Private Credit Solutions for Sub-Saharan African Enterprises

1. Request a Proposal

The process starts when the borrower requests a proposal. We evaluate the transaction to ensure it aligns with our lender mandates.

2. Approve the Proposal

Financely issues a detailed proposal outlining the terms and structure of the potential deal. Once the borrower reviews and approves the proposal, they pay a retainer fee. This fee secures our services and initiates the process of moving the transaction forward.

3. Distribution and Closing

With the retainer paid, Financely begins working on the distribution and closing process. We distribute the deal to our network of private credit investors, secure term sheets, and handle all the necessary arrangements to finalize the transaction.

4. Funds Disbursed

The borrower approves the selected term sheet and finalizes any pledge agreements or loan agreements. Once all documents are signed and in place, the funds are disbursed to the borrower.

Private Credit Term Sheet for African SMEs

Disclaimer

The terms in this document are indicative and reflect preliminary assessments based on our private credit fund mandates. These terms will be finalized after an exhaustive due diligence process and approval by the specific fund’s investment committee.

The borrower, typically a Special Purpose Entity (SPE) established solely for this transaction, must meet all outlined criteria. Any deviation from the SPE structure must be pre-approved by the lender, with potential additional conditions imposed.

Upon your request for a proposal and our subsequent issuance, the transaction is deemed to have preliminary funding viability under current market conditions. If, upon further review, the transaction is found non-fundable, your $500 USD retainer will be refunded in full.

If the final terms differ by more than ±1% in annual interest rates or if there are significant changes in collateral requirements from this indicative term sheet, the $39,500 USD origination fee will be fully refunded.

Borrower:

A Special Purpose Entity (SPE) established and registered in the relevant jurisdiction within Sub-Saharan Africa, solely for the purpose of this transaction. In rare cases where the borrower is not an SPE, additional protective covenants and conditions will apply.

Lender:

Financely or directly through the private credit funds engaged in this transaction.

Loan Amount:

Varies depending on the transaction, typically ranging from $1,000,000 to $50,000,000 USD (or local currency equivalent, subject to agreed conversion rates and hedging strategies).

Loan Type:

• Secured Debt: Loans secured by tangible or intangible assets, including but not limited to real estate, equipment, receivables, or shares in the SPE.
• Unsecured Debt: Loans based on the borrower’s creditworthiness, cash flow stability, and strategic market position without the need for collateral.

Interest Rate:

Typically ranging from 7.0% to 12.0% per annum (indicative, subject to final approval by the private credit fund’s investment committee and prevailing market conditions).

Grace Period:

A grace period of up to 6 months may be granted before the commencement of principal repayments, allowing the borrower time to stabilize cash flows or complete necessary project milestones.

During this grace period, interest will continue to accrue at the agreed rate, with the first payment due at the end of the grace period.

Long-Term Refinancing:

As the borrower’s credit history improves and their business grows, they may be eligible for long-term refinancing options under more favorable terms.

This refinancing could include reduced interest rates, extended tenors, or a shift from secured to unsecured debt, depending on the borrower’s enhanced financial profile.

Such opportunities will be evaluated periodically, and the borrower is encouraged to request a refinancing review after demonstrating consistent performance and creditworthiness improvements over a minimum of 24 months. 

Tenor:

3 to 7 years, with the possibility of extension up to 2 additional years based on borrower performance and lender discretion.

Repayment Schedule:

• Amortization: Quarterly payments starting 6 months after disbursement, aligned with the borrower’s cash flow projections.
• Balloon Payment: Option for a balloon payment of up to 30% of the principal at maturity, based on borrower preferences and negotiation.

Collateral:

For Secured Debt:

• Tangible assets such as real estate, equipment, or inventory, with security interests duly perfected and enforceable.
• Assignment of project revenues or receivables, where applicable.
• Equity pledge of the SPE with all necessary registrations completed under local laws.
• Personal guarantees or cross-collateralization from affiliated entities, if required.

For Unsecured Debt:

• Approval contingent upon rigorous analysis of the borrower’s financials, business plan, and market position.
• Enhanced due diligence to assess operational resilience and long-term viability.

Currency:

• Denomination: Available in USD, EUR, or local currency, depending on the borrower’s operational needs.
• Currency Hedging: Tailored hedging solutions offered to manage foreign exchange risk, with specific terms negotiated at the time of loan issuance.
• Conversion Rates: Established at the time of loan approval and fixed to safeguard against unfavorable currency fluctuations.

Use of Proceeds:

• Primary Uses: Expansion of operations, acquisition of capital assets, working capital, or refinancing of existing high-cost debt.

• Strategic Initiatives: Funds may also be allocated towards 144A bond issuance or refinancing for transactions exceeding $20 million USD, providing access to global capital markets.

