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A good Business Plan is a must Loan package for African countries

THE BANK GUARANTEE PROBLEM


Lenders are not ready to take risk of financing a project without the certainty of recovering their funds in case of project failure. The Bank Guarantee they usually request from the Borrowers provides an irrevocable third party guarantee to the Investor / Lender against any loss.

The issuance of a bank guarantee, however, has been a major long-standing roadblock for many entrepreneurs from sub-Saharan African countries and, frequently, good, high profit making projects are unable to obtain necessary funding. They end-up in limbo.

In order to solve the bank guarantee problem, Dr. Quenum And Associates and other Assistance Partner(s) are in the position to arrange for Financial Guarantees to be issued by reputable guarantor(s) or international insurance companies which are rated up to "A" by Standard & Poors.

According to experts from Fox-Pitt, Kelton - Investment Bank - these insurance companies presently having up to US$ 50 billion in excess capital, a major bear market, combined with several years of poor result, would be required to eliminate this excess capital; the problem now is too much capital chasing to little business. For more on the matter you may search Financial Times' archive for an interesting article by Andrew Bolger, dated Monday September 4, 2000

This guarantee will stand an irrevocable undertaking by the insurance company to guarantee the repayment of principal and / or interest of a loan or investment.

The Financial Guarantee is to be used only as a credit enhancement, which would help to bridge the gap between the Investor, the Lender and the Borrower.

A sample of the Financial Guarantee is available here

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THIS SERVICE HAD BEEN DISCONTINUED
APPLICATION PROCEDURES
SEQUENCE OF EVENTS FOR FINANCIAL GUARANTEE

-1. Applicant sends executive summary to BusinessAfrica™ / Dr. Quenum & Associates / Assistance Partner(s) for analysis and review.

The summary should include:

(a.) Financing required.
(b.) Amount of Guarantee required.
(c.) Use of funds.
(d.) A list of assets that will be used to secure the guarantors in event of default and the values of that security in U.S. Dollars and in the English language.

-2. Dr. Quenum & Associates / Assistance Partner(s) review the executive summary and send feedback to the Client / Borrower(s) either for additional information / input or to confirm that project meets the criteria of the guarantors for issuance of a Financial Guarantee.

-3. If the project meets the guarantor's criteria, (assets that when liquidated on a "quick sale" basis would be sufficient to satisfy any outstanding liability on behalf of the guarantors) an application is sent to the Client for completion.

-4. Applicant submits application and sends the full business plan to Dr. Quenum & Associates / Assistance Partner(s)

-5. Should the Client / Borrower(s) indicate their interest in pursuing a Financial Guarantee for the project, a Letter of Intent is sent to Dr. Quenum & Associates / Assistance Partner(s)

-6. Dr. Quenum & Associates / Assistance Partner(s) acknowledge the Letter of Intent with a "Pre-Offer Letter" indicating the terms and conditions under which Dr. Quenum & Associates / Assistance Partner(s) will pursue a Financial Guarantee assistance / arrangement on behalf of Client / Borrower(s). The terms and conditions will, also, include the amount of the deposit - US$ 50,000 for a loan of US$ 5,000,000 ; and US$ 100,000 for loan above precedent amount - that is required to be placed with Dr. Quenum & Associates / Assistance Partner(s) in order for BusinessAfrica™ / Dr. Quenum & Associates / Assistance Partner(s) to obtain the commitment from a major, international, insurance brokerage firm that will act as a liaison to an insurance company who will ultimately issue the Financial Guarantee.

-7. A meeting is scheduled between Dr. Quenum & Associates / Assistance Partner(s) and the Client / Borrower(s) to finalize details.

-8. Dr. Quenum & Associates / Assistance Partner(s) issue an Offer Letter (contract) to the Client / Borrower(s) with final terms and conditions of Dr. Quenum & Associates / Assistance Partners' offer. The Offer Letter becomes the operative instrument under which Dr. Quenum & Associates / Assistance Partner(s)) is required to perform. The Offer Letter clearly spells out just what Dr. Quenum & Associates / Assistance Partner(s) is required to do for the Client / Borrower(s) in order to earn the deposit that has been placed with Dr. Quenum & Associates / Assistance Partner(s). The Offer Letter also clearly states that Dr. Quenum & Associates / Assistance Partner(s) is not offering loans of any kind, nor is responsible for any funding.

The final responsibility of locating a lender rests with the Client / Borrower(s) through a Non Disclosure Non Circumvent - NDNC - Agreement signed between Client / Borrower(s) and Dr. Quenum & Associates
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-9. The Offer Letter, which is signed between Dr. Quenum & Associates / Assistance Partner(s) and the Client / Borrower(s), clearly states what must happen before any funds are released to Dr. Quenum And Associates / Assistance Partner(s), including the time frame in which Dr. Quenum & Associates / Assistance Partner(s) is to arrange for the Commitment Letter to be issued. Furthermore, if Dr. Quenum & Associates / Assistance Partner(s) does not perform, as agreed, the funds are returned to the Client fully and without deduction.

-10. The Commitment Letter is issued and sent by FAX to the Client / Borrower(s). The hard copy of the Letter is mailed to the Client / Borrower(s).

-11. The Client / Borrower(s) makes arrangements with the lender and undertakes to fulfill the pre-agreed upon conditions of the Commitment Letter.

-12. Once the terms and conditions of the Offer Letter have been satisfied, a meeting is arranged at the offices of the brokerage firm that has issued the Commitment Letter and an introduction of Client / Borrower(s) to the company ultimately issuing the Financial Guarantee is made by Dr. Quenum & Associates / Assistance Partner(s).

-13. Arrangements are made between the lender and the guarantor for the delivery of the Financial Guarantee and payment is made for the Guarantee. The deal is now completed.

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