as a member of a syndicate

Security
The bank will require one or a combination of the following:

· First mortgage on land and buildings

· Specific / floating charge on company’s fixed assets

· Pari-passu charge on company’s fixed assets

· Joint and several guarantee of the shareholders

· Key man life insurance

· Commercial bank guarantee

· Holding company guarantee

Interest
With foreign currency loans, a margin of up to 5% above the cost of funds will be charged. Local currency loans, a margin of up to 10% on the 273 days Treasury Bill rate will be charged.

Fees
Appraisal Fee – Non-refundable fee equivalent to 1% of the loan amount, payable upfront.

Facility Fee – 1% of the loan amount payable before or at the time of signing the loan agreement

Commitment Fee - 3% of the undisbursed loan amount after 90 days from date of approval.

Loan repayment period
Medium term loans are repayable over 2 – 5 years whilst long-term loans are between 6 – 10 years. The Bank will consider a grace period for capital repayments of up to 2 years. The repayment schedule will be determined by the nature of the project and the cash flow projections.

On foreign currency loans the following shall apply:

· The grace period applicable to repayments shall not exceed the net grace period on the Line of Credit at the time of the Bank’s approval of the loan.

· The loan will be repaid in the currencies of disbursement.

· The promoter will bear the foreign exchange risk

Procedure for application

(See application procedures and guidelines)