Trade Finance

OVERVIEW

CEDA offers Trade Finance facilities across product offerings such as Purchase Order Financing, Invoice Discounting, Factoring, Performance Bonds, Suppliers Guarantees, Bank Guarantees and other Credit Guarantees.

 

SHORT TERM FINANCING

Citizen Entrepreneurial Development Agency (CEDA) as an Agency for the development of viable sustainable citizen-owned business enterprises provides bridging finance. This is money lent to a client over a fairly short term (not exceeding 12 months), which is to be repaid from the receipt of moneys due to the client. An existing business or start-up can be offered short term finance. The Agency also offers purchase order funding under short-term finance. The loans are for individuals or companies owned by citizens aged 18 or over, either wishing to start a new business or wanting to expand an existing one. The loans are provided under the following conditions:

 

Loan amount

Bridging finance loans range from P500.00 to P30 million.

 

Loan period

The repayment period will depend on the date of receipt of expected moneys which will be used to clear the debt, but will not exceed 12months. Monthly repayments are not usually required, instead a bullet repayment is made using the received moneys.

 

Interest rate

•             Loans of up to P500 000 will be charged interest at the rate of 5% per annum.

•             Loan exceeding P500 000 up to P4 million will be charged interest at the rate of 7.5% per annum.

•             Loans exceeding P4 million will be charged interest at the prevailing prime rate.

 

CEDA CREDIT GUARANTEES SCHEME

 

The CEDA Credit Guarantees Scheme (CCGS) is available to citizen owned businesses which intend to borrow from commercial banks but do not possess the level of security or collateral required by the banks. The loans are available to individuals or companies owned by citizens aged 18 or over either wishing to start a new business or wanting to expand on an already existing one.

 

The facilities should be from any of the six commercial banks which participate in the scheme.

 

The following banks participate in the scheme:

 

•             Barclays Bank Botswana

•             Standard Chartered Bank Botswana

•             Bank of Baroda

•             Stanbic Bank Botswana

•             First National Bank Botswana

•             Bank Gaborone

•             BancABC

 

Conditions of the Scheme

Who qualifies under the CCGS?

The scheme targets citizen owned SMME’s (small, micro and medium enterprises)

 

Activities covered under the scheme

All types of lending are covered under the CCGS.

 

Facilities range

The facilities considered under the CCGS range from P10, 000 to P4million.

 

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 CCGS.

 

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 per cent) on the loan amount is payable annually in advance by the Banks, who would then recover it from the Borrowers.