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  What are the cases for loan rescheduling?

Taking into account the maximum balance repaid of the loan, and providing the borrower a further opportunity for repay, maturity rescheduling can be considered in the following cases:
• Delays in implementation of the project resulted in delay in the planned date set for start-up of the commercial operation.
• Some marketing issues and adverse market conditions, in addition to project’s inability to generate enough cash flows.
• Economic conditions related to work environment of the industrial sector in general affecting the project performance.
In all circumstance The borrower should submit re-scheduling proposal including updated study on the project evaluating marketing and economic conditions, supported by updated and audited financial statements, and borrower’s commitment to spare no effort to handle difficulties faced by the project.

  What are SIDF procedures for default?

Borrower shall be served 30-day notice to remind him of the repayment on the maturity date, if not responded, an official warning letter signed by SIDF Director General shall be sent to the borrower warning that the overdue must be repaid within 15 days maximum pursuant to the Collection of State Funds Regulation. Meanwhile the borrower shall be closely followed-up, and SIDF may review and discuss the proposals the borrower may submit for settlement, and a solution may be reached before initiating any legal action.

  What are SIDF conditions for disbursement of the final 20% of the loan?

When a request submitted for disbursement of 80% or more of the loan, the project is in its final stage of implementation, and prior to disbursement of the final 20%, borrower should prepare and submit a detailed Arabic and English list of all project’s fixed and existing assets, such as buildings, M&E, cars and furniture, as they are virtually on the ground. The list shall be reviewed by the Audit Division and forwarded then to LD for finalizing the mortgage notarization. Disbursement of the final (20%) of the loan also stipulates borrower’s compliance with all industrial safety, environmental and protection requirements, and the SIDF Safety Unit is satisfied that all safety and prevention equipment are in place.

  What is SIDF lending policy towards lands on which projects are located?

• SIDF prefers to finance projects located in the Kingdom’s industrial cities, which are available in all urban regions
• SIDF finances also projects located justifiably outside the industrial cities, while declines to finance the cost of land priced at value exceeds SR 50 per square meter. The Technical Consultant determines the area needed for a project.
• Project sponsor’s own personal preference is not always considered a rational reason.
• Project proposed site must be suitable for the project in terms of area, location, topography, soil and supply of required facilities.
• Cost of land acquisition for the project should be included in the total cost for SIDF competent officers need to ensure that the financing SIDF provides covers all estimated costs of the project.
• Cost for land preparation, sometimes is called infrastructure, is part of the cost for land, including surface levelling, road asphalting, sewerage system, erection of electric cables, water piping, and site fencing, the details of such works shall be described in the feasibility study, and duly asserted by the Technical consultancy Division.
• Land preparation cost is among SIDF- financeable items.

  Does SIDF accept to finance projects located on leased land?

Yes, but requires in such case submission of additional guarantees to cover the higher level of risk involved.

  Does SIDF finances purchase of private land for industrial project?

The Fund accepts setting up of an industrial project on a private land located within the supervising boundary of the municipalities in case of non-availability of land within industrial cities, provided that the land is fully owned by the borrower who possesses the land title deed and the necessary permits . SIDF may finance the value of the purchased land, at up to SR 50 per square meter including the land preparation cost.

  Is it possible to transfer financing from a project item to another?

In some cases, transfers of financing among capital items may be implemented as required, based on convinced justification and SIDF prior approval.

  How pre-operational costs are calculated?

Pre-operational expenses include all costs incurred in the course of the project implementation, such as cost of M&E commissioning, wasted raw materials, design and supervision of the project buildings, travels, feasibility study, advisory services and respective license fees. Credit and Technical Consultancy Divisions shall decide on the items listed in the shaded areas.

  What are the documents required for effecting loan disbursement?

• 5The borrower submits to SIDF request for loan disbursement during the implementation of the project. The request should be supported by submission of required information on the costs of the project.
• Documentation required for loan disbursement shall be delivered to credit officer who is assigned by the Fund to manage the project and sign the Order Note in the SIDF offices for the full disbursed amount.
• Borrower is required to submit the guarantees stipulated by the loan agreement, LD verifies and approves that these guarantees are satisfied. Disbursement-related special conditions should also be satisfied (if any).
• For disbursement of the amount assigned to finance M&E, following documentation should be submitted:
 Copy of the contract for M&E supply and respective invoices.
 letter of credit from the borrower’s bank, along with certified invoices and detailed specifications.
 Certificate of final delivery and certificate of origin.
 Bill of lading and customs clearance documents.
• For disbursement of the amount assigned to finance buildings, following documentation should be submitted:
 Copies of the signed contracts and detailed schedules of quantities.
 Bank financial statements on bills for the work already implemented and receipts of cash payments.
 Work progress report.
The competent SIDF officer shall make a site visit to the project to verify conformity and ensure quality of implementation. Borrower is also required to submit an official letter from his bank certifying the open of the required letter of credit (L/C), detailing the value and term of credit, validity of L/C, name of the beneficiary. L/C should contain the bank’s undertake to cover the credit by transfer the amount provided by SIDF only, and not to amend the maturity date except under SIDF prior consent.

