Banking Solutions
Term Loan
Term Loan
A Term Loan is a loan granted for working capital and/or project finance to be repaid within a specific period with interest. The loan is repaid in a lump sum on maturity, or in periodic installments (monthly, quarterly, semi-annually or annually), depending on the nature of the business and its cash flow.
For any project financing, the borrower shall first commit her/his/its equity contribution to the project.
The Bank extends Short-Term, Medium-Term, and Long-Term Loans.
- Short-Term Loanis a loan extended to finance the working capital needs and/or to address other short-term financial constraints of the borrower. Short-Term Loan could be granted up to a maximum of two years.
- A Medium-Term Loan is a loan that has a maturity period longer than two years, not exceeding a maximum period of five years, with periodic installments.
- A Long-Term Loan, on the other hand, is a loan, which has a maturity period longer than five years with periodic installments.
The applicant for a Medium or a Long-Term Loan must be able to submit a detailed study of the capital investment project or a business plan. Unless specifically stated otherwise, the applicant must contribute at least 30% of the project cost from own financing. The Bank will finance the remaining balance up to a maximum of 70% of the total project cost after ascertaining the 30% equity contribution.
Letter of Guarantee Facility
Letter of Guarantee Facility
A letter of guarantee is a written promise issued by the bank to compensate (pay a sum of money) to the beneficiary (local or foreign) if the obligator fails to honor her/his/its obligations per the terms and conditions of the guarantee/agreement/contract.
Coopbank may extend a one-time or renewable letter of guarantee facilities. A one-time letter of guarantee facility is a non-renewable letter of guarantee extended to applicants who have no recurrent requests. Renewable letter of guarantee facility on the other hand, is a form of credit facility where the limit is set for customers with recurrent requests reviewed periodically when the customer fulfills the bank’s requirement.
The Bank provides guarantee services to both local and foreign customers. A foreign-currency permit from NBE should be obtained for any form of guarantee that the Bank is requested to issue in favor of foreign beneficiaries.
Types of Letters of Guarantees
- Bid Bond Guarantee,
- Performance Bond Guarantee,
- Advance Payment Guarantee,
- Suppliers’ Credit Guarantee /Trade Credit Guarantee/,
- Retention Payment Guarantee,
- Steamers’ Guarantee /Letters of Indemnity for Missing Documents/,
- Customs Duty Guarantee
Revolving Export Credit Facility
Revolving Export Credit Facility
Revolving Export Credit Facility is an advance extended to exporters to bridge their temporary working capital requirement upon presentation of all valid and acceptable export documents, except a bill of loading. The Revolving Export Credit Facility loan amount to be advanced is up to a maximum of 90% depending on the financial strength and track record of the customer.
In addition to the General Eligibility Criteria, customers are required to fulfill the following specific requirements for the facility.
- It is approved for exporters with a clean track record in the export business.
- The customer’s Credit Risk Grade should be 1, 2, or 3 with a clean record of accomplishment.
Pre-shipment Export Credit Facility
Pre-Shipment Export Credit Facility
Pre-Shipment Export Credit Facility is a short-term, one time or revolving loan facilities extended for the purchase of export materials, processing and converting into finished goods, warehousing, packing, and transporting the goods until the time of shipment, upon presentation of valid sales contract and irrevocable export letters of credit or otherwise depending on relationship and credit history.
Coopbank provides four types of pre-shipment export credit facilities:
- Against Development Bank of Ethiopia (DBE’s) guarantee.
- On a clean basis against Export Letter of Credit.
- On a clean basis against Export Sales Contracts; and
Import Letter Of Credit Facility
Import Letter of Credit Settlement Loan
The Import Letter of Credit facility is a credit product that Coopbank extends to applicants engaged in the import business or other applicants who import for various purposes on payment of a certain percentage of the value of the document while opening a Letter of Credit.
The Import Letter of Credit facility amount to be availed to the customer is up to a minimum of 30% (NBE directive) as per margin of the document value, depending on the financial strength of the customer, the letter of credit facility account performance, and marketability of the imported goods for one year against valid import documents. A list of goods eligible for import may be obtained from the National Bank of Ethiopia at the time of opening the letter of credit.
In addition to the General Eligibility Criteria, the customer must fulfill the following specific requirements.
- The importers applying for an Import Letter of Credit Facility should present their import trade licenses.
- In the case of non-importers applying for a one-time Import Letter of Credit Facility, an investment certificate or appropriate license from the concerned government organ and Pro-forma Invoice shall be presented.
Types of Merchandise Loan
Types of Merchandise Loan
Cooperative Bank of Oromia S.C shall avail three types of merchandise loans, Revolving Merchandise Loan, One-time Merchandise Loan, and Merchandise Loan against warehouse receipts or import documents.
- Revolving Merchandise Loan: - Revolving merchandise loan is a type of merchandise loan in which the borrower is allowed to use up to the limit set by the Bank for a specific period. Revolving merchandise loan is renewable subject to proper utilization of the facility. It has to show adequate turnover and swing. In case of revolving merchandise loan, the bank encourages releasing of the merchandise items should be based on the principle of first- in first –out.
