STRUCTURED FINANCE SERVICES
RURAL FINANCIAL SERVICES
ASSESSMENT OF LOAN APPLICATIONS
The screening of an application will include:
An evaluation of the financial conduct of the applicant;
The applicant’s capacity to repay the loan (projected cash flow of
the business / the repayment history of the client)
Economic climate (condition)
The collateral offered by the client
Business case assessment
Relevant experience of the applicant
The following should be investigated:
An evaluation of the financial conduct of the applicant
a) The client’s past loan history with Agency / ECRFC / AsgiSA-EC / ABT /
CAB / other financiers;
b) Savings history of the client;
c) Bank statements covering the most recent three months where possible;
d) Compliance with tax clearance – refer to paragraph 27
e) Ensure that a recent credit bureau enquiry is conducted.
Enterprise’s capacity to repay the loan.
a) Type of enterprise and industry norms.
b) Projected cash flow of the business or enterprise and the client’s ability
to repay the loan applied for.
c) Payment capacity ranks supreme in the applicant’s enterprise
assessment process as it determines the ability of the client and / or the
enterprise to repay the loan.
Economic climate (condition) – The economic condition of the country, province, and village and the industry of a specific enterprise
is crucial and must therefore be considered by the loan officer.
Collateral offered by the client
Loan Application Supporting Documents
- Businessplan with positive cashflows
- Quotations
- Recommendation letter from DOA, i.e. Extension Officer of the Department of Agriculture
- Registration documents of the enterprise
- Tax clearance certificate
- Certified ID copies of the directors
- 3 month bank statements
- Records of sales
- Proofs of residence of each director.
- Proof of access to the land, i.e. proof of ownership or copy of the lease agreement
TYPES AND CATEGORIES OF LOANS
Starter Business Entrepreneurial Development Program
A group consisting of between 2 and 10 individuals –
Group members will be trained and expected to jointly
and severally stand surety for the group’s debt. No
collateral required. Savings mobilisation important. The
group to maintain mandatory savings from a minimum
of 2% of the loan amount throughout the loan term.
Phase 1 – Maximum loan of R10 000 per member
Phase 2 – Maximum loan of R20 000 per member
Phase 3 – Maximum loan of R30 000 per member
Maximum
Redemption Period
Up to 12 months
Up to 24 months
Up to 24 months
Sole Trader Entrepreneurial Development Program
Individual traders – maximum loan amount of R50 000-
00.
Advanced Trader Entrepreneurial Development Program
Individuals and legal entities – maximum loan amount
of R 100 000-00.
Maximum
Redemption Period
Up to 24 months
Agricultural – Primary production loans
Subsistence farmers
Seasonal input loans to groups are restricted to R100
000 in value and a maximum of 10 individuals per
group. No collateral required. Members jointly and
severally accept liability for the loan advanced to a
cohesive group.
The group to maintain mandatory savings from a
minimum of 2% of the loan amount throughout the loan
term.
Loan term linked to production cycle
Emerging farmers
Seasonal input loans to individuals are restricted to R150
000 in value, however if this amount is more than 5% of
the annual loans budget, the loan will be restricted to
5% of the annual loans budget.
Loan term linked to production cycle
Collateral: Refer to Section 16. Bona fide farmers.
Seasonal input loans to bona fide farmers, are
restricted to R500 000 in value, however if this amount is more
than 5% of the annual loans budget, the loan will be
restricted to 5% of the annual loans budget. Unsecured
subject to clause 16 (a) – (f).
Collateral: Refer to Section 16.
Loan term linked to production cycle
Seasonal input loans to bona fide farmers in excess of
R500 000 in value. Collateral of 25% will be required in
addition to conditions stated in clause -16.
Collateral: Refer to Section 16.
Agricultural – Secondary / Processing loans
Commercial activities by individuals and legal entities
Loan term linked to production cycle
Maximum loan of R 2 000 000.00, however if this amount is more than 5% of the annual loans budget, the loan
will be restricted to 5% of the annual loans budget.
