SDB bank | SME Plus | Flexible SME Loan | Entrepreneur | Small Business

Value Chain Financing

Finance is extended to the entire value chain of the product life cycle, from sourcing raw materials/inputs to making it available to the end user.

There are two main financial arrangements under the process.

FEATURES AND BENEFITS

Target Segment
- Top Tier Local Corporates (TTLCs)
- Multinational Corporates (MNCs)
- High end SMEs
- Distributors/Authorized Dealers
Purpose/s
- To get an advance on the supply of goods to the buyer
- To purchase goods from specific company on cash/credit terms
Amount of the loan
- To be decided based on the working capital requirement of the particular business
Interest Rate
- AWPLR+1.50% to AWPLR+4.50%
- Rate to be decided based on credit grading and collateral of the borrower.
Security
- Recourse from Buyer, Cash deposits, immovable property, movable property etc
Tenor
- To be decided based on the trading cycle of the particular business

Benefits to the Buyer and the Supplier

To the Buyer	To the Supplier
Reap early settlement discounts which flow, directly into profits while still paying at invoice maturity.	Faster access to cash at advantageous rates
Off-balance sheet financing and general improvement of the balance sheet.	Lower Trade Receivables and increase in cash position
Increase in bargaining power as the supplier gets day 1 cash	Stronger cooperation with the buying company creates a competitive advantage.
Attractive retention strategy for the suppliers	Quicker cash conversion cycle from delivery to cash.
Improved process capability in Invoice Receipting, Approving, Electronic Invoicing and overall Procurement	Assurance of the payment by the bank on supply of goods

Benefits to the Sponsors and Distributors.

Sponsors	Distributors
Convert credit sale into cash sale and improve cash flow position	Purchase on cash terms and by increase GP (via trade discounts on cash purchase)
Reduce the risk of receivables and bad debts	Less collateral requirement since score cardbased lending
Focus on core business activities via reducing distributors credit evaluation	Reduce BG commission by arranging a credit facility with the Bank by giving the same collateral
Increase revenue with enhanced credit limits to distributors	Increase the volumes with the enhanced credit limits for purchase