Import Duty Finance

A financing solution for importers

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

Features

Customer Needs/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 to avoid high storage and demurrage charges at the port
  • Enable the importer to 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:

Importers of Motor Vehicles and Equipment:

  • For own use (Individual or company),
  • For sale (Motor Vehicle dealers)

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.

Importers of Other Goods:

  • E.g. manufacturers (raw materials), construction materials suppliers or other businesses etc.
  • 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 the 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 a maximum period of 12 months
  • Car Dealers, Clearing Agents and Other Importers Of Goods
  • Bullet payment or monthly instalments (depending on 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/Colateral

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 the 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 for 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
    • Customer Applies for facility

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:

  • 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

Requirements

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

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