1) How is the START facility solving issues of the bank’s willingness to lend to SMEs and the high costs of financing?
START’s Technical Assistance for selected projects help reduce the risks associated with these projects so that the cost of financing is low. START charges loan interest of 10% to 12% and one-off processing fees of not more than 1%.
2) What type of external financiers will START facility link projects to?
The primary focus will be to link to domestic financial institutions.
3) What is the minimum/maximum grant or loan that START facility can provide?
START facility targets projects that need additional funding from approximately UGX 40 million to UGX 400million. The project developer’s equity contribution should be at least 25% of the total project cost.
4) What constitutes the 25% equity requirement for the developer’s contribution?
The equity contribution by the developer may come in a variety of forms – cash or non-cash/ in-kind e.g. land, plant & equipment, working capital e.t.c. At the same time START facility sets generous collateral requirements due to collateralization of future financial laws
5) If one cannot afford the 25% of the project owners contribution should they not apply?
Every applicant must demonstrate their commitment for the project. The 25% contribution can either be cash contribution or in-kind in form of assets. The project developers will have to produce evidence of ownership of such assets to be accepted as part of the contribution.
6) Must you own the land for the project?
Yes. Project developers will need to provide evidence of ownership.
7) Do land agreements qualify as collateral for the loans?
Land agreements are not sufficient evidence; you will need Certificate of Customary Ownership that are in the individual/company/cooperative/association names.
8) Does the project only provide for capital costs alone, how about operational costs like extension services?
START facility supports a capital expenditure and working capital. However, eligible non-capital expenditure such as working capital must be below 25%. Eligible non-capital costs are costs direct to the Project & necessary for carrying out the Project, and must not include; pre-award costs, cost of idle facilities, fines & penalties, cost of advertising & fundraising, entertainment, debts & provisions for losses.
9) How frequently are START facility calls for proposal published?
START facility will hold one call for proposal per year for the 4 years of the Facility. You can find all information on the START call for proposals on the websites of PSFU; www.psfuganda.org.ug and UNCDF; www.uncdf.org which are regularly updated. The call for proposals will also be published in the national newspapers.
10) Is it possible to receive clarification on the call for proposals or guidance on how to complete the application process?
PSFU and the other START facility partners will provide technical assistance to project developers to prepare their submissions. START facility team conducts sub-regional call for proposal sensitization workshops where project developers are trained on how to complete the submission form and seek clarifications.