This will take the form of an unconditional undertaking by UDBL to pay a specified sum of money to a beneficiary against presentation of a written demand and any other documents specified in the guarantee. The beneficiary will be indemnified for a stated amount against the failure of the Bank customer to fulfill its obligation under the underlying transactions.

Purpose:
Guarantees aim at aiding investment in key sectors of the economy through contractual arrangement.

Qualifying Sectors or Businesses:
Bank guarantees will be provided to businesses engaged in Key growth sectors of Uganda economy such as Agriculture & fisheries, forestry, agro-processing, education & social services, health, oil & gas, infrastructure, manufacturing, construction & real estate, hotel, tourism & hospitality, extractive industries.

Tenure:
The validity period of Bank guarantees to be offered by UDBL will not exceed one (1) year but renewable, unless specific credit approval is held.

Grace Period:
The grace period for guarantees is 4 months and guarantee fees are payable quarterly.

Guarantee Fee:
The Bank will charge guarantee fee per quarter that ranges from 0.5-1% of the value of the contract per annum depending on the underlying risk of the transaction.

Arrangement Fees:
Appraisal fee for carrying out due diligence process on transactions to be guaranteed vary from 0.5%- 2% of the value of the contract with a maximum capped at 100m.

Collateral/ Security:
Guarantees offered will be fully secured preferably by a mortgage over immovable assets, cash cover, fixed deposits and chattels mortgage. The forced sale value of security should be between 100% and 120% of contract amount. In addition, Corporate and personal guarantees of the business owner(s) will be required.

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