A number of organizations make use of third parties in providing some of the items required in their businesses and set out specifications of items needed either in a contract agreement document or a Local Purchase Order (LPO). These third parties or “contractors” or “suppliers” often require financial assistance to execute such supply contracts. For more information, go here http://bit.ly/1ye6ZVl
However, experience has shown that some contractors often encounter challenges in accessing finance from banks largely due to the lengthy turnaround time for credit evaluation and their inability to meet certain requirements.
Examples of Companies that may require LPO/Contract Financing • Contractors/Suppliers to Oil Majors and Oil servicing companies • Contractors/Suppliers to reputable manufacturing companies and FMCG • Contractors/Suppliers to construction giants • Contractors/Suppliers to reputable Telecoms companies
Product Highlights from StanbicIBTC • Tenor: this is usually aligned to the terms of the PO/Contract and it varies between 90 to 180 days • Repayment terms: Total sum (Principal and Interest) is paid at maturity • Contribution: Applicant is expected to make between 10-20% of the cost of financing the PO/Contract • Collateral: Domiciliation of contract proceeds
Required Documentation • Formal Application Letter • Board Resolution (if a Limited Liability Company) authorising the request • Copy of Purchase Order/Contract Document • Copy of goods/product invoice from supplier • 12 months Bank Statement (for new to bank customer) • Evidence of at least 2 similar jobs of commensurate magnitude, the last of which must have been executed not longer than 3 months ago
Benefits to the Customer - Provides working capital to execute the contract - Faster/Timely execution of the contract as a result of the access to funds. - No need to provide tangible collateral