Businesses are a large part of our Lankan culture, it fulfills an everyday need for the common man. The Coronavirus pandemic has had a devastating impact around the world to our daily life causing the disruption of livelihoods and communities.
Organizations around the world are coming together to find Solutions to limit disruptions to economies and supply chains, and we at Simplebooks would like to play our part, the blog is where we start to make our fight back against the Pandemic.
In order to minimize this the government of Sri Lanka with the directives of His Excellency the President had issued certain reliefs schemes to assist businesses through this phase.
A working capital loan is a loan that is obtained to support a company’s day to day business operations. The funds obtained through the working capital loans are not to be used for purchasing long term assets or to make investments. The working capital loan will support you to cover your short- term operational requirements such as processing employees’ salaries, rental payments, and debt payments.
1) Financial institutions will be providing the loan facility for working capital or investments purposes upon the conditions listed down below once the applicant provides a business plan,
i) The working capital loan facility will be conceded to eligible performing and non-performing borrowers in Rupees not surpassing Rs. 25 mn for each bank per borrower and Rs. 10 mn for every other financial bodies per borrower or 2 months working capital requirement whichever is higher. Such credit will be reimbursed more than two years at an interest rate equivalent to 4%, CBSL will carry interest rates up to 4% for authorized banks and up to 7% for other financial institutions.
ii) The investment purpose loan facility will be allowed strictly by banks and only for performing borrowers in Rupees not exceeding Rs. 300 mn for each bank per borrower to diversify the business objectives. Such loans will be repaid more than five years at an interest rate equivalent to the limit of AWPLR plus 1.5%.
2) A moratorium for a period 25.03.2020 to 30.09.2020 will be provided for both working capital loans and investment loans.
3) Financial institutions could request for collateral’s in order minimize risk involved while providing this facility.
4) The government had instructed the financial institutions to accept loan applications from people applying to the facility until 30.04.2020.
(a) Export-related businesses (direct and indirect)
(b) Foreign currency earners (individuals and corporates) who have to repay loans in foreign currency and whose incomes/ businesses have been adversely affected due to the outbreak of COVID-19.
(c) Self-employment businesses and individuals who have lost their jobs or income due to the outbreak of COVID-19.
(d) Small and Medium Enterprises (SMEs)
(e) Tourism sector
Only the Import Facilities listed below will be permitted under this Re-Finance Facility. Imports other than the below mentioned will NOT be permitted.
Following is a list of the financial records you’ll have to submit to the bank to process a request for a Working capital loan.
The requirements could vary from bank to bank as the way they assess credibility can differ. We have covered the core requirements most lenders require, upon gathering information from a couple of such financial institutes.
A restructured business plan to efficiently use the money obtained through the loan, also depicting the income that you’re expecting on generating.
Management accounting reports
Certified Financial Statements such as Balance Sheet, Key Performance Indicators, Profit and Loss statement, The Cash Position, Forecasted cash flow statement.
There could be various other requirements based on the history of the business and also based on the financial institution that you reach, such as the proof of property ownership for the collateral. The following below can be few other documents requested by certain banks,
Bank statements will confirm the turnover in the past months
Existence of the business
Business registration certificate and the annual report.
We at Simplebooks would be glad to assist you with the documentation process needed when applying to this scheme.
Have any questions you want answers? Let us know or Call us on 011 4060 909
With the fast pace of COVID-19 developments, businesses are having to make quick adjustments to protect themselves, their staff, and their customers. Safeguarding the financial health of your business should also be a top priority.Not sure How to Protect your Business? Not to worry –Refer our guide on How to Protect Your Business from Covid 19