Credit Rating and Insurance:

• Credit Rating: Assistance with obtaining a credit rating from recognized agencies like Bloomfield or GCR to enhance deal terms and investor confidence.

• Insurance: Arranging comprehensive insurance, including political risk, key person, and trade credit insurance, to secure the transaction and protect both borrower and lender.

Covenants:

• Financial Reporting: Borrower must submit quarterly unaudited financial statements and annual audited reports, adhering to IFRS or GAAP standards.
• Business Continuity: Mandatory maintenance of business continuity plans and key person insurance, reviewed by the lender.
• Debt Service Coverage Ratio (DSCR): A minimum DSCR of 1.5x must be maintained, ensuring sufficient cash flow to cover debt obligations.
• Change of Control: Any change in ownership or control of the SPE requires lender approval, with unapproved changes triggering an event of default.
• Negative Pledge: The borrower is prohibited from pledging additional assets or incurring new debt without prior lender consent, ensuring the security of the lender’s position.

Conditions Precedent:

• Due Diligence: Completion of thorough due diligence covering financial, legal, technical, and environmental aspects, confirming the transaction’s feasibility and compliance.
• Collateral Perfection: All collateral must be fully registered and perfected to ensure enforceability under the relevant legal framework.
• Investment Committee Approval: Final approval from the private credit fund’s investment committee is required before disbursement.
• Legal Opinions: Independent legal opinions verifying the enforceability of all loan agreements and collateral documents across jurisdictions.

Closing Procedure:

1. Request for Proposal: The transaction begins when the borrower requests a proposal from Financely. We conduct a preliminary review to assess the transaction's viability based on our private credit fund mandates.
2. Proposal Issuance and Retainer Payment: Upon successful preliminary assessment, we issue a detailed proposal outlining the initial terms and fees. The borrower reviews and, if agreeable, signs the proposal and wires the retainer/origination fee as quoted.
3. Portal Access and Document Upload: After receiving the signed proposal and retainer, we provide the borrower with access to our secure portal. Here, the borrower can upload all necessary financial, legal, and operational information required for the transaction.
4. Preparation of Offering Documents: Once the required information is received, we commence work on preparing the offering documents. These documents are critical as they detail the terms and structure of the proposed financing and are used for internal distribution to potential investors.
5. Internal Distribution and Definitive Term Sheets: With the offering documents finalized, we distribute them within our network of private credit funds. We then receive and compile definitive term sheets from interested investors, which we present to the borrower for approval.
6. Approval of Definitive Term Sheets and Funding: The borrower reviews the definitive term sheets and selects the most favorable option. Upon approval, we proceed with finalizing all legal documents, obtaining risk ratings, securing guarantees, and completing any other necessary requirements.
7. Finalization and Disbursement: Once all legal agreements and conditions are satisfied, funds are wired to the borrower’s account. The entire process, from initial proposal to fund disbursement, typically occurs within 4-6 weeks for routine transactions.

144A Bond Issuance and Refinancing (For Larger Transactions):

• Eligibility: Suitable for transactions above $20 million USD, including large-scale infrastructure projects and significant corporate expansions.
• Process: Financely facilitates the structuring, issuance, and distribution of 144A bonds, targeting institutional investors under Rule 144A of the U.S. Securities Act. This involves coordination with rating agencies, insurance providers, and legal advisors to prepare an offering memorandum.
• Benefits: Access to a larger capital pool, potentially lower financing costs, and extended maturity terms compared to conventional loans. Refinancing through 144A bonds can optimize capital structure and improve cash flow management.

Business Continuation Policy:

The Borrower shall maintain a business continuation plan, including key person insurance, disaster recovery, and contingency planning. The Borrower must provide periodic updates on the plan and promptly notify the Lender of any significant changes. Failure to maintain an adequate business continuation plan may result in a review of loan terms or additional covenants being imposed.

Environmental, Social, and Governance (ESG) Compliance:

The Borrower commits to adhering to specified environmental, social, and governance (ESG) standards, including minimizing environmental impact, maintaining fair labor practices, and ensuring transparent corporate governance. The Borrower shall provide regular ESG compliance reports to the Lender. Failure to comply with these standards may lead to a review and adjustment of loan terms or the imposition of additional covenants.

Still Have a Question? Schedule a Consultation

If you have any remaining questions or need further clarification, we’re here to help. Schedule a consultation with our team to discuss your concerns and get personalized guidance. We're committed to ensuring you have all the information you need to move forward with confidence.

Next Steps

If you are already a client, please proceed with the payment of the necessary fees and upload your deal documents through our secure portal.

Once your documents are received, we will begin working on the prospectus and other offering documents required for the transaction.