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THE
BANK GUARANTEE PROBLEM |
Funding sources always require from Borrower a good and secured collateral before
signing any loan agreement. That is normal. They want to make sure that they shall
recover their funds in case of loan-payment's default from the Borrower. Here
are listed collateral most used on the international financial marketplace
The problem of collateral - and particularly the most appreciated by financiers:
the Bank Guarantee - is not easy to secure from the African commercial banking
system. And most of the times development projects with high potential to making
profit end up in limbo. African entrepreneurs are obliged to rely
only on their own meager financial resources to implementing their initial project
or undertaking the expansion of an existing one. Even government sponsored-projects
- necessary to establishing vital infrastructures: roads, railways system and
so on - take years to reach the launching pad. For lack of funds. This
is a serious matter, which needs to be properly addressed to finding solutions
as African countries are desperate to implementing vital infrastructure and other
industrial development projects to bridge the developing gap. To
quickly have access to much needed financial means, it is an absolute necessity
for African entrepreneurs and governments to make use of the alternative offered
by the international commercial banking system; as it operates with less red tape
procedures and quick disbursement delays compared to the International Financing
Organizations such as the International Monetary Fund - IMF - and The World Bank.
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Till now the financing option and advantages of the international commercial financing
system (speediness of decision and short disbursement period) have not been fully
used by the African business community. For lack of sufficient expertise in the
field. And also for lack of good documentation and preparation of the loan-request
package. -
It is obvious that a project which is structured to having
the following parameters:
1-
International and regional equity partners in addition to the national investors.
2- An international technical partner.
3- A marketing plan
for local, regional and international markets. 4- Production's Purchasing
Agreement with international purchasers. | Will
be far more appealing to direct foreign investors and to the commercial financing
banking system. And even more if related Feasibility Study and Business Plan are
professionally drafted with a particular focus on the cash-flow. Once
above conditions are met, borrower could either arrange for a Financial
Guarantee; or combine insurance and reinsurance policies as collateral - particularly
in case of the expansion of an existing operation. -
Dr. Quenum and Associates are in the position to assist any African investor fulfilling
the above mentioned
parameters through a proven planning strategy.
Furthermore Dr. Quenum and Associates
have working relationships with funding sources which may consider a collateral
option based on insurance and reinsurance policies associated with a FINANCIAL
INDEMNITY BOND - (FIB) and assist in finding financing / funds for viable
project backed by comprehensive Feasibility / Business Plan. |
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WHAT
IS A BOND AND HOW IT WORKS
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A Bond is a written promise, provided by a Surety or Guarantor, to pay
the direct loss and damage suffered by the beneficiary of the Bond, as a direct
result of the breach of contractual obligations of the Surety or Guarantor's client.
Click this link for Frequently
Asked Questions on Bond, Surety, Indemnity. Etc.
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Below outlined is the gist of the procedure to arranging a Financial
Indemnity Bond
1- Borrower should
contact an Insurance Company and arrange for an Insurance Policy, which satisfies
the international wording / verbiage of lending Banks or Institutions.
2- Such Policy has more impact if backed by the Reinsurance Partner(s) in Europe
/ Asia and Americas of the Borrower's Insurance Company. 3- The
Insurance Company should then issue a Financial Indemnity Bond, thereby Guaranteeing
Payment in full, any Lender to whom the Bond is presented by the Borrower.
4- Said Financial Indemnity Bond could be accepted as viable
collateral by Dr. Quenum & Associates / Financing Partners if the Insurer(s)
are rated 'AA+' or 'AAA'. 5- If the Insurance Company
is not rated 'AA' or 'AAA' but is affiliated to a 'AA+' or 'AAA' rated Re-insurer
Partner, then Dr. Quenum & Associates and Financing Partners will accept the
Re-insurance Company Binder of the Insurance Company's [F.I.B.] - Subject to
mutual modification, if necessary, of the FIB wording / verbiage. |
With said combination of insurance and reinsurance policies / FIB - and adequately
drafted Feasibility Study and Business Plan - an existing company is in the position
to negotiate and secure large amount of funds - in the range of hundred to billions
of US $ - for the expansion of its operation.
