Banks usually require security or a guarantee before making a loan. TIGF's credit guarantee scheme has been designed to assist clients who are unable to offer the required security.
TIGF's support comes in the form of international guarantees or secured standby irrevocable letters of credit issued by an international bank and authorized by TIGF's partner organization Shared Interest in favor of South African Banks.
"Shared interest creates the means for US social investors to invest in community-based economic projects that will not only create jobs but also alternative methods of control and ownership."
Former President Nelson Mandela
How TIGF Works
TIGF guarantees loans from South African banks to approved borrowers.
TIGF provides only partial guarantee up to a maximum of 75% of the loan required. Local banks and borrowers are required to share the credit risk.
TIGF staff
Identify potential borrowers
Appraise and analyze guarantee requests
Monitor the project throughout guarantee period
Work with the lending bank to mitigate risks
"We heartily support initiatives like Theban International Guarantee Fund which are designed to increase access to capital for those South Africans who have been most impoverished, marginalized and victimized by apartheid."
Brigalia Hlope Barn, SACC
Things to Remember
TIGF does not lend money. TIGF guarantees loans to bank approved borrowers.
TIGF does not guarantee loans for individuals.
TIGF monitors progress on projects to which credit guarantees have been issued. Loans must be repaid regularly according to the loan agreement.
TIGF offers a credit guarantee for a period of 1 to 3 years.
TIGF does not guarantee that a bank will lend to a client.
Process of Guarantee Issuance
Applicants should approach the bank for securing the financing facilities well in advance, this will facilitate timely availability of the credit limits as well as the terms and conditions applicable;
Applicants must submit a complete Business Plan or Project Proposal to TIGF as well as to their respective bank;
Budgets and Cash Flow Projections revealing the prospects of the project as well as the capacity to adequately service the loan and to continue to grow;
Audited accounts and current financial statements for the previous two financial years;
Security/Collateral required by the bank as borrower's contribution towards facilitating the loan being applied for;
A brief elaboration as to the present and future trends of strengths, weaknesses, opportunities and threats must be made explicit;
Any information such as Registration Certificates, Memorandum and Articles of Association are to be provided by the borrower;
The total guarantee requirement by the borrower should not exceed 75% of the credit facility required and, not exceed R10-million;
In addition to fixed assets, guarantees should be secured by Cessions of stocks and book debtors;
Preparation and ratification of a joint agreement incorporating obligations by all parties;
Final organization approval and signing of joint agreement before issuance.
