Loan Types

Loans

SHORT - TERM LOAN

Type of loan: This type of loan is repaid within one year duration.

Objective of loan: This loan is availed as working capital to customers engaged in various business lines.

Repayment of loan: loanees must finish repayment depending on the nature of their business & arrangement with the bank.

OVERDRAFT

This type of loan is operated for some specified time by overdrawing current accounts. The customer is also required to deposit income from sales to this account. Accordingly, this guarantees the healthy operation of accounts.

The overdraft facility has to be renewed either every six month or every year. The customer should request renewals in writing 45 days before the overdraft expires.

Objective of Overdraft loans:The overdraft loan is extended to businesses with fast business performance.

Usage of Overdraft:

The money in overdraft account should show adequate turn over.
A healthy overdraft account must show at least one time credit balance in six months time.
Every overdraft account should not be overdrawn beyond the authorized limit.
Interest calculation is based on remaining balance of the loan every day.
In case the overdraft loanee fails to utilize the facility, the bank can change it to a term loan of specified time or oblige the customer to conclude the facility.

Collateral: Customers could forward any asset listed in the colaterals section other than vehicles.

LETTER OF CREDIT FACILITY

Type of Credit: This type of loan is extended to importers based on the value of import documents, certain margin of loans are delivered.

Objective of the loan: It is to help importers by collateralizing the merchandise they import so that they will not face shortage of capital.

Repayment & Renewal of the loan: Based on the letter of credit opened, up on arrival of the documents, the customers must pay the remaining value of the documents and takeover the document. The margin held limit must be renewed every six month or every year.

What customers should do: Prospective loanees should meet the requirement enlisted in Loan Requirement in addition to the:

Application for the request of foreign exchange
Foreign exchange license
Documents certifying that the importers have settled the obligation of NBE in 120 days.
Proforma invoice
Insurance coverage certificate
Settlement of the margin held and other service charges.

MERCHANDIZE LOAN

Type of loan: By Collateralizing imported and domestically produced merchandise, particularly merchandise ready for export, the loan is extended taking in to consideration invoice value or least market value.

Repayment of loan: The loan is extended for 90 days and the repayment would be periodically but not more that three times. The loan should be repaid in 90 days

What customers should do:

Application letter
Renewed trade license
Customers declaration if the merchandises are imported
The collateralized merchandise should not be perishable, unfashionable, uncountable, unmarketable, should not be held for speculative purpose.
The warehouse where the merchandises are kept should be standardized to the status of the bank or if the loanee own his own warehouse, he should present ownership certificate; if leased, the rental contract should be presented
The bank will have a joint security over the collateralized merchandise. Sometimes, the bank could assign its own security officer and supervising officer at the cost of the loanee.
The loanee covers the merchandise with insurance in bank in the name of the bank and the loanee.
The loanee covers the expenses that the bank incurrs to protect the merchandise from spoilage.
The loanee signs the loan and collateral agreement contracts once the loan is approved.

Revolving Merchandise Loan

Type of loan: This is merchandise loan where the tenure of the loan is renewable.

What customers should do:What customers should do: The loan is extended for maximum of 6 months. Customers should forward their application for renewal in writing before two months from the expiry date.

PRE-SHIPMENT CREDIT FACILITY

TYPE OF FACILITY:This facility is extended to exporters based on export letter of credit for export products

Objective of the facility: This facility is availed to exporters who face shortage of working capital in the process of exporting their products via airlines or shipping lines.

Settlement and Renewal: This facility is settled once the letter of credit and other relevant documents are presented to the bank.

What customers should do: Prospective loanees should fulfill the criteria as stated in Loan Requirement in addition to the following.

Export trade license.
Export sales contract certified by NBE
Certificate of experience in export trade in line with the export product in consideration.
Documents certifying that the export sale contract is done through foreign banks that are recognized by NBE and other relevant documents.
If the export product is other than coffee, the letter of credit should be opened by a first grade international bank.

Advance on Export Bills

Type of the facility: This facility is extended to exporters based on collateralization of shipment document and the volume of the document.

Objective of the facility: The objective of the facility is to help exporters who face shortage of working capital.

Settlements and Renewal: This loan is settled once the bill of lading or the airway bill is presented to the bank.

What should customers do: Prospective loanees should fulfill the criteria as stated in Loan Requirement in addition to the following

Export trade license
Sales contract
Letter of Credit
Also other relevant documents as requested in the letter of credit except the bill of lading
Custom's declaration and annex declaration from united Bank.
Prorforma invoice
Document from national bank certifying that the export proceed has entered in to the country in 90 days.

