Trade Finance

Our trade solutions facilitate local and cross-border activities to finance operations and liquidity, as well as mitigate risks inherent in trade.

Letters of Credit (Import & Export LCS)

Issued by the Bank at the request of the Customer (applicant/importer) where the Bank promises to pay the beneficiary/exporter for goods and services provided the exporter presents the stipulated documents.

Benefits:

  • Payment is guaranteed by both the issuing bank and the confirming bank as long as compliant documents are presented.
  • Mitigates the buyer/country risks
  • Can allow multiple/continuous shipments, with quality of products and price guaranteed by an independent pre-shipment inspection company
  • Allows access to other products e.g. pre-shipment finance and structured finance
  • Ensures delivery is done within schedule and assures timely payment to seller/exporter

Requirements:

  • KCB LC Application form.
  • Proforma Invoice
  • Import Declaration Form if required.
  • Insurance as per Trade Terms.
  • Meets all other terms and conditions set out in the (Export) LC

Pre Export Finance

This facility enables our exporting clients finance the purchase of raw materials and process/package before shipment to the buyers.

Benefits:

  • Helps to generate additional working capital to enable the client meet production demands
  • Provides additional working capital with flexible security requirements
  • Enables taking of very large orders
  • Cheaper than other borrowing facilities
  • Can be used on a revolving basis

Requirements:

  • The facility needs to be backed by an export LC or a confirmed export order or tied up in a structure.

Post Import Financing

A loan facility given to an importer (customer) to settle trade finance related bills that have matured before the importer (customer) has mobilized adequate resources to settle the same.

Benefits:

  • Used to bridge financing gap between customers payables and receivables.
  • The Bank allows its client an additional credit period which is undisclosed to the seller and therefore allows the client to negotiate for better rates with the seller.
  • Extended credit period.
  • Lower lending rate
  • It is ideal to use when the client’s account is not in credit balance as the fees charged are much lower that for an overdraft.

Requirements:

  • The facility is granted to pay import bills. The client will have a credit appraisal done as per bank’s lending policy.

LPO/LSO Financing

Local Purchase Order (LPO)/Local Service Order (LSO) Financing. KCB offers temporary loans to enable your business close out an order from reputable companies for supply of goods or services.

Benefits:

  • Finance of up to 70% of cost of items to be supplied
  • Flexible security requirement
  • Low interest rate
  • Quick approval process
  • Maximum period of 90 days depending on the term of the LPO

Requirements:

  • Be a KCB account holder.
  • The LPO/LSO issuer must be of good repute.
  • Supplier’s Proforma invoice or quotation for items to be purchased

Guarantees/Bonds (Bid/Performance/Transit Bonds)

A written irrevocable undertaking issued by the Bank to pay the beneficiary on demand if the customer (applicant) has not fulfilled their contractual obligations.

Benefits
  • Credit worthiness of the region’s largest bank by capital and assets substituted for that of the client.
  • Client obtains credit hence easing any liquidity constraints (KCB guarantee can be a substitute for cash deposit)
  • Immediate compensation in case of default by primary obligor (applicant)

Bills/ Invoice Discounting

An exporter obtains an advance from the bank against a bill or invoice thereby securing liquidity. The advance is based on the face value of the trade bill/invoice.

Benefits
  • Immediate access to the proceeds of sales
  • Simple operational procedures
  • Cheaper additional working capital with simplified security requirements

Commodity Financing

Available to producers who do not have access to Balance Sheet Lending.

Benefits
  • The Commodity purchased is the collateral. No need to provide Bank with other security.
  • Simple operational procedures.
  • Cheaper additional working capital with simplified security requirements.
  • Producer obtains liquidity by leveraging his inventories well before the goods are sold onto the market.
Requirements
  • Pre-requisite is to have ‘All Risks’ insurance and an assignment of proceeds.
  • Collateral Manager to control or take custody of the commodity on behalf of the Bank

Documentary Collections

Documentary collections are used to facilitate importation/exportation of goods between parties and collection of sales proceeds.

Benefits
  • Cheaper than LCs in terms of lower bank charges
  • Easy to establish and operate with shorter processing time- speedy payments
  • If documents are against acceptance (DA), allows an importer a period of credit and at the same time assuring exporter of payments
  • Drawee has the flexibility on settlement of bills (especially for documents against acceptance)
  • No impact on customer’s credit lines.

Structure Trades Finances (STF)

A cross-border trade finance where the intention is to get repaid by the liquidation of a flow of commodities. Various trade finance products are used at different stages of the transaction.

Benefits
  • Access to financing where no other financing is in place
  • Financing facilities are tuned to a producer’s production and trade cycle
  • Off balance sheet operation/liquidity
  • Allows a producer to benefit from his track record in a reduced risk environment

Bill Purchase

Seller obtains financing and receives immediate funds in exchange for a sales document not drawn under a letter of credit.

Benefits
  • Seller does not have to get a letter of credit.
  • Improvement of liquidity. The product can convert forward receivables into cash on demand so as to accelerate capital turnover and relieve the pressure of finance.
  • Simplification of financing process.

Supply Chain Financing

This facility reduces the burden of a buyer of making multiple payments to suppliers every month. Through a process of reverse factoring, a buyer facilitates the financing of his suppliers against his own credit with the aim of optimizing cash flow while minimizing risk throughout the value chain.

Benefits to Supplier
  • Early access to liquidity
  • Non-recourse working capital financing, not affecting SMEs’ borrowing base
  • Cheaper funding (through lower arrangements and monitoring costs for banks)
  • Very fast TAT
  • Better and easier administration
Benefits to Buyer
  • Stronger supplier network
  • Standardized payment
  • Possibility to stretch payment terms without affecting suppliers
  • Deleveraging own balance sheet
  • Better and easier administration.

 

*Terms and conditions apply.




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