Trade Finance

Our range of Trade Finance solutions gives you the backing to execute the obligation of your contracts without the hassle. We are committed to protecting your business against the risks associated with trade for our SME and Corporate clients.

Our Trade Finance Solutions enables you to;

  • Secure payments for the good and services sold.
  • Procure goods and services.
  • Improve their cash flow so that they can better negotiate extended credit terms prior to payment of goods/services.
  • Maintain control over their goods until payment is received.
  • Facilitate payments to be made easily and effectively.
  • Support performance of contracts both locally and globally.
  • Provide reassurance that the financial and commercial documentation are controlled in the banking system.

Guarantees

A written and signed/authenticated undertaking wherein the bank (guarantor) agrees to make certain stipulated payments on behalf of a customer/applicant to the beneficiary, should the customer/applicant fail to carry out specified terms under the contract or if a certain even materializes or fails to materialize.

Types of Guarantees Offered

  1. Bid Bonds – A guarantee by the bank that the bidder will execute the contract under the terms at which they bid in the event they win the tender.
  2. Performance Bonds – A banking facility that guarantees the borrower will abide and perform as per the terms of a specific contract.
  3. Advance Payment Guarantee – A facility where a borrower asks for a sum of money to be paid in advance before commencement of works/service and in turn the employer requests for a guarantee before releasing the advance payment. The employer is therefore guaranteed that the advanced funds will be repaid if default on works/service occurs.
  4. Retention Bonds – For some contracts/works, a specified percentage of the contract amount is held for a specific period to ensure performance as per the terms and conditions of the contract is met. The bank, therefore, can issue retention bonds for the same period to the employer to unlock the retained funds.
  5. Bank/Payment Guarantee – An assurance that a buyer will fulfil their obligations for the goods/services supplied/provided as per their contract terms and conditions. It is an irrevocable undertaking given by the bank for transactions such as property/ motor vehicle sale, distributorship guarantees to manufacturers/suppliers, guarantees to utility companies, etc.
  6. Customs Bonds – Custom bonds or guarantees are used to guarantee that a specified obligation will be fulfilled between customs (Kenya Revenue Authority, KRA) and an importer for any given import transaction. Guarantee payment of import duties and tax.

Letters of Credit

An undertaking issued by the bank at the request of the customer (importer/applicant/buyer) where the bank promises to pay the beneficiary (exporter/seller/supplier) for goods/services, provided that the beneficiary presents all required documents and that the documents meet all the terms and conditions set out therein.

Types of Letters of Credit

  • Confirmed/Unconfirmed Letter of Credit
  • Transferable Letter of Credit
  • Back to Back Letter of Credit
  • Revolving Letter of Credit
  • Standby Letters of Credit

Documentary Collection

This is a form of payment whereby the exporter entrusts the handling of the commercial and transport documents and more often financial documents to Sidian Bank. Sidian Bank will be given instructions concerning the release of these documents to the importer/buyer. Terms of payment/delivery of the documents could be either documents against cash or documents against acceptance.

Types of Documentary Collections

  1. Import Documentary Collection
  2. Export Documentary Collection
  3. Clean Collections

Avalization

Sidian Bank is requested by the importer to issue their undertaking over accepted bills of exchange, however the Bank is not obligated to do so. The drawee (importer) will request the bank in writing to avalize the bill of exchange drawn by the seller. If the bank chooses to avalize the bill of exchange it will present a counter bill of exchange issued by The Bank to the drawee for acceptance.

Trade Loans

We offer flexible short-term borrowings to customers regardless of the method used to trade; whether open account, advance payment, documentary collections or documentary credits linked to specific import, export or domestic transactions.

Trade Loans Offered

  1. LPO/Contract Financing – Have you obtained purchase orders/letters to deliver goods and services or carry out contractual works? This is the product for you.We provide funds to the borrower against confirmed  orders/contracts to enable them perform contracts or meet the delivery of a specific order from the issuer.
  2. Invoice Discounting – Short-term financing that allows the borrower to obtain funds in advance from the bank against accepted bills of exchange or commercial invoices. The advance is based on the face value of the accepted bill of exchange or the commercial invoice drawn by the seller where thepayment will be deferred.
  3. Pre-Shipment Finance – Short-term financing to facilitate performance under a sales contract and will often be predicated on the credit strength of the end buyer/off-taker.
  4. Post Import Finance – Short-term financing to enable the borrower to  – meet their maturing/payment obligations under import letters of credit, import documentary collections or open account.
  5. Warehouse/Commodity Finance – A facility available to customers who are traders or manufacturers on the basis of goods or commodities held in trust as collateral for the loan.