Comment

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Loans SHORT - TERM LOAN Type of loan: This type of loan is repaid within one year duration. Objective of loan: This loan is availed as working capital to customers engaged in various business lines. Repayment of loan: loanees must finish repayment depending on the nature of their business & arrangement with the bank. OVERDRAFT This type of loan is operated for some specified time by overdrawing current accounts. The customer is also required to deposit income from sales to this account. Accordingly, this guarantees the healthy operation of accounts. The overdraft facility has to be renewed either every six month or every year. The customer should request renewals in writing 45 days before the overdraft expires. Objective of Overdraft loans:The overdraft loan is extended to businesses with fast business performance. Usage of Overdraft: The money in overdraft account should show adequate turn over. A healthy overdraft account must show at least one time credit balance in six months time. Every overdraft account should not be overdrawn beyond the authorized limit. Interest calculation is based on remaining balance of the loan every day. In case the overdraft loanee fails to utilize the facility, the bank can change it to a term loan of specified time or oblige the customer to conclude the facility. Collateral: Customers could forward any asset listed in the colaterals section other than vehicles. LETTER OF CREDIT FACILITY Type of Credit: This type of loan is extended to importers based on the value of import documents, certain margin of loans are delivered. Objective of the loan: It is to help importers by collateralizing the merchandise they import so that they will not face shortage of capital. Repayment & Renewal of the loan: Based on the letter of credit opened, up on arrival of the documents, the customers must pay the remaining value of the documents and takeover the document. The margin held limit must be renewed every six month or every year. What customers should do: Prospective loanees should meet the requirement enlisted in Loan Requirement in addition to the: Application for the request of foreign exchange Foreign exchange license Documents certifying that the importers have settled the obligation of NBE in 120 days. Proforma invoice Insurance coverage certificate Settlement of the margin held and other service charges. MERCHANDIZE LOAN Type of loan: By Collateralizing imported and domestically produced merchandise, particularly merchandise ready for export, the loan is extended taking in to consideration invoice value or least market value. Repayment of loan: The loan is extended for 90 days and the repayment would be periodically but not more that three times. The loan should be repaid in 90 days What customers should do: Application letter Renewed trade license Customers declaration if the merchandises are imported The collateralized merchandise should not be perishable, unfashionable, uncountable, unmarketable, should not be held for speculative purpose. The warehouse where the merchandises are kept should be standardized to the status of the bank or if the loanee own his own warehouse, he should present ownership certificate; if leased, the rental contract should be presented The bank will have a joint security over the collateralized merchandise. Sometimes, the bank could assign its own security officer and supervising officer at the cost of the loanee. The loanee covers the merchandise with insurance in bank in the name of the bank and the loanee. The loanee covers the expenses that the bank incurrs to protect the merchandise from spoilage. The loanee signs the loan and collateral agreement contracts once the loan is approved. Revolving Merchandise Loan Type of loan: This is merchandise loan where the tenure of the loan is renewable. What customers should do:What customers should do: The loan is extended for maximum of 6 months. Customers should forward their application for renewal in writing before two months from the expiry date. PRE-SHIPMENT CREDIT FACILITY TYPE OF FACILITY:This facility is extended to exporters based on export letter of credit for export products Objective of the facility: This facility is availed to exporters who face shortage of working capital in the process of exporting their products via airlines or shipping lines. Settlement and Renewal: This facility is settled once the letter of credit and other relevant documents are presented to the bank. What customers should do: Prospective loanees should fulfill the criteria as stated in Loan Requirement in addition to the following. Export trade license. Export sales contract certified by NBE Certificate of experience in export trade in line with the export product in consideration. Documents certifying that the export sale contract is done through foreign banks that are recognized by NBE and other relevant documents. If the export product is other than coffee, the letter of credit should be opened by a first grade international bank. Advance on Export Bills Type of the facility: This facility is extended to exporters based on collateralization of shipment document and the volume of the document. Objective of the facility: The objective of the facility is to help exporters who face shortage of working capital. Settlements and Renewal: This loan is settled once the bill of lading or the airway bill is presented to the bank. What should customers do: Prospective loanees should fulfill the criteria as stated in Loan Requirement in addition to the following Export trade license Sales contract Letter of Credit Also other relevant documents as requested in the letter of credit except the bill of lading Custom's declaration and annex declaration from united Bank. Prorforma invoice Document from national bank certifying that the export proceed has entered in to the country in 90 days.

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