CREDIT FINANCE PRODUCTS
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Margin Facility: A margin facility is a facility granted to the client to take advantage of the opportunity in the capital market. To qualify for this type of facility, the client should make equity contribution of 30%-40% in cash or shares acceptable to SFC.
The facility shall be secured by both the shares provided by the client as equity contribution and shares bought with the facility. The collateral should be closely monitored by the Account Officer through constant valuation. Where the shares (collateral) falls in value up to 15%, the Account officer should notify the client and seek approval to realize the collateral to regularize the loan account.
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Local Purchase Order: Financing local purchase order is one of the credit products of SFC. SFC finances local order (LPO) from reputable and blue chip companies such as Banks, Manufacturing companies, Telecommunication providers, Oil companies and other organizations acceptable to SFC management.
Transaction Dynamics
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The LPO must be from a reputable company.
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The Account Officer must verify the authenticity by visiting the issuer of the LPO for confirmation.
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The source of the goods should be confirmed.
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The quality of the goods should be ascertained and must agree/match with the approved sample.
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Upon approval, cheque should be written in favour of the owner of the goods and paid directly by the Account Officer.
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The Account Officer is to monitor the transaction from the point of purchase to the point of supply.
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The Account Officer should go for cheque collection on maturity.
Collateral
All LPO financed by SFC must be secured with adequate collateral such as shares, property (equitable or legal mortgage). Payments on LPO’s financed by SFC must be domiciled with SFC. The domiciliation agreement must be in writing and irrevocable. It must be signed by the Financial Controller, Accounts manager or any other officer of the company responsible for payments.
In a situation where there are no other forms of collateral, management can exercise sound discretionary judgment as to the acceptability of the domiciliation agreement as the only form of security.
It is the responsibility of the project/Account Officer to monitor payment and ensure that the company’s position is not compromised or jeopardized.
3. Working Capital Finance: Working capital finance is a bridging finance granted to entrepreneurs, businessmen and organizations to fill the cash flow gaps in their working capital cycle and to continue in business.
Collateral
Any funds made available to finance working capital must be adequately collaterized. Acceptable collaterals include shares (200% cover), property (equitable or legal mortgage) in an acceptable location or any other form of security adjudged adequate and acceptable by management.
Repayment
Strictly, the repayment should come from cash sales or debtors collection. To achieve this, sales/debtors collection should be domiciled with SFC. Minimum daily cash lodgments into SFC account should be agreed upon. The account Officer should monitor and ensure that the client complies.
Working capital finance should not be ever green. Rollover request should be declined.
4. Personal loan:
Personal loan is a facility granted to individuals who are qualified to meet urgent personal financial needs. To qualify, the client must have a strong and regular cash flow such as salaries or other personal source of income acceptable to SFC. The client should be working in a reputable organization or running a reputable personal business.
Collateral
All personal loans must be adequately secured with acceptable collateral. Adequate and acceptable collateral include stocks (200% cover), Treasury deposit, Treasury bills etc.
Repayment
The client should issue post dated cheques (principal plus interest) tied to his salary or other personal income source. Rollover request for personal loan should be declined. |
