About YERF Order Finance
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. 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 applicant fills in the forms providing information which shall among others include:
- Information about the applicant(s)
- Form is taken to Umphakatsi or Zone Leader for vetting they append their signature and stamp the form
- The form is taken for further vetting at Inkhundla through signature and stamp
- The form with all the attachments is submitted to The Fund Offices only.
- Applicants should ensure that before submission, attachments are included as guided in the requirements checklist found in the last page of the application form.
Young entrepreneurs between the ages of 18 – 35 years qualify for this loan product and the following must also be accounted for:
- The order must be issued by a reputable company which can be traceable to confirm the order by YERF.
- 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 types of businesses that qualify include:
The following attachments shall be necessary to accompany the submission of the application form:
- Memorandum & articles of association (for companies & coops)
- A completed loan application form
- Cash flow projections.
- A Purchase Order or contract document
- Lease agreement / proof of premises ownership
- Certificate of incorporation (for companies & coops)
- Form J (for companies)
- Trading license
- Certified I.D. copy
- Company’s resolution to borrow
- Proof of physical address
- Bankers (account number and branch)
- Bank statement for at least 3 months (for existing businesses)
The applicant fills in the application forms
- The application form together with other loan attachments are submitted to YERF offices.
- YERF conducts pre-screening which is a feasibility analysis to ensure feasibility and completeness.
- Upon completion, successful applications are forwarded to IDCE for full appraisal.
- Upon completion of appraisal, loan is recommended to YERF for approval of the requested amount.
- YERF also reviews loan for approval.
- 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.
- 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.
The disbursement of funds shall follow the process below:
- The successful applicants shall undergo and intense business training.
- Those that have previously undergone training from a reputable institution shall be exempted from the training.
- The successful applicants shall proceed to sign loan agreements.
- All applicants will be expected to open bank accounts for their businesses.
- A mentor/advisor shall be assigned to the applicants before disbursement of funds. The mentor shall also be co-signatories to procurement or expenditure requisitions.
- Disbursements shall be made direct to suppliers as per purchase order.
LENDING TERMS AND CONDITIONS
There shall be different lending limits for Individuals, companies and cooperatives. Deviation from these limits shall be at the discretion of the youth fund in consultation with the intermediary. Beneficiaries can be in the following entities with the proposed lending limits:
- Sole Traders - E80,000.00
- Companies - E150,000.00
- Cooperatives - E200,000.00
- Repayment Period: - 3 – 6 Months (once-off)
- Interest rate: - Prime +4%
- Security: - The Confirmed Order
- Own Contribution: - Zero
*Prime rate is taken from the Central Bank of Eswatini
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.
- 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.