Collateral: Refer to Section 16.
Maximum
Redemption Period
Linked to business cash-flow projections
On farm infrastructure development loans Irrigation, dams, sheds, stock handling facilities, fencing etc. are restricted to R500 000, however if this amount is more than 5% of the annual loans budget, the loan will
be restricted to 5% of the annual loans budget.
Collateral: Refer to Section 16.
Maximum
Redemption Period
Linked to business cash-flow projections
Tractors and equipment
Tractors: Collateral: Refer to Section 16.
Ploughs, trailers, combine harvesters excluding bakkies
etc. Maximum loan of R500 000, however if this amount
is more than 5% of the annual loans budget, the loan
will be restricted to 5% of the annual loans budget.
Collateral: Refer to Section 16.
Maximum
Redemption Period
72 months
Livestock
Maximum loan of R 500 000.00, however if this amount
is more than 5% of the annual loans budget, the loan
will be restricted to 5% of the annual loans budget.
Collateral: viable business plan with positive cash flow
projections and good client credit record. Livestock be
branded.
Maximum
Redemption Period
Linked to business
cash-flow projections
Non-agricultural enterprise Loans e.g. tenders
Business / commercial activities by individuals or legal
entities – maximum loan of R500 000.00, however if this
amount is more than 5% of the annual loans budget,
the loan will be restricted to 5% of the annual loans
budget. Cession of payment is needed. Collateral:
Refer to Section 16.
Maximum
Redemption Period
Linked to business cash-flow projections
Revolving Credit Facility
A revolving credit facility may be made to clients of
good standing who require access to funding to meet
operating and or trading costs. The facility will allow the
client to:
- Draw funds from the facility up to a maximum of an agreed upon limit,
- Payments into the facility will first be used to pay
interest accrued and thereafter capital,
- The facility will be repayable in full on the anniversary
of the granting of the facility or at any time that the
client fails to make interest payments within 30 days
of statement,
- The facility may be extended for a further year upon
a review by the Loans Committee,
- Interest rate charged will be at prime rate-refer to
Section 9.
Collateral: Refer to Section 16.
Maximum
Redemption Period
Linked to business cash-flow projections
INTEREST RATES
For loans repayable within 36 months (3 years), interest rates are deemed to be fixed interest rates for the full period of the loan. For loans repayable above 36 months, interest rates are deemed to be variable and linked to prime lending rate for the full period of the loan.
Interest rates charged on loans issued in terms of national programs or commercial initiatives or partnerships may vary from the official Agency’s interest rates.
These rates are determined by the relevant agreement between the parties.
Calculation of interest – Interest will be raised on the outstanding daily balance of the loan and capitalised at the end of every month.
Interest rates –
• Agricultural loans: Prime rate minus 2.00 % p.a.,
• Non-agricultural loans: Prime rate
A concessionary rebate of 2.00% p.a. will be given to individual clients who qualify due to their status either as youth, disabled person or female.
LOAN INITIATION FEE
A non-refundable Loan Initiation Fee is charged on all disbursed loans.
The fee is based on the size of the loan:
| Loan category R5 000 and less R5 001 – R20 000 R20 001 – R99 999 |
Initiation fee R250-00 R500-00 R750-00 R100 000 and above R1050-00 |
VALUATION FEES
a. The Agency reserves the right to request that an applicant submits a recent
valuation by a professional person duly registered as a property evaluator
in terms of the Valuation Act when fixed property is offered as collateral for
commercial loans.
b. Valuations relating to agricultural property such as farms will require a
valuation by a registered agricultural valuator.
c. Valuation fees charged are for the cost of the applicant.
