YERF - Order Finance Loan Application Form - Revised October 2020

 

What is it?

Youth Fund Order financing - Is a short-term commercial finance option that provides capital for young Eswatini Entrepreneurs who what to pay suppliers upfront for verified Purchase Orders (P.O) which have been obtained from reputable or reliable companies as well as government.

 

Who uses it?

Youth Fund Order financing - Is designed for start-ups or growing businesses that want to fulfill orders but have limited access to working capital and/or poor cash flow. This product is ideal for businesses that require quick lending processes which are faster than normal loan processes. The types of businesses that qualify include:

  1. Manufacturers
  2. Distributors
  3. Traders
  4. Retailers
  5. Importers/exporters

 

Who qualifies?

Young entrepreneurs between the ages of 18 – 35 years. Beneficiaries can be in the following entities with the proposed lending limits:

  1. Sole Traders              - E80,000.00
  2. Companies               - E150,000.00
  3. Cooperatives           - E200,000.00
  • Applicants with already existing loans also qualifies for the product but must exhibit a good repayment record on the existing loan.
  • Applicants with existing YERF loans must have repaid at least 3 (three) installments in succession on their loans.
  • The applicant must submit proof of availability or access to technical expertise to carryout the business being offered through the P.O.
  • The order must be issued by a reputable company which can be traceable to confirm the order by YERF.

 

How it works?

Your business receives a Purchase Order from a new or existing client. The entrepreneur’s supplier needs upfront payment, but the client’s invoice won’t be paid upon delivery, but would be paid within 30 - 90 days after invoicing. This creates a finance gap. Without the working capital, entrepreneurs risk losing the order as well as customer confidence.

 

With a verified Purchase Order Youth Fund Order financing can support a single transaction and/or grow with the young entrepreneur company’s accelerated funding requirements. The applicants shall not wait for YERF loan opening periods in order to submit loan requests. The product shall be available anytime a client receives an order for supply.

 

Product Features

 

  1. Minimum Amount:               - E10,000.00
  2. Maximum Amount:              - E200,000.00
  3. Repayment Period:                         - 3 – 6 Months (once-off)
  4. Interest rate:                         - Prime +4% 
  5. Security:                                 - The Confirmed Order
  6. Own Contribution:               - Zero

 

Nb: The repayment of the facility is once off upon payment of invoice. The period of 3-6 months is only a grace period to allow the entrepreneurs to be paid by their clients. This period can be negotiated further if the invoice has still not been paid.

 

REQUIREMENTS

Legal documents

  1. Memorandum & articles of association (for companies & coops)
  2. Certificate of incorporation (for companies & coops)
  3. Form J (for companies)
  4. Trading license
  5. Certified I.D. copy

 

Business Documents

 

  1. A completed loan application form
  2. Cash flow projections.
  3. A Purchase Order or contract document
  4. Lease agreement / proof of premises ownership
  5. Company’s resolution to borrow
  6. Proof of physical address
  7. Bankers (account number and branch)
  8. Bank statement for at least 3 months (for existing businesses)

 

 

The Lending Processes

  1. The applicant fills in the application forms
  2. The application form together with other loan attachments are submitted to YERF offices.
  3. YERF conducts pre-screening which is a feasibility analysis to ensure feasibility and completeness.
  4. Upon completion, successful applications are forwarded to IDCE for full appraisal.
  5. Upon completion of appraisal, loan is recommended to YERF for approval of the requested amount.
  6. YERF also reviews loan for approval.
  7. Upon final approval, a letter of offer is issued to the applicant and the loan is returned to IDCE for further processing and subsequent signing of loan agreement.
  8. Upon completion of the security documentation, the client is handed over to the mentorship and coaching service provider to monitor and authorize disbursement upon fulfillment of all necessary documentation.

 

Other Provisions

  • YERF shall provide mentorship & coaching service to ensure good management of the businesses
  • The mentorship & coaching service provider shall be co-signatory to the business accounts of the beneficiaries for at least the duration of the loan, to ensure control of funds usage.
  • There shall be a session over the order being financed which shall be confirmed with the company that issued it.
  • YERF will provide credit life insurance to the beneficiaries.

 

 

Security Documents

 

  1. Session over the proceeds of the order being financed

 

Approval of loans

  1. The YERF management Credit Committee shall be responsible for approval of the deposit portion up to a maximum amount of E50,000.00
  2. The YERF board credit committee shall be responsible for approval of the deposit portion up to a maximum of E100,000.00