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Concessional loans

Insofar as your funding requirements do not qualify for grant financing and your own bank is unwilling to provide financing, your next best option may be a concessional loan. Concessional loans are issued by Development Finance Institutions (DFIs) and non-governmental finance organisations. Compared to commercial banks, these organisations accept a higher risk in order in their pursuit of developmental objectives. Relative to the alternative of commercial bank financing, they provide debt financing on terms that are ‘concessional’ as one or more of the following conditions may apply:

  • longer maturities (up to 10-12 years)
  • longer grace periods (up to 3-4 years)
  • lower collateral requirements
  • subordinated debt or other forms of quasi-equity finance
  • syndication of loans
  • technical assistance grant
  • other direct and indirect benefits.

The lending policies of DFIs reflect their mandate that debt should be priced at an interest rate which reflects genuine country and project risk. The interest rate therefore tends to be in line with market rates, so generally is not concessional.

Contact us for more information or send us your company profile and project idea for first scrutiny, so that we can advise you if and how you can qualify.