A due diligence report on the guarantor company is required which must cover the following:
- Ascertain business continuity (going concern) of the business for at least the tenor of the required loan
- The company's capacity to meet the guarantee commitment should the need arise
- Establish and know the duly appointed signatories, who can act legitimately on behalf of the company
Submission of the equivalent of a credit application for the guarantee company by the lending officer, which must comprehensively cover the following aspects:
- Name of the company (employer)
- CR14, Memorandum and Articles of Association
- Board resolution appointing and empowering a person to act on behalf of the company
- Board resolution empowering the company to act as guarantor and a cap on the total liability of the company
- A letter of undertaking to meet its guarantee commitments and advise the bank should the employee leave employment or gets terminated
- State shareholding and group structure of the company
- State nature of business
- State age of business and comment on the successes associated with the number of years of operations (as a guide, avoid businesses with less than 5 years of operations)
- State key business outline, the products and how the sector is performing - explicitly stating/evaluating their track record and capacity to pay salaries on time
- Compliance issues- obtain and submit tax clearance certificate, the latest, operating business licenses and any other licenses required for running the business and compliance to the indigenisation act (especially for mines)
- Their current bankers- and obtain a bank report and FCB report on the company
- Management team- evaluate capacity and integrity
- Obtain financial statements for 2 years (and look out for adverse signs and deterioration) - avoid companies with over 25% debt on their balance sheet.
- Obtain information on the mode or system of salary payments - all salaries must be automated via Paynet and not RTGS or cash deposits as these can easily be diverted
The Due Diligence is sent to Risk Department for assessment and approval before beneficiaries of the Company are asked to submit their personal loan applications.
The loan application must have the following features and attachments:
- A letter of recommendation from the company/ employer is a must and must be addressed to The Branch Manager of Metbank Limited
- Repayments must not be more than 40% of the net
- Preferred loan tenor 6 months, however a maximum tenor of 12 months will be accepted if all other conditions are met.
- Corporate guarantees to be properly signed
- Monthly reports on performance required from the branch
- Defaulters to be blacklisted and handed over to FCB
- NSSA and Pension deductions must be evident on the payslip
- Beneficiary must have been with the organisation for at least 6 months
- Beneficiary must not be a contract worker, if however a contract worker is to be considered, their Contract period of employment must exceed the loan tenor
- Beneficiary must be free from micro-finance deductions as this is an indication of heavy reliance on debt
- Beneficiary’s Bank Statements for at least 3 months from the former bankers
- Loan limits: 3 (times) x net monthly salary, maximum that can be accessed is USD2 000.00. Income from other activities not salary will not be used to calculate the maximum loan limit.