SMALL BUSINESS FINANCING AGENCY FUND LENDING POLICY
INTRODUCTION
The Fund’s objective is to contribute towards the economic development of the country by providing finance to economically sound and viable projects for the small and medium business community.
Sectors of financing include but are not limited to:
- Tailoring
- Arts
- Backyard Farming
- Fishing
- Bakery
- Snack Production and Food Processing
- Repairs and Maintenance
- Hairdresser
- Tourism related services
- Manufacturing
- Graphics
- Day-care and Child Minding
- Horticulture
- Entertainment
- Cleaning and Landscaping
- Handicraft
- Carpentry
- Other Services
DBS shall attempt to diversify and balance the loan portfolio amongst the above sectors to spread the risk in all profitable sectors of industry for better credit risk management.
The policy is in compliance with good business and banking practices and controls in order to properly manage the Fund’s Credit risk.
The policy sets out the guidelines on the different sectors of financing, loan conditions and repayment terms, collections & recovery procedures and write offs.
The policy shall be reviewed periodically and necessary amendments, if any, shall be incorporated in line with market conditions.
SOURCES OF FUNDS
Funds shall be raised from the annual budget funded by the Government of Seychelles as per the Development Bank of Seychelles (Small Business Financing Agency Fund) Agreement.
LOAN LIMITS
The minimum loan amount shall be SCR 15,000 and the maximum shall not exceed SCR 300,000/- per client.
LOAN APPROVAL SANCTION LEVEL
| Level of Authority | Loan Amount | Approval Timeframe |
| CEO | SCR 15,000 to SCR 100,000 | Daily |
| CCM | Above SCR 100 to SCR 300,000 | Weekly |
INTEREST RATES
- 4% per annum for loans up to SCR 75,000
- 25% per annum for loans above SCR 75,000 and up to SCR 300,000
The interest rate is subject to change whenever deemed necessary due to changes in market conditions or any changes in regulation. The approval for such changes shall come through DBS’ Board of Directors with approval of the Ministry responsible for Finance.
PERSONAL CONTRIBUTION
No contribution is required to be injected by promoter under this fund.
LOAN DURATION
The maximum repayment period shall be 7 years.
GRACE PERIOD
Grace period will not exceed 6 months.
The duration for each project repayment is assessed on a case by case basis. The factors that are used as guidelines in deciding the duration of repayment and grace period include:-
- Nature of the project
- Repayment capacity of the project
- Economic life expectancy of the assets involved in the project
The interest during grace period is capitalized.
ELIGIBILITY
Individual applicants must be of a minimum 18 years of age, a citizen of Seychelles and residing in the Republic of Seychelles.
As for businesses, it must be registered in Seychelles and 100% owned by citizens of Seychelles.
APPLICATION FEE
The Bank will charge each applicant per application handled by the Bank, irrespective of the application being successful or not, a non-refundable application fee of SCR 250 or 0.1% of the loan amount, whichever is the highest. The application fee is payable up-front and it shall be non-refundable.
DOCUMENTS TO BE SUBMITTED
A checklist of documents to be submitted shall be made available to the client.
The documents related to Customer Due Diligence (CDD/KYC) is compulsory and other documents listed on the checklist will vary depending on the type of project.
A Business plan is required for loan application above SCR 150,000, requests below SCR 150,000 are required to provide a cash flow only amongst other documents. This requirement will allow to objectively and realistically appraise the loan proposal.
LOAN PROCESSING AND DISBURSEMENT
DBS shall be guided by its present procedures for loan processing and disbursement.
COLLECTION AND RECOVERY
The Bank shall be responsible for the collection of payments and recovery of loans from the borrowers. For both processes including legal proceedings in respect of default cases, the Bank shall be guided by its own internal policies and procedures.
No liability for default shall fall on the Bank. Any costs incurred in relation to the recovery and bad debts of loans granted under the Fund shall be charged directly to the Fund.
WRITE-OFF
Any write-off of irrecoverable debts, after all recovery measures have been exhausted, shall be endorsed jointly by the Bank and the Ministry responsible for Finances as per the Development Bank of Seychelles (Small Business Financing Agency Fund) Agreement. Any recommendations shall be in accordance with the Financial Institutions Act, 2004.
RESCHEDULING OF LOANS
Request of rescheduling of loans shall be considered and approved by the Credit Committee of DBS.
VEHICLE FINANCING
Request for vehicles shall only be considered for activities related to the project only.
Loans for purchase of car/vehicles shall be considered as per terms and conditions mentioned below. The amount or period of the loan will depend on the valuation of the car offered as security.
| Type of Vehicle | Loan Duration |
| Brand new | 60 months |
| Second hand (must not be more than 5 years from the date of manufacture) | 48 months |
- VEHICLE AS A SECURITY
The financial interest of DBS must be noted with Seychelles Licensing Authority.
All vehicles financed or held as security must be pledged to DBS and the necessary registration formalities must be completed. Proper follow up should be done until receipt of original pledge document is duly stamped and registered at Registrar office.
COLLATORALS
Security coverage for loans shall be at least 1:1 and in the form of:
- Mortgage on freehold/leasehold property;
- Pledge on Assets (vehicle, equipment and vessel)
- Bank guarantee; or a guarantee from an insurance company;
- Qualified guarantros (Guided as per DBS Policy for Guarantors)
Note: In addition to the above securities, the following conditions also apply:
- Registration of movable assets should be done prior to disbursement of the loan
- Assignment of Insurance policy to the Bank
- Loan repayment to be done by Standing Order or cash
- MORTGAGE OF PROPERTY AS A COLLATERAL
DBS shall allow mortgage on land/house as a security.
Properties given as security for the loan should have sufficient market value to cover the loan amount. In the event that an evaluation is required, this has to be done by a bank approved licensed Quantity Surveyor.
- FIXED DEPOSITES, BONDS AND TREASURY BILLS AS SECURITY
DBS shall allow fixed deposits, bonds and treasury bills as a security which are to be maintained/renewed unless cancelled by DBS.
Client shall provide all information and relevant documents about the security.
- ASSIGNMENT OF SALARY
If in employment the salary of the borrower must be assigned to DBS before disbursement of loan. As for the assignment of the dues for the Guarantor the same is being guided by its respective policy as mentioned above.
- COMMITTED CLIENTS AND GUARANTORS
Clients with bad repayment records with DBS and any other financial institutions are not eligible for financing under the SBFAF.
