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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

Application procedure

Customers can apply for these facilities from their respective banks. The bank assesses the applications according to their prescribed lending criteria. Commercially viable projects which are found short of the bank's security requirements but meet the conditions of the scheme listed below, are then recommended by the bank to CEDA by submitting a guarantee application under the CCGS.

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.

Arrangement / Administration Fee

The banks charge their borrowers an amount which they normally charge for their normal lending, i.e. Loans outside the CCGS.

Interest Rate

The banks charge a preferential interest rate not exceeding prime plus two per cent.

Loan Term

The loan term is negotiated and agreed between the bank and the borrower.

What happens if the borrower fails to repay the loan?

The bank realises its 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.

Product Sectors: 
Trade Finance