- Overdrafts (OD) An Overdraft (OD) is a line of credit that allows a customer write cheques for more than the actual balance on the account with a finance charge on the excess.
Ideally, the use of an OD should be restricted to working capital requirements. Hence, it fluctuates regularly and even moves into credit periodically as the business cycle is completed. It is an open credit, which can be used repeatedly until the balance on the account reaches a certain pre-arranged limit with a specific repayment date, usually one year.
- Lease Facilities
nterprise Bank Limited can buy or fund the purchase of a capital asset at a client’s request and hire or lease it to them at an agreed rental. The title of the asset resides in the Bank until the last installment is paid and the client exercises its option to purchase the asset at the pre-determined price
Stated in the lease agreement.
- Term/Time Loans
These include any non-revolving facility where the final maturity extends beyond one year from the date of approval by the Bank for Term Loans and less than one year for Time Loans.
Term/Time loans are normally given to finance specific transactions, capital projects or a customer’s expansion programme. Repayments are made in installments at pre-agreed times and should be tied to the cash generated by the project transaction. Term loan requests must be backed by independently verifiable cash flow projections based on sound assumptions.
- Performance, Advance Payment, Bid Bonds, And Guarantees
These are undertakings by the Bank, made at the request of our client to a beneficiary that our client will carry out the terms of a contract with the beneficiary. Failing which and upon presentation of predetermined documents, the beneficiary will be compensated by the Bank to the extent of our undertaking. These instruments are contingent liabilities where the Bank substitutes its credit for that of our client.
- Import Finance Facility
This facility is designed as a working capital facility for customers engaged in importation of goods into Ghana. It is targeted at Customers who have shown volume import turnover and have established regular demand for foreign exchange. A customer is expected to contribute a minimum amount of total value of the Letter of Credit as may be approved by the MCC from time to time. Import Finance Facilities should have 30 – 60 or 90 days clean up cycle.
- Receivable Finance / Invoice Discounting
This is a type of finance where the bank provides funds for the customer in anticipation of outstanding receivables, usually from blue-chip companies. The receivables are usually discounted to allow for bank charges and interest.
- Local Purchase Order (LPO) / Contract Financing
These are loans extended for the purpose of executing specific contract or series of contracts or LPOs awarded or issued to a customer. It usually involves domiciliation of contract proceed and the repayment of the loan is largely dependent on the contract proceed.
- Temporary Overdrafts (TODs)
From time to time, a customer might be in need of temporary accommodation to overdraw its account with us.
For customers wishing to draw against confirmed drafts, the Account Officer shall fill a Temporary Overdraft (TOD) form, which shall be approved for the tenor the draft / cheque, is in clearing.
For other accommodations not supported by confirmed drafts, the request shall come by the way of a proper Approval Memo. Adequate security shall be taken for such requests, which shall not exceed 10 working days. Requests for longer tenors shall be documented as proper CAM. All TODs shall be approved by Officers who have authority to do so.
- Direct Credit
Good clients with substantial turnover, strong management can be offered direct credit (instant credit) for cheques lodged into their accounts for clearing. Financial institutions are often given this facility if they carry a risk rating of 1 or 2. Where the risk is low and provided the client has no record of returned cheques, the Relationship Manager can recommend the customer for a direct credit line.
- Revolving Credit
This is usually structured as a short-term facility where the customer should repay each drawing by a fixed period of time, usually from 30 days to 180 days. The customer may however re-borrow sums as needed up to the limit of the facility. It is usually given to finance a company’s permanent working capital and is evergreen for the period of the total facility. The tenor of the facility must not exceed three (3) years. The facility should be made available only to clients in more stable industries and who have strong finance planning systems.
- Bankers’ Acceptance (BA):
Bankers’ Acceptances are trade bills; (a commitment to pay). They are usually betweeCedis
30 and 180 days, and are drawn on and accepted by banks on behalf of their customers.
The bills can be sold to a third party usually at a discount. By accepting the bill (signing accepted on the bill) the accepting institution guarantees payment of the bill. These instruments are provided for clients to finance imports of raw materials, or local orders with a short turnaround time. The facility is usually revolving and available for period up to 12 months. Usually, the line is available on standby to fund a specific type of transaction for which it was approved. They are secured by a lien on the products financed or the resulting receivable. Rollover is dependent on prompt liquidation of the earlier drawdown.
- Commercial Papers (CP)
Commercial Papers are unsecured short-term promissory notes (usually betweeCedis
30 – 180 days) of corporate bodies, issued directly to the investing public through an issuing house.
We will only arrange Commercial Paper on behalf of companies whose risk ratings are not lower thaCedis
2 and where this classification is not due to strong collateral. Where the risk rating is lower, the Commercial Papers (CP) must be supported by a standby facility arranged by the Bank. Such a standby facility is subject to the normal credit approval policy and processes of the Bank.
Although CPs are issued unsecured and carry no direct credit exposure for the Bank’s reputation is put on the line each time we arrange a CP. Hence, the same standard of credit analysis is required for CP issues as with other short-term credit facilities.
- Warehouse Financing
Under this form of financing, the Bank takes physical control of the goods it is financing. Physical control is usually by way of an independent third party warehousing agent. Warehouse financing is best suited where the items being financed are the principal support for the facility. Easily disposable products with fast conversion cycles either as raw materials or finished products are more suited to this form of financing. The facility can be a one-off transaction with a maximum tenor of 12 months.
Where a financing request or risk is too large for one bank, two or more banks may jointly provide financing. We shall be willing to participate in Syndications led by other banks. Regardless of the origin of a credit opportunity, the same standards of credit analysis, documentation, client contact, and responsibility apply. The Lending team must analyze and present for approval, all participation requests. The same considerations apply when the Bank originates loan syndication.
- Bills Discounted
Most Commercial houses operate a credit scheme wherein goods are sold on credit to their customers against a bill of exchange, which is duly accepted as an acknowledgement of indebtedness with a promise to pay on the maturity of the Bill. Where the seller requires money before maturity of the bill he negotiates the Bill with his Bankers who immediately credit him with the face value of the Bill less a discount charge.
- Export Credit
The facility is designed to finance the production, purchase, storage and transportation to the port of departure of goods destined for export. Export credits are advances made against Confirmed Letters of Credit and for amount not exceeding 80% of the L/C value depending on the status of the customer.