Direct loans for financing of customers' capital expenditures are used for financing of certain types of capital assets, e.g. for construction of buildings and structures, purchase of equipment and vehicles. As a rule, terms and conditions of such loans and repayment procedure thereunder mirror performance life and depreciation period of such assets. Normally, the Bank advances such loans for a term not exceeding five years, although in some cases (for example, where certain loan facilities are advanced for the purchase of imported equipment) it may be longer. Depending on the project, potential borrowers are offered loans or non-revolving loan facilities. Such loans are as a rule secured by a pledge of the asset to be financed or other capital assets.
The Bank is able to finance purchases of imported plant and equipment by funds extended by overseas banks under guarantees of national export credit agencies of exporting countries (e.g. HERMES, COFACE, SACHE, etc.). In this case, a loan amount may be up to 85 percent of the import contract value with a loan life for certain types of equipment of 10 and more years. The Bank is funding equipment purchases from the USA and the majority of European nations.
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