Supplies Business in Kenya: One of the most lucrative business you can engage in involves supplies.
From supplying county governments to parastatals, and participating in the 30 per cent procurement rule, the supplies business holds major potential to create wealth quickly.
However, one of the major hindrances that the business presents is sufficient capital.
Oftentimes, providing supplies consistently calls for an adequate pool of funds, which many in the business don’t have. However, Cooperative Bank is stepping in to help facilitate smooth running of such businesses through its LPO Financing product.
This is a financing offer against local purchase orders that suppliers get for the supply of tendered goods and services.
Now let us take a look at what you need and how you can benefit from the LPO Financing product from Co-operative Bank.
About the Co-op Bank financing product
The Co-operative Bank LPO Financing comes with the following features:
- Maximum Loan – 60% of input cost of servicing LPO
- Minimum loan – Kes 50,000
- Maximum Tenor – 4 months.
- Maximum Limit – Maximum exposure to a customer on LPO financing will be 70% of 3 months’ total turnovers from the issuer of the LPO.
- Availability – Facility will revolve for 12 months upon which supplier will be reviewed for renewal Pricing LPO Advance Fee 3% p.m. on the funds advanced LPO Advance Commission 1% of funds advanced Communication fee Kes. 1,500 Extension fee (Advance fee + 1%) p.m. upon application Penalty fee 5% p.m.
It’s cost
The Co-operative Bank LPO Financing comes with an advance fee of 3 per cent per month on funds advanced to suppliers. The LPO financing attracts an advance commission of 1 per cent of the funds you’ll get as a supplier., and a communication fee of Sh. 1,500. Additionally, Co-operative Bank LPO Financing attracts an extension fee which includes the advance fee plus 1 per cent per month and a penalty fe of 5 per cent per month upon application of repayment extension.
What you need to be financed
To be successfully financed under the co-operative Bank LPO Financing, you’ll need to meet the following requirements:
- LPO Issuer must execute a Supplier Credit MOU with the Bank.
- LPO must have been issued by an Acceptable LPO Issuer as per Issuer as per the set criteria.
- Irrevocable instructions by applicant to LPO issuer to pay only to specified LPO Financing account with us
- Undertaking by buyer to remit payment of the LPO amount to supplier’s LPO Financing account with us
- Securities to be provided for amounts above Kshs. 500,000
- Applicant must have banked with the Bank for a minimum period of 6 months
- Company Profile and most recent Audited Financial Statements, KRA PIN Certificate and relevant Certificate of Registration from LPO Issuers.