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A financing solution for importers

Co-operative Bank is Regulated by the Central Bank of Kenya.

Import Duty Finance

Import Duty Finance (IDF) is a financing solution for importers designed to help them have a seamless process during clearing and transportation of imported cargo from the port/airport of origin to the final destination. The solution targets importers of goods and services.

The facility is booked in the customer’s account and payments/disbursements done directly to the service provider e.g. KRA against Proforma invoices

Customer Need / Benefits

The Import Duty Finance Product is a Solution Meant to Facilitate MSME Importers to;

  • Pay for import duty and other related costs promptly
  • Pay for storage charges and demurrages if any
  • Pay for clearing, forwarding and other logistics costs
  • Facilitate transportation of goods from the port to the final destination.
  • Enable the importer avoid high storage and demurrage charges at the port

Enable the importer avoid auction of goods imported, due to non-payment of duty.

Purpose

Working Capital - To facilitate KRA duty payment, clearing costs or any other logistical costs associated with clearance of imported goods

Target Market

The product will target the following groups:

  1. Importers of Motor Vehicles and Equipment:
    • For own use (Individual or company),
    • For sale (Motor Vehicle dealers)
  2. Importers of Second Hand Items For Sale:
    • These are business people who import second hand goods for resale in Kenya and other neighbouring countries. Business people in Gikomba market will be the target clientele to take up this product.
  3. Importers of Other Goods:
    • E.g. manufacturers (raw materials), construction materials suppliers or other businesses etc.
  4. Clearing and Logistics Firms:

These are firms that offer clearing and forwarding services as well as logistical solutions.

Facility Features

Amount Financed - Up to 100% of value of invoice or quotation raised by third parties (KRA, Clearing agent, Freight Company, etc.).

Tenor - Facility will revolve for 12 months upon which the applicant will be reviewed for renewal. One off applications allowed.

Debt Ratio - 50%

Limits To Be Funded - Minimum amounts Kshs. 50,000/=

Facility Repayment / Tenure

Consumers, Individuals and End Users

  • Equal monthly instalments for maximum period of 12 months 

Car Dealers, Clearing Agents and Other Importers Of Goods

  • Bullet payment or monthly instalments (depending with the type of transaction).

Maximum Tenor

180 days for bullet transactions or 12 months for monthly payment transactions.

Pricing
Loan Processing Fee:   2.5% of the facility amount
Interest:      CBR +4% p.a. currently at 13% p.a
Late Payment Fee:  0.25% p.a
Security Type / Collateral

Chattels (Motor Vehicles) up to Kes.2 Million (150% Security Coverage)

  • Landed property for exposures above Kes.2 Million.
  • Cash cover also accepted
  • Customers importing motor vehicles can use the same vehicle as security (Joint registration of vehicle handled by a Bank appointed clearing agent after disbursement of facility)

Collateral Management Agreement (imported goods are pledged as collateral) on case to case basis

Qualification Criteria

Customers in Import Business

  • The customer must be in business  more than six months and demonstrate having undertaken an import transaction previously

MSME Customers

  • Importing for purposes of reselling, increasing efficiency, productivity or own use

No proof for a previous import transaction

Documents Required (for Appraisal)

Customer Application

  • A Quotation for duty (duty entry form) and other related charges,
  • Copy of Import documents: (Bill of lading/Airway Bill, Commercial Invoice, copy Inspection certificate by KEBS certified agent, IDF, etc.)
  • For motor vehicles - Export Certificate (Japanese Logbook) & Inspection Certificate issued by QISJ or any other inspection company approved by KEBS.

All the other  requirement as per the MSME lending terms-Strong Financials ,Good account conducts, Debt ratio-below 50%  & all KYC & supporting documents

Process Flow

Customer Applies for facility

  • Facility appraised at branch/business unit and forwarded to credit analysis for approval
  • Customer executes offer letter and other contractual documents
  • Branch/business unit sends documents to credit administration for limit loading (memo code 6N7)
  • Credit administration approves and forwards limit loading request to credit operations
  • Credit operations unit marks import duty finance limit

Trade services to disburse facility and remit payment directly to third parties

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