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1. Registration and Evaluation
The Fund encourages and welcomes early contact, and will accept a loan
application once you provide a completed loan application form, a copy of the
industrial license and the feasibility study (please refer to Part “B” of this
Section and to Section 2), but can not formally register a project on make a
full analysis until all the principal elements constituting the investment
proposal have been established by you in an acceptable degree of detail.
For the purpose, contact the Fund for an appointment with a Team Leaders of
the SIDF Credit Department to review your submission and inform you of missing
information, if any.
Once all the required information and documentations are provided, your loan
application will be officially registered and given a number. Then it will be
assigned to one of the Fund’s project officers for analysis in collaboration
with specialists and consultants in the Project’s Studies and Consultancy
Department. Finally a lending recommendation will be made to the management
committee (for loans to or under SR 5 million) or Board of Directors (for loans
over SR 5 million). You will be notified of the final decision after this
process is completed.
It should be noted that the evaluation process will be considerably speeded up
if sponsors co-operate fully with the assigned consultants to help them
evaluate your project.
2. Legal Procedures
During the loan application evaluation process, the Fund will determine the
project’s evaluation cost and will prepare an agreement in this regard to be
signed by the sponsor prior to the loan approval.
When the Fund approves the loan, a commitment letter will be sent to the
sponsor informing him of the loan’s terms and conditions.
The loan agreement and follow up agreement will be prepared upon the sponsor’s
acceptance of this offer by signing and returning the commitment letter to
SIDF. Signing of the loan agreement will take place after the fulfillment of
conditions precedent (if any).
Documents necessary for signing the loan agreement are as follows:
a. Original Industrial License Document or a copy stamped by the Ministry of
Commerce & Industries.
b. Original of Commercial Registration document or a copy stamped by the
Ministry of Commerce & Industries.
c. A copy of the Articles of Association certified by a Notary Public and
published (in the case of companies only). The copy should also be stamped by
the Chamber of Commerce.
d. A copy of relevant land lease agreement documents or original land title
deed.
e. Authorization by the company’s board of directors or power of attorney to
the individual who will sign the Loan Agreement, related agreements and Order
Notes.
f. List of fixed assets of the project including buildings (provide detailed
building areas), machinery and equipment (provide a detailed list indicating
type, description, serial number and origin), vehicles, furniture and any other
fixed assets to be mortgaged.
Following the signing of the loan agreement, the bor
rower will register a mortgage in favor of SIDF or provide alternative
security, or both, according to terms of the loan.
3. Loan Disbursement
The loan disbursement takes place after the signing of the Loan Agreement,
registering the mortgage, obtaining the required guarantee (if any) and
fulfillment of special conditions relating to disbursement (if any).
After review of supporting documents, disbursements of up to 50% are made based
on actual expenditure on eligible, financeable costs.
In order to facilitate disbursement, the borrower must follow the procedure
outlined below:
a. Open a separate and independent bank account for the project.
b. Maintain basic accounting records for the project.
c. Establish and maintain a proper filing system for all documents supporting
recorded costs (contracts, invoices, receipts, shipping and custom documents,
bank statements, etc.)
d. Employ a qualified accountant for the project. Once SIDF approves the
loan, the accountant must visit SIDF and meet with one of the officers in the
Audit Division who will supply him with the requisite format and instructions
for preparation of a disbursement request file for SIDF.
e. Avoid payment of cash for any part of the project cost.
Note:
If the actual project cost is less than the budgeted cost, the Fund will
reduce the loan proportionately and an explanatory letter to this effect will
be attached to the Loan Agreement.
4. Loan Repayment And Follow up
The loan is repayable according to a schedule shown in the Loan Agreement and
the borrower must repay the loan installments according to the Loan Agreement.
The fund, represented by the concerned consultant, will follow the project’s
performance through the financial information supplied by the borrower and
through periodic contacts and site visits to the project until full repayment
of the loan.
Important Notes
a. SIDF does not finance the following:
·
Projects assets that are more than one year old as at the date of application
prescreen.
·
Machinery, equipment and vehicles that are used or for more than one year old
from the date of customs clearance.
·
Used or imported furniture, or employees / laborers housing furniture.
·
Buildings that are more than one year old from the prescreen date and imported
steel hangers as well as employee housing buildings.
b. Locally manufactured materials must be used in implementing, furnishing and
operating the project.
c. A local consulting firm (acting independently or in cooperation with a
foreign firm) should be employed during the project’s implementation.
d. A Saudi auditing firm must be employed to audit the project’s financial
accounts throughout the term of the loan.
e. A plan should be put in place to attract Saudi nationals to work in the
projects.
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