As a financial intermediary, your role is to provide clarity and ensure transparency in deals between your clients and financiers. To address common client doubts, the following questions should be asked to the financier or funding institution. These questions will help you assess the credibility and terms of the deal and relay accurate information to your clients.
This document serves as a guideline for professionals involved in facilitating funding transactions and is intended to promote transparency and trust between clients and financiers.
1. Terms and Conditions of the Funding
- What are the specific terms and conditions for accessing funds?
- Is the funding conditional on certain factors such as business performance, project approval, or jurisdiction-specific requirements?
- What are the timelines for disbursement once all conditions are met?
2. Grace Period
- Is there a grace period before the repayment of the funds begins?
- If yes, how long is the grace period, and what are the terms during that period?
- Does interest accumulate during the grace period?
3. Payback Period
- What is the total payback period for the loan or investment?
- Are there flexible options for the payback period based on the client’s financial standing?
4. Facilitation Fees
- Is there any facilitation fee that needs to be paid?
- If yes, how much is the facilitation fee, and when is it due?
- Is the facilitation fee refundable if the deal does not go through?
5. Down Payment
- Is a down payment required?
- If yes, what percentage or amount is expected as a down payment?
- Can the down payment be waived or reduced under certain conditions?
6. Due Diligence
- Will the financier conduct due diligence on the client’s business or project?
- What are the key documents required for due diligence?
- What is the estimated timeline for completing the due diligence process?
7. Feasibility Study / Business Plan
- Does the financier require a feasibility study or business plan for the project?
- Is there a preferred format for submitting the feasibility study or business plan?
- What specific elements should the feasibility study or business plan include?
8. Interest Rate
- What is the interest rate offered on the funds?
- Is the interest rate fixed or variable?
- Are there any promotional or discounted interest rates available for specific industries or projects?
9. Repayment Plan
- What is the standard repayment plan (e.g., monthly, quarterly, annually)?
- Can the repayment plan be customized based on the client’s cash flow projections?
- Are there penalties for early repayment or restructuring of the loan?
10. Minimum and Maximum Funding Amount
- What is the minimum and maximum amount of funding offered by the financier?
- Is there flexibility in these amounts based on project scale or client requirements?
11. Security / Collateral
- What security or collateral is required for the funding?
- Can the security be in the form of property, equipment, or other assets?
- Is there an option for unsecured funding or reduced collateral?
12. Governing Laws
- What governing laws apply to the funding agreement?
- Is the agreement governed by the laws of Dubai or the client's local jurisdiction?
- Are there provisions for international arbitration in case of disputes?
13. Commission for Brokers and Consultants
- Is there a commission or fee paid to brokers and consultants involved in facilitating the deal?
- What percentage or amount is allocated as a commission?
- When is the commission paid – upfront, upon deal closure, or as part of the loan disbursement?
14. Sectors Covered
- Which specific sectors or industries does the financier deal with?
- Are there preferred sectors where funding is more accessible or favorable?
15. Fund Appraisal Documents
- What specific fund appraisal documents are required for the application?
- Are there any templates or formats provided for these documents?
16. Form of Guarantee
- What form of guarantee does the financier require for the funding?
- Can the guarantee be in the form of third-party assurances, insurance, or personal guarantees?
17. Asset Financing
- Does the financier offer asset financing options for businesses?
- If yes, what type of assets qualify for financing, such as equipment, vehicles, or real estate?
18. Business Type (Startups vs. Existing Businesses)
- Is the funding available for startups, or is it restricted to existing businesses with a track record?
- Are there additional criteria for startups to qualify for funding?
19. Experience Criteria
- Is there any experience criteria needed for business owners or management teams to qualify for funding?
- How many years of business experience are typically required?
20. Fund or Property Managers
- Do fund managers or property managers qualify for the funding?
- Are there any specific requirements or criteria for fund or property management professionals seeking financing?
Summary and Recommendations
By asking these essential questions, clients can gain a clearer understanding of the funding offer and the potential risks involved. These questions will also help in assessing the credibility and authenticity of the financier.
It is recommended that clients thoroughly review all terms and conditions provided by the financier before committing to any agreement. It is also advisable to engage legal counsel or a financial advisor to ensure that the deal aligns with their financial goals and risk tolerance.
Prepared by:
Zatra Consultants
Sam Nujoma, Road
Mwenge, Tower
Opposite Mlimani City Mall
Dar Es Salaam, Tanzania
12/09/2024
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