Contractor Loan Schemes
Line of Credit (LoC) Scheme for Government Contractors
| Scheme Name | Line of Credit (LoC) Scheme for Government Contractors |
| Purpose of the Loan | To offer various facilities at different stages of contract execution. |
| Eligibility Criteria | Eligible Contractors: Contractors approved by State, Central, and other Government Agencies Experience: The entity must have successfully completed at least three contract works for Government agencies or corporate entities. Financials: The applicant contractor or contracting entity must possess satisfactory audited balance sheets or Income Tax (IT) return statements. Current Projects: At the time of sanctioning the Line of Credit, the contractor must have at least one valid Selection Notice or Work Order in their possession. Work Issuing Authority (WIA) : The WIA must be a Government Department, Government Agency, State or Central Public Sector Undertaking (PSU), Local Body, or Corporate entity. |
| Upper Loan Limit | Rs. 100 crore |
| Validity of the Line of Credit (LoC) | 5 years (subject to annual renewal) |
| Processing Fee | 0.5% of the sanctioned Line of Credit plus GST, subject to a minimum of Rs 10,000 plus GST and a maximum cap of Rs 25 lakh plus GST. |
| Upfront Fee | 0.1% of the sanctioned Line of Credit plus GST, subject to a maximum of Rs 50,000 plus GST. |
| Internal Credit Rating | Should obtain a minimum credit rating of 50% |
| Facilities Under the Line of Credit (LoC) | • Performance Guarantee • Work Execution Facility (WEF) • Early Bill Discounting Facility (EBDS) • Government Bill Discounting Facility • Equipment Finance Facility |
Performance Guarantee
| Facility Name | Performance Guarantee |
| Objective | To offer a Performance Guarantee, Additional Performance Guarantee, or Letter of Guarantee for eligible activities, either before the start of the contract work or during the work period. |
| Maximum Guarantee Eligibility | 100% of the required Guarantee amount. |
| Minimum Promoter’s Contribution | Nil |
| Maximum Guarantee Period | 10 years |
| Guarantee Commission | 0.50% of the Guaranteed amount plus GST per quarter, subject to a minimum total commission of Rs 5,000 plus GST. |
| Facility Fee | 0.10% plus GST, subject to a minimum of Rs 2,000 plus GST per Guarantee, with a maximum cap of Rs 10,000 plus GST. |
| Security Coverage Required | 100% |
| Credit Rating | Not Applicable |
Work Execution Facility
| Facility Name | Work Execution Facility |
| Objective | To provide financial assistance to contractors for executing contract works. |
| Maximum Loan Eligibility | 75% of the cost of work including GST; OR 80% of the cost of work including GST (provided 10% of the loan amount is retained as a Debt Service Reserve Account (DSRA), proportionately during each disbursement). |
| Minimum Promoter’s Contribution | 25%, which can be relaxed to 20% in cases where a provision of up to 10% is made as DSRA. |
| Repayment Period & Moratorium | Fixed based on the work execution time and the time taken for the release of bill payments. |
| Facility Fee | 0.10% plus GST, subject to a minimum of Rs 2,500 plus GST, and a maximum cap of Rs 50,000 plus GST. |
| Credit Rating & Interest Rate | A credit rating will be conducted for the LoC. The interest rate for the WEF is fixed based on this credit rating score. |
| Security Coverage Required | 100% collateral plus a Power of Attorney (POA) in favour of KFC, registered with the Work Issuing Authority (WIA). |
| Disbursement | Up to 1/3rd of the sanctioned WEF shall be released in advance. Upon completion of 34% of the work, up to 2/3rd shall be released, and upon completion of 67% of the work, the remaining final amount can be released. For existing standard-category customers who have been with the Corporation for more than one year, up to 50% of the sanctioned assistance (less interest provision made) per work order shall be released in advance. The balance amount will be released after verifying the utilisation certificate in the following cases: Where the agreed PAC (Probable Amount of Contract) is up to Rs 100 lakh; OR The work order is for Bitumen Macadam and Bitumen Concrete (BMBC) tarring works, and the contractor has to procure the tar for the work; OR The work order is for the construction of a bridge. |
Early Bill Discounting Facility
| Facility Name | Early Bill Discounting Facility |
| Objective | To provide financial assistance by discounting the bills submitted by a contractor, where the pending payment has been confirmed by the Work Issuing Authority (WIA). |
| Maximum Loan Eligibility | 85% of the Net Bill Amount. |
| Minimum Promoter’s Contribution | 15% |
| Repayment Period | Maximum of two years. |
