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IDC launches short-term finance product

Johannesburg - The state-owned Industrial Development Corporation (IDC) has launched a new ring-fenced short-term finance product, FasTrak.

In a statement on Tuesday, the IDC said the new product was a once-off, non-revolving credit/loan facility, applicable only to clients who had won contracts, tenders and/or orders and had an urgent need for bridging assistance for a limited time frame.

"The product seeks to close the gap by promising delivery of the funding and/or guarantees, within 14 days, provided all the information required is at the disposal of the IDC's International Finance Department."

Businesses who required bridging finance needed it quickly, normally within 14 to 21 days from the time that the contract or order was awarded, senior account manager Achmat Adams said.

"The users of these products are mostly strong, but smaller businesses with limited cash flow."

He said the IDC's FasTrak aimed to alleviate financial strains on these businesses that did not have funds to satisfy their orders, which might result in the business either losing the order or using unconventional ways of funding, if not assisted.

The IDC's International Finance Department, together with certain strategic business units, conducted a historical audit into the actual use of both the revolving credit and guarantee products.

"From this it was evident that the short-term finance products play a pivotal role in ensuring that the IDC fulfils its mandate of addressing market failures and assisting the economy to develop in ways that contribute to achieving the corporation's development objectives," Adams said.

As time was of the essence for this specific facility, the IDC's process would be prompt, without taking unnecessary risk.

"An abridged due diligence will be conducted, based on a set number of documents that the applicant is expected to provide."

A pro-forma application pack would be presented to the client, including all documents to be signed, he said.

The facility would be capped at a maximum combined value of R5m.

"Once an applicant is granted the assistance they require, they will not be able to access the facility again but can convert it to a revolving credit facility upon IDC conducting its normal due diligence process."

Adams said the facility would operate on the same principles as a revolving short-term finance/guarantee product in all other respects, which would be available for up to six months pre- and six months post-shipment financing.
 
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