- Most development finance institutions in the country offer a minimum Order Finance Loan from E10 000 to E500 000
By Ntokozo Nkambule
So you are entrepreneur and after working very hard, your luck seems to turn as an established company has offered you the opportunity to supply them with material which will cost E100 000. The Purchase Order you have received is for E300 000. But there’s a catch, as an SME, you do not have the financing amount. The client will also pay after delivery, even your bank will not lend you this amount as you do not have collateral and no property to use as surety. Suddenly, your luck has turned into a nightmare. But, wait, there is a product that suits this need exactly, and it’s known as Order Finance. The good news is most development finance institutions in the country offer this product.
We have done a bit of research for you from the available development finance companies in the country offering this product. Please note these are not exhaustive, for more information we advise you to do further research. Firstly, what is Order Finance? Well, this is a loan facility that is designed for entrepreneurs or small businesses that are involved in the sourcing and supplying of goods and services. It is called Order Finance because the entrepreneur must have at least an Order or Purchase Orders (P/O) from a reputable company or institution.
Eswatini Development Finance Corporation
Locally, this is normally a short term loan offered for a period of six months. Eswatini Development Finance Corporation’s (FINCORP) offers this product from E10 000- E500 000. What makes this product also compelling is the fact that the security loan must be backed by the above mentioned purchase order from a reputable company. There is no need for surety such as immovable property from the entrepreneur.
Industrial Development Company of Eswatini (IDCE)
The Industrial Development Company of Eswatini also offers this product and is short term. Similarly to Fincorp, the minimum amount from this product is E10 000 with a maximum of E500 000. IDCE offers a lengthier period of payment as they offer entrepreneurs up to 12 months to pay. The IDCE however, expects entrepreneurs to also foot a 20% amount of the total project cost, which does not apply from Fincorp.
Youth Enterprise Revolving Fund
The Youth Enterprise Revolving Fund (YERF) which is a fund that was created by the Eswatini government to aid entrepreneurs has an Order Finance Product that does not exceed E200 000. The minimum however, is E10 000 which is similar to Fincorp and IDCE. The repayment period is 3-6 months, however, the YERF does have a grace period, as they extend the payment period to entrepreneurs, if their invoice has still not been paid by the client.
Other private lending companies in Eswatini that offer Order Finance Loans include Amandla Financial Services which states that its Finance Order product is designed for current Purchase Orders (P/O), contracts from reputable organizations who pledge to cede payments directly to them upon full delivery. Other private lending companies that offer a similar product is Select Financial Services as well as Letshego.
Summary
| FINCORP | IDCE | YERF | |
| Amount | E10 000- E500 000 | E10 000 – E500 000 | E10 000- E200 000 |
| Interest Rate | Market Related Rate | Prime + Risk | Prime + 4% |
| Repayment Period | Once off or upto 6 months | Once off or upto 6 months | 3-6 months |
| Security | Cessation over proceeds from reputable company | Cessation over proceeds from reputable company | Purchase Order |
| Own Contribution | Zero | 20% | Zero |
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