Equity Bank has launched its Structural Commodity Finance Loan innovative product in Gulu, with an aim of supporting vulnerable farmers and SMEs in rural areas of the Northern region.
The structural Commodity Finance Loan is a financing solution aimed at supporting the growth of agribusinesses and smallholders in Northern Uganda.
The structured commodity finance loan will allow agribusinesses to borrow against their agricultural inventory which can be used as collateral for security and repayment.
Speaking at the launch, Mr. George Kato, Head of Retail Banking, Equity Bank Uganda’s said, farmers and agribusiness SMEs can now effectively manage their liquidity and mitigate against risks related to the production, purchase, and sale of farm outputs.
“Agriculture remains a key sector in our economy and as Equity, we have chosen to invest in upscaling smallholder and medium holder farmers because they play a key role in the growth of the economy. With the new Structured Commodity Financing,”
Agribusinesses stand to benefit from SCF by receiving financing to ensure that cash flow is available for maximum output; with the intention of repaying the loans once the sale of the agricultural produce is complete. A financing solution that will allow them to sustain customer demand and have access to new markets and customers.
Working with the farmers, Kato said Equity bank will isolate assets that have relatively predictable cash flows attached to them through price discovery and discounting.
The agribusinesses, he said will then use these to mitigate risk and secure affordable credit with flexible repayment terms.
“With the new facility, customers can now access a loan amount of between Shs30Bn to Shs5Bn at competitive interest rates per annum determined on a case-by-case basis and repayable within flexible periods as agreed during the application process,” he said
Farmers and agribusiness SMEs looking to access the new financing solution will need to have an existing bank account with Equity Uganda while new customers will be required to open new accounts with the bank and provide previous banking history and statements.
All agribusiness SMEs, he noted that will also have to provide proof of operation in the commercial agribusiness sector for at least one year and demonstrate the ability to repay the loans as well as meet the other mandatory loan application requirements.
“Other than SCF financing, Equity offers farmers various financing solutions including production loans which aim at improving crop and livestock production, asset finance loans for farm machinery such as tractors, marketing loans and processing loans which allows them to add value to their farm inputs and increase sales. Equity Bank also highlighted supporting the women in Agribusiness in Northern Uganda through their women finance product EquiMama,” he said.
