This product is designed to finance asset acquisition, general capacity expansion and long-term financing needs, may also be used for specific expansionary purpose or clearly identifiable cash outlay of specific amounts.
Issues to consider include determining the source/mode of payment, instalments in line with obligor’s capacity/turnover etc.
Term loans may be short term (up to 1 year), medium-term (1 – 5 years) or long term (above 5 years).
Key characteristics:
- Moratorium period (where applicable), a thorough feasibility study, disbursement patterns, monitoring, use of a qualified project manager, experienced business managers etc.
- Detailed review of business plan and cash flow projections.
Term loans can be used to finance projects. The revenue generated from the project acts as both the source of repayment and is also a comfort for the exposure.
This type of financing is usually for large, complex and big-ticket projects.
It is principally a form of ‘Non-Recourse’ or ‘Limited Recourse’ financing, whereby the bank bases its credit decision solely or primarily on the cash flows of the project, with respect to repayment of the project debts.
These projects might include:
- A mass transit project
- A telecommunication local services, long-distance and value-added project
- A power generation, transmission or distribution project by laying a network of new transmission or distribution lines
- A petroleum extraction, refinery, pipeline project
- A factory establishment or capacity expansion project.
Requirements include (but are not limited to) the following:
- 3-year Audited Financials
- Company Profile
- Business Plan & Cashflow Projection
- Adequate collateral covering 150% of loan value
- Positive Credit Check (Credit Rating) from two (2) Credit Bureaus
Please note that all facility requests are subject to the approval of the Bank’s Credit Appraisal team
Pursuant to the Stamp Duty Act Cap 58, Laws of the Federation of Nigeria 2004 (as amended), the Finance Act 2019 (as amended) and the Press release of the Federal Inland Revenue Service (FIRS), on payment and collection of Stamp Duty taxes, the bank shall deduct and remit, as required, all Stamp Duty taxes on the principal amount of the facility and related dutiable instruments.