ASSESSMENT OF LOAN APPLICATIONS
The screening of an application will include:
An evaluation of the financial conduct of the applicant;
The applicant’s capacity to repay the loan (projected cash flow of
the business / the repayment history of the client)
Economic climate (condition)
The collateral offered by the client
Business case assessment
Relevant experience of the applicant
The following should be investigated:
An evaluation of the financial conduct of the applicant
a) The client’s past loan history with Agency / ECRFC / AsgiSA-EC / ABT /
CAB / other financiers;
b) Savings history of the client;
c) Bank statements covering the most recent three months where possible;
d) Compliance with tax clearance – refer to paragraph 27
e) Ensure that a recent credit bureau enquiry is conducted.
Enterprise’s capacity to repay the loan.
a) Type of enterprise and industry norms.
b) Projected cash flow of the business or enterprise and the client’s ability
to repay the loan applied for.
c) Payment capacity ranks supreme in the applicant’s enterprise
assessment process as it determines the ability of the client and / or the
enterprise to repay the loan.
Economic climate (condition) – The economic condition of the
country, province, and village and the industry of a specific enterprise
is crucial and must therefore be considered by the loan officer.
Collateral offered by the client
INTEREST RATES
For loans repayable within 36 months (3 years), interest rates are deemed to be fixed interest rates for the full period of the loan. For loans repayable above 36 months, interest rates are deemed to be variable and linked to prime lending rate for the full period of the loan.
Interest rates charged on loans issued in terms of national programs or commercial initiatives or partnerships may vary from the official Agency’s interest rates.
These rates are determined by the relevant agreement between the parties.
Calculation of interest – Interest will be raised on the outstanding daily balance of the loan and capitalised at the end of every month.
Interest rates –
• Agricultural loans: Prime rate minus 2.00 % p.a.,
• Non-agricultural loans: Prime rate
A concessionary rebate of 2.00% p.a. will be given to individual clients who qualify due to their status either as youth, disabled person or female.
LOAN INITIATION FEE
A non-refundable Loan Initiation Fee is charged on all disbursed loans.
The fee is based on the size of the loan:
| Loan category R5 000 and less R5 001 – R20 000 R20 001 – R99 999 |
Initiation fee R250-00 R500-00 R750-00 R100 000 and above R1050-00 |
VALUATION FEES
a. The Agency reserves the right to request that an applicant submits a recent
valuation by a professional person duly registered as a property evaluator
in terms of the Valuation Act when fixed property is offered as collateral for
commercial loans.
b. Valuations relating to agricultural property such as farms will require a
valuation by a registered agricultural valuator.
c. Valuation fees charged are for the cost of the applicant.
ASSESSMENT OF LOAN APPLICATIONS
The screening of an application will include:
An evaluation of the financial conduct of the applicant;
The applicant’s capacity to repay the loan (projected cash flow of
the business / the repayment history of the client)
Economic climate (condition)
The collateral offered by the client
Business case assessment
Relevant experience of the applicant
The following should be investigated:
An evaluation of the financial conduct of the applicant
a) The client’s past loan history with Agency / ECRFC / AsgiSA-EC / ABT /
CAB / other financiers;
b) Savings history of the client;
c) Bank statements covering the most recent three months where possible;
d) Compliance with tax clearance – refer to paragraph 27
e) Ensure that a recent credit bureau enquiry is conducted.
Enterprise’s capacity to repay the loan.
a) Type of enterprise and industry norms.
b) Projected cash flow of the business or enterprise and the client’s ability
to repay the loan applied for.
c) Payment capacity ranks supreme in the applicant’s enterprise
assessment process as it determines the ability of the client and / or the
enterprise to repay the loan.
Economic climate (condition) – The economic condition of the
country, province, and village and the industry of a specific enterprise
is crucial and must therefore be considered by the loan officer.
Collateral offered by the client
GET IN TOUCH WITH US
Talk to us if you are a rural-based entrepreneur looking to unlock growth opportunities for your business through ECRDA loan funding.
Head Office
Waverley Office Park,
2nd Floor, Chiselhurst,
East London, 5201
Head Office
3-33 Phillip Frame Road,
Waverley Office Park,
2nd Floor, Chiselhurst,
East London, 5201
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