Loan and Advances
Agricultural Machinery Loan
Agricultural Machinery Loan
Agricultural Machinery Loan is a loan granted to those who are engaged in farming and agricultural related activities on a small/medium/commercial scale or to customers who are engaged in agricultural machinery rental businesses for the acquisition of agro-processing machineries and equipment (such as water pumps, generators, combine harvesters, tractors, coffee processing machines, etc.). This loan may also include the cost of spare parts.
The minimum equity contribution for a credit risk grade 1 or 2 applicants is 50% of the purchase price of the machinery to be bought. For credit risk grades 3 and 4 applicants it is 60% and 70%, respectively.
If the customer offers additional collateral in the form of a building having estimated value equivalent to 50% of the loan amount, the bank may relax the required equity contribution.
Motor Vehicle Loan
Motor Vehicle Loan
A Motor Vehicle Loan is a term loan granted for the purchase of new motor vehicles. The loan does not, however, include the cost of spare parts or luxury items.
In addition to the General Eligibility Criteria, customers shall fulfill the following specific requirements.
- The motor vehicles to be financed should meet the standard specification of the Ministry of Transport – Transport Authority.
- The motor vehicles to be bought shall only be new brand.
- The applicant should provide two proforma invoices from legally licensed supplier, but one proforma invoice for sole agent supplier, which will be verified by sole agent confirmation letter, and/or for suppliers with which the bank has business relationship.
Agricultural Term Loan
Agricultural Input Loan
Fertilizer Loan
It is a short-term agricultural loan granted for the purchase of fertilizers. Applicants that are established as Cooperatives or Associations may be extended clean based fertilizer loans. However, they have to:
- Acquire legal personality from the concerned organ.
- Present minutes of a resolution passed by at least three-fourths of the members of the General Assembly of their Cooperative /Association.
- Provide audited financial statements.
- Employ a Manager and an Accountant/Bookkeeper; and
- Present letter of guarantee from the respective regional or federal government body.
Other Agricultural Input Loans
It is a short-term loan granted to customers engaged in the agricultural sector for the purchase of agricultural inputs other than fertilizers like improved seeds, and/or agrochemicals.
Agricultural Investment Loan
It is a short to long term loan granted for working capital needs as well as purchase or lease of buildings, agro-processing machineries, equipment (such as water pumps, generators, combine harvesters, tractors, vehicles, coffee processing machines, etc.), plant and animal production (dairy, poultry, and livestock fattening activities) in small/medium/large-scale farming, construction of storage facilities, etc.
Priority is given to modern commercial agriculture ventures that produce for export and both rain fed and irrigation system agricultures may be financed. A maximum grace period of five years may be granted for plantations like coffee plantation and a maximum of two years for other agricultural farms.
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