What is the purpose of the Partial Credit Guarantee Programme? ECPCGC provides partial credit guarantees to lenders so that MSMEs who do not have sufficient collateral but have a good project and the ability to repay, could now qualify. Is there a limit per country? There is no limit on the number of guarantees per country or per financial institution. Guarantees would be issued on a “first come, first served” basis. Different countries are at different stages of development and would leverage the programme differently during its lifetime. Who gives the guarantee and determines the eligibility of the borrower? The guarantee is issued by ECPCGC and eligibility requirements for MSMEs are enshrined in the Participating Lenders Agreement. PLs must comply with these conditions. Can someone have a guarantor? Guarantors are acceptable. They must provide a Statement of Affairs during the application process. Can the lender extend the loan beyond 10 years? The lender can extend the term of the loan, but the guarantee would cover only 10 years. The guarantee expires after that period. Are guarantees granted to start ups? Startups would not be accommodated at this time. A minimum period of two years in operation is needed to determine whether the client has the capacity to service a debt. Who determines the guarantee limit? The guarantee limit is based on the business model of ECPCGC and is currently set at 75%. Is XCD 300,000 the maximum loan amount or the maximum guarantee amount? XCD 300,000.00 is the maximum loan and the maximum guarantee is XCD 225,000.00. What is the anticipated turn-around time for an approval decision? According to our operational guidelines, the maximum turnaround time for approval is 5 working days. However, given the fact that most MSME loans are time sensitive, we would strive for a 2-day turn-around time. Is there a penalty for early repayment of a loan? There is no penalty for early repayment of a loan. What are the reporting requirements for the Programme? Reports are due from the PL on the 15 monthly and should provide the status of each loan on the portfolio. How does ECPCGC handle the borrower when s/he encounters difficulty in loan repayment? ECPCGC works with the PL to determine which of a series of prescriptions could be used to solve the issues encountered. Would there be different rules for credit unions and development banks? The same rules apply for all financial institutions under the programme.
What are the World Bank Guidelines? The guidelines are enshrined in the Environmental and Social Management Framework created by the Bank and are used in all projects in which the Bank has a financial interest. Does the PL need special certification for this? ECPCGC guides the PL through this process, and the lender does not need any special certification.
What are the conditions under which a guarantee claim can be made? The guarantee claim can only be triggered when a guaranteed loan has been in uncured default of payments for 90 consecutive days. The PL must complete the authorized Guarantee Claims Form and submit with supporting documents to ECPCGC for adjudication. ECPCGC would review the documents, and, once all conditions have been fulfilled, would forward a notice that the claim has been accepted and then remit the payment to the PL. How long will it take for the guarantee to be paid? Once all documentation has been made available, payment would be effected within 21 working days. Does the PL provide any evidence of attempts to follow up with the customer before making a claim for the guarantee? The PL must provide evidence of the various measures taken to address the non-payment by the borrower. The PL is also required to use the same procedures and level of care to service a guaranteed loan as it would for a loan without a guarantee.
A guarantee fee of 2.3% is charged to the lender. Could this be passed on to the borrower? The PLs are allowed to pass this fee on to the borrower, but there should be no surcharge placed on this fee.
Who determines the interest rate to the borrower? The interest rate will be determined by the PL depending on the risk of the facility being granted. ECPCGC would not set interest rates but would ascertain that they are aligned to the market.