1. What financial products are on offer at the ECDC?
The Eastern Cape Development Corporation (ECDC) offers products across two main categories, namely short-term and long-term business finance. ECDCFuture, our long-term offering, consists of a long-term debt finance vehicle, and an equity finance vehicle, the TERMcap and EQUItrader products respectively. Please refer to the ECDCFuture product brochure, and the TERMcap and EQUItrader infocards for product specifications relating to these products.
Our short-term offering, ECDCAccess, provides short-term debt financing products that are geared towards the facilitation of efficient cash-flow management in our client businesses. The NEXUS trade, WORKflow, POWERplus, and IMBEWU micro loan products are on offer in this regard. Please refer to the ECDCAccess brochure and the infocards relating to each product for further information and product specifications.
2. Why does the ECDC offer financial loan and equity financing products?
The ECDC distinguishes itself as the financial service provider of choice for initiatives that bring with them a meaningful developmental impact on the Eastern Cape economy. We seek to facilitate financial viability and sustainability of these initiatives through the provision of financial resources at a highly competitive rate.
3. How do I go about making application for the ECDC finance products?
Please contact 0860 ECDC FIN (0860 3232 346) to speak to one of our account managers. The account manager will conduct a preliminary interview with you to capture your details and the reason for making application, before forwarding you an application form. The account manager will be able to inform you at this stage if the ECDC is to proceed with your application. All interviews are recorded and stored for legal purposes.
Once the suitability of your application has been approved, the process will commence to determine the terms and conditions of the application. Please note that the suitability of the application does not guarantee that your application will be successful. The contract will be considered binding once it is signed by both the ECDC and the applicant concerned.
4. What does the ‘aftercare' service of ECDC entail for me as a prospective client?
The ECDC employs an aftercare philosophy that aims to provide efficient client service for the entire duration of the contract term. Monthly account management, together with quarterly report-back visits to ascertain the health of your business, are two ways that we assist the client with the management of their account. In the event that the account manager raises concern about the viability of your business and your ability to sustain the repayments of your loan, we will provide business support to assist as far as possible to turn your operation around favourably.
5. Can I settle my loan in a time period quicker than the term stipulated in the contract?
As an entity concerned with sustainable development, the ECDC welcomes the situation where its clients are able to settle the loan amount before the end of the contract term.
6. If I should run into financial difficulty during the time of the contract term, is there any kind of ‘grace period' should I not be able to service my loan as stipulated in the contract?
A maximum moratorium of 6 months from final drawdown is allowed on all new development investments, and this is only considered in the event that the cash flow of the promoter indicates that such a moratorium is required.
7. Are there any penalties imposed if I am not able to make my loan repayment in any given month?
In the event that the loan account defaults on monthly repayments, so that the contract is more than three months in arrears, a full investigation as to why this is the case will be set in motion. The account will be charged a 1% investigation fee, and, in compliance with the National Credit Act, the relevant credit bodies (such as the ITC) will be informed of the default.
As mentioned above in question 4, the ECDC will determine whether further investment into the client enterprise is the required ingredient to effect meaningful financial turnaround. This investment will then be made subject to approval by the relevant credit committees within the ECDC.
8. Is there any project or idea that the ECDC will not consider an option to finance?
Yes. Any application that proposes the following circumstances will be unsuccessful:
Where the idea might be offensive to the community directly affected by such operation, or the community at large;
Where application is made for finance to be used in the purchasing of shares that are unrelated to the target of meaningful development
in the Eastern Cape;
Where application is made for a loan to acquire property which will be receiving its income from lease rentals only, and the loan
proceeds will be used for the acquisition of that property only;
Where the applicant puts forward an idea that requires a period in excess of the recommended period of viability;
Where application for a loan is to be applied to a purpose that does not create or save jobs directly, is speculative in nature or, is made by
a service provider to the ECDC.
9. What are the specific requirements that the proposal must satisfy before the application will be considered?
Finance applications that facilitate job creation and/or retention, economic empowerment, value addition to the economy, rural and/or township development, and/or increased export income are deemed suitable for the purposes of the mandate of the ECDC. Any project that is a new greenfield initiative, where expansion and rehabilitation will be the resultant benefits of the initiative, will be eligible for application for finance from the ECDC.
It is important to note that although the ECDC will not entertain applications for financing to develop property where the only income generated will be from rental income, it will consider applications where the property to be developed satisfies the developmental requirements of the ECDC (job creation, developmental expansion and acceleration, etc.).
10. Is it true that I do not have to arrange 100% collateral for loan finance granted by the ECDC?
The ECDC operates under different collateral policies to the major banks in South Africa, in that it does not require 100% collateral should that collateral be unavailable. However, what must be made clear, is that:
a) should 100% collateral be available, it will be attached as security; and that
b) any available collateral (albeit less than 100% of the loan value) will be attached as security to the extent that the ECDC deems necessary.
11. What are the specific requirements that I, as an applicant, should satisfy before I am eligible for financing?
Own Contribution: It is expected that, despite the ECDC's policy that 100% collateral is not required as a prerequisite for loan finance, a significant contribution is made by the applicant that demonstrates their 100% commitment to the idea.
Expertise: The applicant must display some expertise in the area of the proposed business idea, either on a technical or business level. However, should the applicant not have the required level of skill to drive the proposal forward, he/she can be referred to ECDC's Development Services Unit to undergo the necessary training courses to improve the level of skill, or be given access to an appropriate mentor within the ECDC operation to glean expertise in the designated disciplines.
Active Involvement: The ECDC requires the applicant to be actively involved in the underlying business enterprise. This will take the form of full time participation in the activities of the business by all or some of the applicants at any given point in time.
Clean Credit Record: An applicant can only be considered for loan finance if he/she holds a clean credit record, or provides ECDC with written proof of arrangements made to clear any bad debt attributable to him/her.
12. Do I have to be resident in the Eastern Cape if I am to qualify for finance?
Not necessarily. As long as the business enterprise has its head office in the Eastern Cape, or can prove that the major developmental impact of its existence will be felt in the Eastern Cape, the application will be considered.
For further information, please contact 0860 ECDC FIN (0860 3232 346) , visit one of our offices in the Eastern Cape.
EAST LONDON HEAD OFFICE: Ocean Terrace Park, Moore Street, Quigney
BUTTERWORTH: 24 High Street
KING WILLIAM'S TOWN: 7 Taylor Street, Arches Buildings
PORT ELIZABETH: 152 Cape Road, Mill Park
QUEENSTOWN: 22 Cathcart Street
MTHATHA: 7 Sisson Street, Fort Gale