  What are the conditions stipulated by SIDF for machinery and equipment (M&E) financing?

The Fund finances only new machinery and equipment; declines to finance used, refurbished or remanufactured M&E.
• SIDF may consider financing M&E that have been recently procured by project sponsor if they were purchased no more than one year from the date on which the prescreen study was registered; M&E purchase date shall be outlined in the customs clearance documentation.
• The Fund finances M&E to enable the project reaches to:
 Required production capacity based on the market conditions
 Or production capacity licensed by the industrial license.
• Borrower shall be required to amend the project industrial license for higher capacity if and when installed production capacity exceeds the licensed capacity during the first years of the project operation. Such amendment is stipulated by SIDF either as a condition precedent or covenant in the project evaluation report.
• Financeable M&E include forklifts, loading, and unloading machinery, costs of installation, inventory of spare parts, safety and loss prevention equipment, lab and quality control test equipment.

  When does loan disbursement commence?

Loan payments shall be disbursed upon the signing of the loan agreement and mortgages notarization, submission of required guarantees, and satisfaction of all conditions precedent and special; based on the actual implementation and the money spent virtually on the project implementation. The Fund disburses minimum 50% (or maximum 75% in Promising regions) of the submitted evidences and progress bills until the loan is fully disbursed upon completion of audit and review of the letter of credit and supporting contracts. The borrower shall open a special bank account for the project on the basis of the commercial register issued for the project and maintain accounting books as well as all other supporting documents for disbursement. The borrower is also required to appoint a qualified accountant to coordinate with the SIDF competent employees; prepare the financial statements and required disbursement documentation.

  Is it possible to make immaterial amendments to submitted and agreed upon items in the course of ongoing implementation of the project?

Certain amendments arising during the implementation of the project are acceptable if found by SIDF evaluation reasonably justifiable and are beneficiary to the project. They include change of the machinery and equipment supplier, or adding a new item required for project production, provided that the additional costs are acceptable, financeable, and within the loan limit.

  Does SIDF finance additional costs of accidental or unpredictable capital items during the ongoing implementation of the project?

It may happen while the project implementation is underway that a cost of a project’s item or component increases significantly due to economic variables in contrast with the originally submitted cost estimations; or it happens that a component be deliberately amended to achieve project higher performance. In such both cases, SIDF may be approached to either finance the additional costs of those new items or a separate loan application be submitted if the additional costs are high enough to justify for a separate application.

  What are supplement agreements to the Loan Agreement?

A- Agreement on technical consultancy, evaluation, and feasibility study of the industrial project:
It is an agreement sets out the fees for conducting project’s feasibility study, analysis, evaluation, and advisory services, whereby SIDF is not obligated to finance the project. It shall be signed after the loan is initially approved. CD directs LD preparation of said agreement, specifying fees for SIDF conducted study; it shall be signed upon or before signing the loan agreement.
B- Agreement on project follow-up and evaluation:
It is an agreement on the actual incurred costs of monitoring the project progress by site visits carried out by competent SIDF employees; for implementation of subsequent screening and follow-up of estimations and expenses. It sets out the tasks to be carried out by the
Fund for the project, including appraising, monitoring and checking the project accounts and making site visits to ensure the competence of the management team and project’s compliance with the terms and conditions of the loan agreement. It shall be signed after the loan is recommended for the project, whereby the borrower is obligated to pay the fees of providing such services as SIDF bills the borrower from time to time.
C- Subordinated shareholders loan agreement:
It is an agreement on injecting an additional amount of capital to enable sound and continued progress of the project and settlement of its financial obligations under the loan agreement. Provision of such additional amount may be made by a loan from some or all shareholders of the project, or external creditors in some cases. To ensure repayment of its loan, SIDF stipulates that such subordinated loan shall be repaid to the shareholders or any third party only after all SIDF loan and dues are fully repaid. Subordinated shareholders loan agreement shall be signed by three parties, the borrower, the Fund and the lender.

  Does SIDF require any special procedure for project insurance?

Borrower is required to insure all project’s assets and items by an approved insurance company against the risks determined by the Fund. The insurance policy should stipulate that the Fund is the first beneficiary of all claims for insured losses, and SIDF should be notified 30 days prior to the effective date of any amendment, material changes or cancellations, at a total amount not less than the loan amount.