As a vast outcome of COVID-19, many enterprises are on the verge of closure, some voted themselves out of existence, while others drastically reduced their staff.
For the tourism stakeholders however, there seems to be a ray of hope, through the call for funding opportunity, that has been presented by Uganda Development Bank (UDB).
In his address to the press on May 18th, 2022 during the launch of the 2nd Tourism Facility at Geogina Garden Hotel, UDB Director Credit Samuel Edem Maitua highlighted on how the first call for funding was handled, the grounds on which the beneficiaries of the second call will be eligible for funding.
Maitua pointed out that in October 2020, the first call for funding was initiated, and over 94 applicants were registered. Of those, only 44 applicants got approved and 50 did not meet the requirements to be eligible for the funding.
He further indicated that a total amount of 60 billion shillings was availed for the first call. Of that amount, 18.2 billion shillings was utilized. 5 billion shillings of this was allocated for grants, and the 12 billion was given out as loans.
He added that in the first call, the major aim was reinstating and retaining employees that were laid off as a result of the COVID-19 Pandemic, to prevent the closure of businesses. The first call registered success as over 2279 jobs were created and preserved.
The UDB Director Credit clearly underlined the entity’s ironclad commitment, to stimulate businesses in the tourism sector, as one of the fundamental rationales for effecting the funding initiative.
“We need to preserve our foreign exchange contribution of this sector, the foreign exchange that the sector brings is very critical for us to have adequate reserves as a nation,” Edem Maitua said.
“Again, we have added an aspect of support towards greening, and this speaks to energy efficiency, waste management,” added Maitua as he reiterated that such a move is very crucial, given the entity’s desire to promote environmental conservation.
“It also recognizes the need to preserve tax revenue inorder to balance the terms of trade in the country.”
He supplied a ray of hope to tourism stakeholders, by noting that refining has been done in the second call for application, to address issues that could have affected the 50 applicants that did not qualify for funding, reiterating that enhancements of the program was done for such reasons.
“The second call does not have very different requirements as indicated by the Director UDB. It still remains a non-repayable grant attached to a loan,” remarked Maitua.
Most importantly, he stressed that the technicalities that were created during the first call was due to the fact that most applicants only applied for grants, and not loans.
He supplied other requirements which must be met by all applicants to be eligible for the funding opportunity, and they are clearly stipulated below.
REQUIREMENTS FOR THE SECOND CALL FOR FUNDING
The number of employees that must be retained should be 75% of the enterprise’s stuff.This must be indicated at the point of application and not prior to application.In addition to this out of the money being applied for, the business must be able to pay among other benefits, 100% gross salary of the stuff.
The loan terms is 12% but you get 8% if you meet the terms of the grants after 2 years.
The working tenant is now 5 years from 3 years .
The term provides a 2 year grace period.
Environmental assessment will be done at the cost of UDB upon request by the applicant.
BENEFICIARIES OF THIS CALL
It is open to individuals from the hotel owners association (HOA).
Players in the tourism sector.
Interested Players must be registered businesses in Uganda playing in the Tourism Sector.
Applicants must have a good credit history.
Applicants must present audited accounts for at least two years in operation.
LEGIBLE EXPENDITURES
The gross stuff salary for two years has been maintained.
Indicate operational costs which speake to repairs, utilities, servicing of motor vehicles, equipment upgrades and clear certification that will enable you to operate in the market.
Additional costs associated greening has been included. Incase of opting for alternative energy sources from electric to solar heaters and other energy saving equipment and waste management.
NON-ILEGIBLE COSTS
There will be no loan refinancing. The money cannot be taken to refinance existing loans.
This facility will not be doing construction and expansions.
There is a UDB mainstream facility for that (If you qualify for it).
LIMITS FOR THIS CALL FOR APPLICATION
A minimum of 100 million shillings.
A maximum of 1 billion shillings.
This applies for both loan and grant.
In the beginning the 1 billion shillings was for only one entity but for this call multiple enterprises can apply but the overall amount must be 1 billion shillings only.
Any activity outside the grand conditions will make the the full amount payable.
NUMBER OF LOTS REMAIN FOUR
For employees between 5-20,the maximum grant is 40% of the total request. This amounts to 30,000 Euros which was previously 20,000 Euros.It has been increased by 10,000 Euros.
20-50 employees generate a maximum grant of 35% of the requested amount. Which is 50,000 Euros from the previous 40,000 Euros.
For employees above 100 in number, the maximum grant is 25% which will amount to 60,000 Euros.
CREDIT ASSESSMENT CRITERIA
Assessment will be done on 2 years performance of the business. The major area of Assessment is the management reports which helps to ascertain the ability to pay the loans. It is also important for determining the viability of the business.
Eligible costs must be clearly highlighted, indicating where each fall and how they will financed for up to two years.
Applicants must clear any credit hindrances with their credit references so as to have a good credit history.
Applicants should provide and highlight profiles of key persons like managers whose wages may be covered through this program.
Site visits will be undertaken to confirm the existence of the business, and the extent to which the business has been effective to assess its potential.
Management reports, official company letter head,application forms that can downloaded,and are complete.
Applicants must have registered resolutions to borrow that is registered with the company’s registry.
Applicants must have constituting documents like the last two years account, management accounts in case the audited accounts are not available.
Applicants must have at least a six months bank statement. This helps in assessment of what the business has been earning, and compare with the information provided in the accounts.
Loan statements in case of any existing loans. This helps in establishing areas where the business is struggling.
Proposed security, and any other assets that you want to pledge. Endeavor to harmonize with your bank to be willing to release the collateral.
The requirements for NSSF and PAYEE has been changed. However applicants must demonstrate their willingness to register for NSSF and PAYEE.This is important to know your tax contribution. It is from the taxes that money is got to fund these interventions.
As part of employee welfare, companies must demonstrate their ability to take care of their employees by applying for the different schemes.
Annual returns for Directors,and shareholders.
And the latest/most recent tax clearance certificate.
HOW TO APPLY
Online-Download the application form from the UDB website.
For hand delivered application, go to UDB offices on plot 6 Nakasero Road Kampala.
Rowen original Towers, 1st floor wing B
Delivery must be done during working hours that is Monday to Friday from 8-5PM.
Uganda Development Bank Limited (UDB) is the country’s national development finance institution (DFI), with a mandate to accelerate socio-economic development in Uganda, through sustainable financial interventions.
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