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Remark: Please kindly be advised that funding
source and guarantor identities will be disclosed to borrower(s) only after a
Non Disclosure Non Circumvent - NDNC - Agreement had been signed between
Borrower(s) and BusinessAfrica™ / Dr. Quenum and Associates. Click
here for more on How Financing Research's Brokerage Works |
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APPLICATION
PROCEDURES
SEQUENCE OF EVENTS FOR FINANCIAL INDEMNITY BOND |
-1.
Applicant sends Executive Summary
to BusinessAfrica™ / Dr. Quenum And Associates / Assistance Partner(s) for analysis
and review.
The summary should
be strictly drafted according to indications available at following link.
(a.) Financing required. (b.) Use of funds. (c.) Particularly the
listing of assets that will be used to secure the Loan should be attached.
-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 Lenders.
-3. Borrower(s)
Primary Insurer, also known as the "Seeding Company" shall issue one
of the following documents: a)- Indemnity Bond / or b)- Insurance Bond
/ or c)- Surety Bond or equivalent on behalf of Borrower(s).
-4. Borrower(s)
Primary Insurer shall then contact and confirm with its Re-insurer that the Re-Insurer
will provide reinsurance for the bond at one of their offices in Europe / Asia
/ Americas.
-5.
Once this is confirmed then the bond and re-insurance stipulations shall be presented
to the LENDER (channeled through Dr. Quenum & Associates) for verification
of text / verbiage with the Re-insurer.
-6.
Once approved, THE LENDER will take note of the Re-insurance value - which
will be set by the Re-insurer and lend UP TO 80% of that value.
Example: if the re-insurance value is US$ 100 million, THE LENDER will
lend US$ 80 million. -7.
Should the Client / Borrower(s) indicate their interest in assistance from Dr.
Quenum & Associates with the PREMIUM for the reinsurance-policy, then
we Dr. Quenum & Associates could arrange for the premium to be put in an escrow
account - by THE LENDER - and paid directly (out of proceeds) to the Re-insurer.
-8. Only
after the PREMIUM is paid will the bond be a LIVE INSTRUMENT. The funds will
be then be put in a BLOCKED ACCOUNT and trading will begin within a week.
-9. A meeting
is then scheduled between Dr. Quenum And Associates / Assistance Partner(s)
and the Client / Borrower(s) to finalize details. At this stage, Client / Borrower(s)
to sign and sent back to Dr. Quenum & Associates a PAY ORDER for services
and duties rendered by Dr. Quenum & Associates.
- 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.
Click here
to read about
"How Financing Research' Brokerage Works".
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REMARK: Borrower(s) may compare the costs and faisability
of the two possibilities of Guarantee and Collateral's enhancement offered by
Dr. Quenum & Associates: 1- Financial Guarantee.
2- Financial Indemnity Bond and opt for the one,
which suits them best. -
If you are planing to expand the operations of your existing business and have
assets insured with a local insurance company, you may reinsure the said assets
with a AAA local representative of an international (Europe/ Americas / Asia)
reinsurance company; and negotiate the issuance of a)- Financial Indemnity Bond
/ or b)- Insurance Bond / or c)- Surety Bond or equivalent. Click
here for Frequently Asked Questions.
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We recommend the usage of the "Financial
Guarantee" facility if you cannot get an Insurance company to backing
your project.
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Completed
"Funding Request"
and attached "Executive Summary"
to be sent to Dr. Quenum & Associates, making use of the Contact & Support Console as per instructions below outlined |
- Interested parties - private African and international investors /
companies, government
agencies,
international development
agencies - to make contact through the Free Access Support Console available at this link
Contact through the support console will get quickest reply from Africabiz Online's staff, than contact by emails. Click here for contact information. Be advised that first contact should be through the support console to be followed by phone calls. If you are a VIP-Member, use VIP-Members Support Console available here.
Before you consult please click
here to review this clarification |
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HAVE
A BUSINESS PLAN FREQUENTLY
ASKED QUESTIONS
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