Short term loans are for purchasing raw materials / productive inputs needed in the day to day operations of an entity. The facility may also be used to acquire assets which have the ability to generate sufficient cash flows to service the loan over a tenure not exceeding 18 months from the initial disbursement. The facility may be accessed by existing projects or green field projects.

The short-term working capital component of a project should be disbursed at the tail end of the project implementation cycle taking into account the respective lead time.

Purpose:
The Short term- loans for asset acquisition or working capital financing aim at supporting short-term needs of both medium-term and long-term project loans or as stand-alone facilities to support existing operations.

Qualifying Sectors/Businesses:
Key growth sectors of Uganda’s economy with emphasis on working capital needs and short-term asset acquisition in key growth sectors such as primary agriculture & fisheries, agro-processing, health supplies, oil & gas, manufacturing, construction & real estate, hotel, tourism & hospitality amongst others.

Tenure:
The duration for short-term loans stretches for a period from 1 to 18 months from initial disbursement date, depending on the resultant cash flows. Working capital facility can be on the revolving or fixed basis. Revolving working capital facility will be reviewed from time to time prior to its renewal.

Grace Period:
The grace period for short-term loans may range from 1 month to 6 months, depending on the production cycle and expected project cash flow pattern of the business.

Interest Rate:
The Bank’s UGX reference (prime) interest rate for short-term loans per annum is 14% plus the risk premium determined by the Bank’s interest rate model. The USD reference rate per annum is at 6.5%.

Appraisal Fees:
Appraisal fee for short-term loans is 2% of the value of the loan with the maximum capped at 100m.

Collateral/ Security:
Short-term loans will be fully secured preferably by a mortgage over immovable assets preferably the project site and chattels mortgage. The minimum forced sale value of security should be 120% of loan amount. Assignment of receivables, Pledge over commodities secured under Collateral Management, cash cover fixed deposits and the corporate and Personal guarantees of the proprietors.

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