Islamic SME Financing

To augment the efforts led by SBP for spurring the financing to SMEs ABL-Islamic Banking is now offering reasonable range of Sharia Compliant Based Assets Products for all segments of the business (manufacturing/trading/service) through our four commercial centres based at Lahore, Karachi, Islamabad & Multan. Our dedicated and well acquainted Assets Teams can handle all types of financing needs of your business for your working capital as well as long term requirements through our suite of Islamic products. Our products are easily customizable in line with our customer needs and their business model.


  • Eligibility Criteria

    Stated below are the minimum considerations for prospective customers that need to be met to qualify for obtaining financing from SME platform.

    These requirements only represent a reasonable benchmark for eligibility and their realization does not warrant approval of finance. Bank at its own discretion may vary these benchmarks on case to case basis as per its internal policies and holds the final right to accept/reject any application/request.

    Age of Business & Experience of Key Decision Maker Min 3 years
    Purpose of Loan -Facility shall be availed to meet business needs only
    -Clear and precise intended fund utilization needs to be in place from the borrower
    Financials

    Leverage Ratio:
    Current Ratio:

    Profit Before Tax:
    Debt Coverage:
    Debtors Aging List:
    Cash Flows:
    Min. Turnover:

     

    As per bank’s leverage policy framework
    Min 1.0x
    Positive for at least 3 years
    Min 1.5x
    Min 70% within 120 days
    Positive cash flow from operating activities
    At least 60% of total sales from banking channels.

    e-CIB Status Clean credit history for the last 12 months, no write-off or litigation in past with any bank
    Supplier Checking:
    Buyer Checking:
    General Market Check:
    Positive feedback from suppliers
    Positive feedback from buyers
    No Negative feedback
    Collateral Requirement Exact requirement will vary on case to case basis.

  • Financing Limits

    Bank will gauge customer’s financing requirements and propose financing limits accordingly. Maximum limit will be in line with the Prudential Regulations of SE & ME.

  • Pricing Criteria

    Profit will be charged to applicant based on relevant KIBOR plus agreed spread. All other charges will be as per prevailing Schedule of Charges (SOC) of the bank.

  • Documents

    Following are the set of documents required to process client’s financing request:

    1. Request letter for financing facilities
    2. Borrowers Basis Fact Sheet as prescribed by the SBP & Loan Application Form
    3. Copy of NTN
    4. Copy CNIC(s) of all owners/partners/directors/key decision makers
    5. Financials for last 3 years (Audited in case of Limited Liability companies or where requested exposure is more than PKR 10 M)
    6. Company Profile
    7. List of Suppliers with credit terms
    8. List of Buyers with credit terms
    9. Details of Receivables along-with its ageing
    10. Details of collateral offered
    11. Any other document/information required by the Bank

    NOTE: The above list is not exhaustive in nature and depending on the nature of business and company’s financing requirements it may vary accordingly.

  • Modes of Repayment its Frequency & Penalties

    Finance can be adjusted upon its maturity date or prematurely before maturity date i.e. any time during the validity of finance period. The late payment penalty amount and other charges will be applicable as per Bank’s prevailing SOC.

  • How to Apply & Process of Approval

    Any company, who fulfils our eligibility criteria, may apply for financing facilities / trade lines from any of our branches Pan Pakistan.

    Step 1: Respective Branch Managers will forward your case to our regional business team that will further liaise with you for any required information etc.

    Step 2: The business team/relationship manager will provide a preliminary assessment of the request in view of the eligibility criteria. Subsequent to bank satisfaction in all respects case will be put forward for further processing.

    Step 3: Decision on the proposed facility will be taken by the approving authority of the bank and advised accordingly to the applicant.

    Step 4: Subsequent to approval of request the relevant business team/ relationship manager will provide an offer letter for applicant’s acceptance along with ancillary documents for limit authorisation.

  • Frequently Asked Questions

    • How are SMEs (Small and Medium Enterprises) defined?

    A Small Enterprise (SE) is a business entity which meets the following parameters:

    Number of Employees Annual Sales Turnover
    * Up to 50 * Up to Rs. 150 million

    * including contract employees

    As per SBP’s SME PR’s, an entity has to fulfil both the criteria of number of employees and sales turnover for categorization as medium enterprise. However, when an entity’s one parameter is as per ME criteria and its second parameter is as per SE criteria, than subject entity would be categorized as ME. Similarly, when an entity’s one parameter is as per ME and its second parameter is above the upper limit prescribed for ME, and then the subject entity shall be categorized as commercial/corporate entity.

    • What financial services can I avail from Allied Islamic Banking?

    A) Project Financing
    B) Leasing
    C) Working Capital

    • How much amount can I seek from the Bank?

    Based on the SBP’s PR and business needs of the client.

    • What does debt:equity ratio of 60:40 represent?

    At least 40% of the project’s/enterprise’s financing should come from the borrower in the form of equity participation. Up to 60% would be financed by SME Bank.

    • Does ABL Islamic Banking charge mark-up?

    No. In order to sustain as per Shariah Principals ABL Islamic Banking would charge profit by selling the underlying assets to the applicant depending upon the product it requested.

    • What is the profit rate?

    Profit is charged by applying the KIBOR as a benchmark in addition to bank’s profit which depends upon the projects expected cash flows. It can vary from business to business.

    • What kind of security Bank needs from the applicant?

    Security may vary from project to project. In most cases, it is mortgage of urban property along with personal guarantees of sponsors.

    Is there any difference between Islamic and Conventional loan documentation process?

    There is no such difference in initial credit processing documentation pertaining to customer profile. However when it comes to transactional documents in Islamic banking, these documents are based on the concept of trade.

    • How long does it take to process a loan application?

    After the applicant has provided the requested information along with attested documents, the process takes the time depending upon the nature of the case and perfection of security documentation. Any delays are usually because of inadequate information provided by the borrower.

  • Contact Persons’ Details

    • Mr. Khalid Waheed Mian (Team Leader Assets)—0321-4348066
    • Mr. M. Imran Aslam (Business Head Assets & Liabilities)—0323-4065977
    • Mr. M. Aslam Khan (Relationship Manager, Multan/South-I)—0300-8733826
    • Mr. Iftikhar Younis (Relationship Manager, Lahore/North-I)— 0321-4253060
    • Mr. Saleem Ahmed (Relationship Manager, Islamabad/North-II)— 0321 5381723

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