Enables a client to bid for contracts that call for guarantees;
Enables a client to procure goods and services from suppliers on credit in cases where their credit worthiness is not known;
Enables a client to access credit facilities from commercial banks in cases where they do not posses suffient security;
The Table below outlines the details:
Eligibility
Botswana citizens 18 years or more and Botswana citizen wholly owned businesses/companies.
Guarantee Amount
BWP500 up to BWP4,000,000
Eligible Items to be Guaranteed
Bonds, contracts, stock and working capital
Percentage Financing
Up to 100% of the cost of eligible items
Credit Guarantee Period
Not exceeding 12 months
Arrangement Fee
2.5% charged on quarantee amount
1.5% per annum on outstanding loan amount for quarantees reguested by the bank on behalf of client
Interest Rate
No interest is charged on Guarantees
Security provided by the Borrower
The Banks will first consider the Borrower's available assets as security, and if the security offered by the Borrower is found to be inadequate/short, then the Bank can make an application to CEDA requesting for cover under the CGS.
Guarantee Cover
CEDA provides a guarantee of 75% of the net loss incurred by the Banks as a result of their lending.
What is the cost to the Borrower?
– Guarantee Fee
A guarantee fee of 1.5% (one and half percent) on the loan amount is payable annually in advance by the Banks, who would then recover it from the Borrowers.
– Arrangement / Administration Fee
The banks charge their borrowers an amount which they normally charge for their normal lending, i.e. Loans outside the CGS.
– Interest Rate
The banks charge a preferential interest rate not exceeding prime plus two.
Loan Term
The loan term is negotiated and agreed by the bank and the borrower.
What happens if the borrower fails to repay the loan?
The bank realises it's security and takes the necessary action to recover the balance of the debt from the borrower. If this still leaves some balance, CEDA pays 75% of the net loss but legal action against the borrower may continue so as to recover the balance owed.
CCGS Application Procedure
The bank sends a fully completed, duly signed and stamped CCGS applications to CEDA.
The application should show the name and number of the originator to enable of the following:
Confirmation of receipt of the application by CEDA;
Follow-up on queries regarding the application should there be any.
Applications should be accompanied by all the necessary attachments for speedier assessment and turnaround. Attachments will be required as follows:
Applications of P50,000 and below - A loan amortization schedule.
Applications above P50,000 - Attachments should include a loan amortisation schedule and financials for guarantees for loans, and cash-flow projections for overdrafts.
CEDA will assess the application and respond within two working days of receipt of the application.
CEDA will inform the bank of the outcome of the application through one of the following media:
A guarantee accompanied by a corresponding invoice for the payment of the guarantee fee will be sent to the bank in cases where the application for the guarantee has been successful, or
A decline letter in instances where the application has been unsuccessful.
The response will be scanned and sent through to the designated official at the bank. Where scanning is not preferred, the response will be faxed through and the original copy of the guarantee and invoice will be delivered within two working days of approval. At this point, the original copies of applications will be collected.
Click here to download the application form for Credit Guarantee.
Click here to download the CCGS Declaration Sheet.