| Facility Fee | 0.10% plus GST, subject to a minimum of Rs 2,500 plus GST, and a maximum cap of Rs 50,000 plus GST. |
| Credit Rating & Interest Rate | Credit rating is not applicable. Interest Rate: 12%. 15% of the discounted amount will be retained as a Debt Service Reserve Account (DSRA). |
| Security Coverage Required | A Power of Attorney (POA) in favour of KFC, registered with the WIA. Collateral security not insisted. |
| Relaxations | Eligibility Criteria, Relaxations & Documents Required: (i) EBDS shall be allowed to entities having a valid ‘BB’ (BB-/BB/BB+) or better category External Credit Rating only. However, for existing good contractors of the Corporation having no External Credit Rating (Contractors with the Corporation for more than one year and all of their loans were/ are maintained in the standard category and were/ are not in SMA1 or SMA2 categories for the last one year), where their existing LoCs are secured with collateral securities, EBDS facilities shall be allowed with 75% collateral securities. (ii) The applicant entity should have an Audited Balance Sheet for the last three years. (iii) The applicant entity should have registered cash profit for the last two years. (iv) The applicant entity should have positive net-worth for the last two years. (v) The repayment track record of the applicant entity with Banks/ KFC should be satisfactory. (vi) The applicant entity should produce the following additional certificates: (i) ’No Statutory Dues’ certificate from the entity’s Auditor. (ii) Certificate from WIA stating that no Arbitration case/ Vigilance case/ Vigilance enquiry/ other Departmental enquiry is pending against the present or previous works done by the applicant entity. |
Government Bill Discounting Facility
| Facility Name | Government Bill Discounting Facility |
| Objective | Contractors who have executed work and whose payment is pending with the Government are given the option to obtain promissory notes against their pending bills from the Government, which can then be discounted. |
| Maximum Loan Eligibility | 100% of the value of the bill amount provided in the Government Promissory Note. |
| Minimum Promoter’s Contribution | Nil |
| Repayment Period | Maximum of One Year |
| Facility Fee | 0.10% plus GST, subject to a minimum of Rs 2,500 plus GST, and a maximum cap of Rs 50,000 plus GST. |
| Credit Rating & Interest Rate | Credit rating is not applicable. Interest Rate: 9.50%. Interest up to the Promissory Note (PN) due date is retained as a Debt Service Reserve Account (DSRA). The Government will bear half of the interest, subject to a maximum of 5% per annum. |
| Security Coverage Required | Nil |
Equipment Finance Facility
| Scheme name | Equipment Finance Facility |
| Objective | To provide financial assistance to eligible contractors to acquire new equipment, machinery, vehicles, etc., required for executing eligible activities under the Contractor Loan Scheme. |
| Maximum Loan Eligibility | For vehicles and earth-moving equipment (where a hypothecation endorsement is available in the RC book): Up to 85% of the on-the-road price. For other equipment: Up to 75% of the equipment cost. |
| Repayment Period & Moratorium | 60 months, which includes a maximum gestation/moratorium period of 6 months. |
| Facility Fee | 0.10% of the loan amount plus GST, subject to a minimum of Rs 2,500 plus GST and a maximum cap of Rs 50,000 plus GST. |
| Credit Rating & Interest Rate | A credit rating will be conducted for the Line of Credit (LoC). The interest rate for the Equipment Finance Facility (EFF) is fixed based on this credit rating score. |
| Security Coverage Required | 100% collateral plus a hypothecation charge over the acquired machinery or vehicles. |
LoC only for GBDS (Government Bill Discounting System)
| Facility Name | Line of Credit (LoC) only for GBDS (Government Bill Discounting System) |
| Purpose of the loan | For discounting Government promissory notes. |
| Eligibility Criteria | The entity must be eligible to obtain a promissory note from the Government under the Bill Discounting System (BDS). |
| Upper loan limit | 25% of the eligible capital base of the Corporation as appearing in the latest audited financials of the Corporation. (Relaxation on this limit is available for State PSUs on a case-by-case basis in the public interest.) |
| LOC Validity | 5 years (subject to annual renewal). |
| Processing Fee | 0.25% of the sanctioned Line of Credit plus GST, subject to a minimum of Rs 10,000 plus GST and a maximum cap of Rs 5 lakh plus GST. |
| Upfront Fee | Nil |
| Internal Credit Rating | Not Applicable |
| Facilities under ‘LOC only for GBDS’ | Government Bill Discounting Facility. |