About the fund
We do impact investment providing debt financing and technical assistance to SMEs in East Africa. We currently operate in Kenya, Uganda and Rwanda.
Investment type
The debt funding that we provide ranges from a minimum of USD $100,000 up to USD $ 500,000 in the first round of investment for an initial period of up to 3 years.
Investment criteria
For a business to qualify for funding (loan) it needs to:
1) be registered as a limited company
2) have audited financial statements for the past 3 years
3) be generating a minimum of (USD 300,000) in revenue per year
4) Have collateral to secure the funding (land). We use land even if given guarantee by a third-party.
The Due Diligence Process
We conduct a rigorous due diligence assessment before funds are disbursed in several stages as follows:
1. Preliminary review of required information (audited accounts, company profile, investment
needs)
2. Initial visit - Usually at the company offices
3. Discussion and agreement of indicative term-sheet (funding conditions)
4. Stage 1 DD- Operational due diligence assessment
5. Stage 2 DD- Financial and legal due diligence assessment
6. Stage 3 DD- Impact assessments
7. Investment Committee review and approval
8. Final term-sheet offered
9. Contracting and disbursement
Please note that these stages can run concurrently depending on the organization’s preparedness.
Cost of capital for the loan/debt
The cost of funding for us is a bit different. We use multiples instead of interest rates. We also charge annual fees and a one off processing fee.
Multiple
For long-term loans, the multiple ranges from 1.3 - 1.4 over a 3 yr period. This means for a debt of say $100K, the total repayment over 3 years would be between:
• · $100K x 1.3 = $130K and
• · $100K x 1.4 =$140K.
Translating this to yearly cost, it would be between
• · 0.3 / 3 = 10% and
• · 0.4 / 3 =13.3333%.
In case you have contracts that you are servicing and need a line of credit, the cost is different. We should be able to advice depending on your needs.
Annual Fees:
We also charge annual fees of between $5,000 - $7,500 fees for each of the 3 years.
One off Processing Fee - 1.5% loan processing fees one off deducted from the first loan disbursement
Collateral
The loan is secured through land (developed or not developed). We accept 3rd party collateral in case the business or the owners have none to pledge.
In case of international exports, there is an extra requirement for trade insurance to be taken against credit sales and /or irrevocable letter of credit from a reputable and well known bank to guarantee payments.
Funding Terms
Funding terms depend on the results of the due diligence exercise. We recognize that each business is faced with unique circumstances and therefore, each term-sheet is different. If an organization is
considered for funding, we usually prepare indicative terms and share them early on.
Repayment
The repayment structure is flexible and is tailored to suit the company's cash flows.
Please note that the debt is disbursed in USD and the corresponding repayment is also expected in USD.
Technical Assistance
We also provide technical assistance which is equally critical in the areas of accounting, finance, strategy,
management, and governance. This assistance is available both pre-investment and post-investment.
Excluded Organizations
We do not fund the following types of organizations / industries:
• Pre-revenue organizations
• Primary agriculture organizations (growing crops & rearing animals) organizations
• Microfinance institutions
• Alcohol & Tobacco organizations
• Petroleum, oil, mining, logging
• Real estate development organizations (If the units are sold off plan, we can consider financing the development)
• Hotels, restaurants, tours & travels
• Aviation
• Any business that has a negative impact on the environment
Next steps for funding
To start the process, we require the organization to send us the following information:
• A brief profile of the company (location, workforce, structure, products, suppliers, market, financials, past performance, etc.).
• Audited accounts for 3 years
• Management accounts to date
• Certificate of incorporation
• Memorandum and Articles of Association
• Latest copy of CR12
• Latest KRA tax compliance Certificate
• Investment needs (purpose and amounts)
• Details of the land to be provided as security for the loan (copy of title deed, location, value of the land & pictures (if available), valuation report)
Click here FUNDING and submit your request online.