- One-time Merchandise Loan: - A one-time merchandise loan is a type of merchandise loan availed only for specified period usually up to one year. Branch Managers makes the necessary follow-up to make sure that such merchandise loan balance is reduced progressively over the loan period or is fully settled by the due date.
- Merchandise Loans against Import Document; - Cooperative Bank of Oromia S.C shall exceptionally avail merchandise loan against goods in transit supported by import documents for its prominent customers. In such cases, complete set of documents such as bills of loading, truck/air/rail waybills, commercial invoices, certificate of origin, insurance certificate, packing list, and other related documents should be submitted.
- Please contact us to get more detail information and advice.
Merchandise Loan Facility
Merchandise Loan Facility
Merchandise refers to a specific product or group of products or goods manufactured or acquired by a trading business for the purpose of sale and or for own use in production facility as raw materials or inputs.
Merchandise Loan is a short-term credit facility provided by the Bank against the merchandise or documentary evidence (valid warehouse receipts for goods in the warehouse, original railway receipts or truck-way bills, or airway bills for in-transit merchandise items).
The purpose of Merchandise Loan Facilities is to relieve the customer from cash-flow problems arising from money being tied up in the merchandise.
Types of Merchandise Loans
Coopbank avails three types of merchandise loans, Revolving Merchandise Loan, One-time Merchandise Loan, and Merchandise Loan Against Warehouse Receipts or Important Documents.
- Revolving Merchandise Loan: – Revolving merchandise loan is a type of merchandise loan in which the borrower is allowed to use up to the limit set by the bank for a specific period. It is renewable subject to proper utilization of the facility. It has to show adequate turnover and swing. In the case of revolving merchandise loan, the bank encourages releasing of the merchandise items be based on the principle of first-in first–out.
- One-time Merchandise Loan: – A one-time merchandise loan is a type of merchandise loan availed only for a specified period, usually up to one year.
- Merchandise Loans against Import Document; – Exceptionally availed against goods in transit supported by import documents to its prominent customers. In such cases, a complete set of documents such as bills of loading, truck/air/rail waybills, commercial invoices, certificate of origin, insurance certificate, packing list, and other related documents should be submitted to the bank
Temporary Overdraft Facility
Temporary Overdraft Facility
The Bank may extend the Temporary Overdraft Facility to selected and creditworthy customers of the bank for a repayment period not exceeding three months to relieve their temporary working capital constraints. Prior to the extension, the customer should settle the accrued interest for the first extension and shall pay 25% of the principal amount for the second extension. The facility must be backed by acceptable collateral. However, the bank may avail the facility for creditworthy customers on a clean basis.
In addition to the General Eligibility Criteria, the customer shall fulfill the following specific requirements.
- The facility shall be extended only to those customers facing a severe working capital shortage
- The facility shall not be extended for existing clean base Overdraft borrowers.
- The facility shall be availed to Credit Risk Grade 1, 2, or 3 customers.
Overdrawal Facility
Overdrawal Facility
An Overdrawal is a temporary facility that gives a customer the right to withdraw a specified amount of funds over and above the Overdraft Facility limit in order to meet the unexpected seasonal working capital shortage. Overdrawal may be allowed for a maximum period of Thirty days and may be approved only twice in a twelve-month period.
Single Overdrawal amount should not exceed 20% of the existing Overdraft Facility limit or Birr ten million whichever is lower. The overdrawal is availed based on credit risk grade.
Overdraft Facility
Overdraft Facility
Overdraft is a form of credit facility whereby customers are allowed to draw above deposits in their current accounts to meet their business needs. Interest is charged on the overdrawn amount outstanding on a daily basis. This facility is usually approved to sizable business activities and well-established customers as supplement of working capital. A fresh overdraft facility shall be extended to an applicant who has established at least a one-year banking relationship with the Bank as a borrower or depositor. However, depending on the nature and type of the business, the Bank may entertain customers with less than one-year relationship. Due to the indefinite nature of the facility– that is renewed periodically, overdraft facility shall be secured against immovable property.
To enjoy overdraft facilities, customers shall fulfill the following specific requirements, in addition to the general eligibility criteria as indicated in the procedure.
- The applicant must not be in blacklist record with CoopBank or other banks.
- Present audited financial statements and audited financial statements are specifically required for a request of Birr Five Million and above.
- In case of cooperatives or unions, the general assembly or board committee shall assign a delegated person who shall request loans on their behalf, conclude loan and/or mortgage contract with the bank and give authority to the chairperson or to the appointed general manager to sign personal guarantee. The same shall be communicated to the bank in writing.
- In case of Share Company or Private Limited Company, major shareholders should sign personal guarantee.
- The Bank may provide overdraft facility on clean basis or against other collaterals for its prominent customers.
- In order to entertain clean base overdraft facility, the customer’s Risk Grade shall be 1, 2, or 3.
- The outstanding balance of the overdraft facility must be within the approved limit at the time of the processing of the renewal request.