What lenders look for in a contractor's financing pack

Winning a tender is one thing. Funding mobilisation, issuing the guarantees the employer asks for and carrying the project until payment certificates are paid is another. For many contractors in Kenya and across East Africa, that second step runs through a bank or financier, and it starts with a pack of documents.

A good financing pack doesn't try to impress. It answers the lender's questions in the order they are asked, with evidence that agrees from one page to the next. Here is what that usually means in practice.

Start with the contract

The contract is the asset behind most contractor facilities, so lenders read it first. Expect to provide the signed contract or letter of award, the bill of quantities and the conditions that govern payment: how work is certified, payment periods, advance payment terms and retention.

Lenders also want to know who the employer is and how reliably they pay. A public body, a donor-funded project and a private developer each carry a different payment profile, and the pack should say which one you're dealing with. If the contract is still at tender stage, include the tender documents and a note of what changes at award.

Show you can deliver

Next comes capacity. A lender is less concerned with whether the job is profitable on paper than with whether your firm can complete it. Useful evidence includes a short company profile, completed projects with completion certificates or employer references, CVs for the project manager and key site staff, and a schedule of plant and equipment, owned or hired.

Include your current workload too. A contractor carrying several large jobs at once will be asked how this one fits alongside them.

Make the numbers agree

Financial statements are standard: audited accounts where you have them, recent management accounts, bank statements and a schedule of existing loans and facilities. A current tax compliance certificate from KRA is commonly requested, and a missing one can stall a file on its own.

The most useful single document is a project cash-flow model. It should show mobilisation costs, the timing of interim payment certificates, retention, and how the facility is drawn and repaid. Build in a realistic delay between submitting a certificate and being paid; lenders will test that assumption whether you do or not.

Then check that the model, the accounts and the contract tell the same story. A turnover figure in the company profile that doesn't match the accounts, or a contract value that differs between documents, creates questions that take weeks to resolve.

Prepare guarantees and cover early

Many contracts require an advance-payment guarantee before the advance is released and a performance guarantee at or soon after signing. The bank issuing them assesses your business much as it would for a loan, so treat guarantee applications as part of the same pack rather than a separate errand.

The same goes for insurance. Contracts usually specify the cover the contractor must hold, such as contractors' all-risk, third-party liability and work-injury cover for employees, and lenders often ask to see that it is in place or arranged. Cover is placed through licensed insurers and brokers; what matters for the pack is evidence that it matches the contract.

Complete the compliance file

Every lender runs know-your-customer and anti-money-laundering checks. Have company registration documents, directors' identification, beneficial ownership details and board resolutions ready before you apply. Missing KYC documents are one of the most avoidable causes of delay.

1. Q1

   Can you deliver?

   • Contract and bill of quantities
   • Track record and references
   • Key staff, plant and workload

2. Q2

   Can it repay?

   • Financial statements and tax status
   • Project cash-flow model
   • Payment terms and retention

3. Q3

   What if it goes wrong?

   • Guarantees and security
   • Insurance the contract requires
   • KYC and compliance file

↓One consistent pack for the lender's credit review

Common gaps to close first

• An unsigned contract, or a letter of award that has lapsed.
• A cash-flow model that assumes every certificate is paid on time.
• Accounts more than a year old, with no management accounts since.
• No plan for the guarantees the contract requires.
• Insurance requirements in the contract that nobody has checked against existing policies.
• Key staff named in the tender who have since left.

How we help

Epiidosis Africa prepares bank-ready financing packs for contractors. We review your documents, build or check the cash-flow model, prepare the guarantee applications and introduce you to independent licensed banks and financiers. Where the project needs it, our other practices support the staffing plan and the insurance review.

We do not lend, and we can't promise approval. The credit decision rests with the lender; our job is to make sure the application in front of them is complete and credible.