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INTERNAL CONTROLS, SYSTEMS AND PROCEDURES
Direct Lending – Post Approval Amendments & Pre- Disbursement Process
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TABLE OF CONTENTS
1. DEFINITIONS AND ABBREVIATIONS ......................................................................................... 3
2. GUIDING PRINCIPLES ................................................................................................................ 4
3. POST APPROVAL AMENDMENTS & PRE- DISBURSEMENT PROCESS FLOW CHART ........ 6
4. ACCOUNTABILITY AND RESPONSIBILITIES............................................................................. 7
5. SUPPORTING NARRATIVE ......................................................................................................... 8
6. ANNEXURES.............................................................................................................................. 12
6.1. DECISION RECORD (COVER SHEET) .............................................................................................. 12
6.2. AMENDMENT MEMORANDUM .......................................................................................................... 13
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1. DEFINITIONS AND ABBREVIATIONS
Abbreviation / term Description / Definition
Approval An approval is only valid once the decision record has been
duly signed by all authorised signatories
CPs Conditions Precedent – these are the conditions that must
be met by the client before a disbursement is made
Disbursement A disbursement occurs when a pay-out is made from sefa to
the client’s and/or suppliers’ bank account
Decision Record This is a record that reflects the decision of the Credit
Committee as well as applicable covenants
Loan Sheet A document that is prepared to guide the legal unit when
drafting loan agreements
Material changes Changes that:
o negatively affect the viability of the client’s
business (e.g. changes in profitability ratios,
gearing and liquidity position of the business
enterprise, contract expiry date, etc.)
o alter the legal status of the client
o affect regulatory and/or industry compliance
PIM Post Investment Monitoring
Sanctioning authority Authority that is mandated to take decisions in terms of the
Delegations of Authority and/or other related documents
(e.g. Mancom, SME Credit, EXCO)
IO Investment Officer
HoR Head of Regions
RM Regional Manager
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2. GUIDING PRINCIPLES
This section outlines guidelines and principles that must be adhered to at all times when
managing facilities that have been approved but not yet disbursed:
Regional Offices are responsible for managing all approved facilities prior to
disbursement
The IO must ensure that the decision record reflects the CP’s as well as other relevant
covenants as set by the relevant Credit Committee
The IO must ensure that the CPs are clearly defined and can be practically implemented
before a loan sheet is prepared to draft the legal agreements
IOs will be responsible for managing the undrawn facilities
All sefaLAS tasks have to be completed in respect of facilities that have been approved
by the respective Credit Committees once a decision is taken by the relevant Credit
Committee
The IO must ensure that the relevant Credit Analyst has altered the status on sefaLAS
from “Credit Committee” to “Credit Committee Approved”
IOs must communicate with the approved clients on a weekly basis to ensure that they
are made aware of any material changes to the business operations.
A verbal confirmation with the client with respect to material changes is to be followed by
a written (email) communication
All changes to the business operations must be recorded on sefaLAS
Material changes must be compiled by an IO and be presented by the RM to the relevant
sanctioning authority for approval and/or noting
No disbursements will be made unless any material changes have been approved by the
relevant sanctioning authority
Upon receipt of an official request for disbursement from the client, an IO must write an
email to the Operations Hub unit informing the unit about such a request
The handover email drafted by the IO must alert the Administration Hub of any unique
circumstances that the Operations Hub must be aware of (e.g. purchase order or
supplier quote about to expire,)
Post Disbursement an email must be sent by the IO to the client advising of the PIM
official to be involved with the client going forward (the IO must copy the relevant Post
Investment Monitoring official with the email)
A handover memo is to be drafted by the IO and addressed to Head: PIM, when the first
disbursement takes place to be allocated to the relevant PM for the respective region.
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All facilities not disbursed within 6 months will lapse and the new application will have to
be lodged for approval in respect of the release of the unutilized facility
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3. POST APPROVAL AMENDMENTS & PRE- DISBURSEMENT PROCESS FLOW CHART
1. Confirm the
(approval)
decision of the
Credit
Committee
2. Ascertain that
the deal details
have been
accurately
captured and
uploaded on
sefaLAS
3. Liaise with the
client to establish if
there are any
changes to the
original application
4. Are there
changes to the
original
applications?
Yes
5. Draft a memo
seeking necessary
approvals
6. Present the memo to
the sanctioning
authority
7. Memo
request
approved?
No8. Inform the
client
Yes
10. Inform the
Operations Hub
about the details
of the approval
No
9. No
material
changes to
the client’s
business
11. Transfer
the file to the
Operations
Hub
Process Ends
Process Ends
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4. ACCOUNTABILITY AND RESPONSIBILITIES
A = Accountable / R = Responsible / C = Consult
Activity / Task IO RM HoR Credit
1. Confirm the (approval) decision of the Credit Committee R A
2. Ascertain that the deal details have been accurately captured on sefaLAS R A
3. Liaise with the client to establish if there are any changes to the original
application
R A
4. Are there changes to the original applications? R A
5. Yes – Draft a memo seeking necessary approvals R A C
6. Present the memo to the sanctioning authority R A
7. Memo request approved? R A
8. Yes – Transfer the file to the Operations Hub R A
9. No – Inform the client R A
10. No material changes to the client’s business R A
11. Inform the Operations Hub about the details of the approval R A
12. Transfer the file to the Operations Hub R A
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5. SUPPORTING NARRATIVE
Activity / Task linked to flow
diagram
Narrative
Tools
Document output
Turnaround time
1. Confirm the (approval)
decision of the Credit
Committee
IO need to liaise with Credit and get a
copy of the decision record and/or
minutes of the Credit Committee meeting
The IO must also inform the Operations
Hub to commence with the compilation
of the loan sheet which triggers the
drafting of legal documents – the
compilation of the loan sheet must
commence after the finalisation of the
decision record
Decision record
Minutes
48 hours (2
business days)
2. Ascertain that the deal
details have been
accurately captured on
sefaLAS
Upon receipt of the decision
record/minutes, IO need to verify that the
information on sefaLAS was correctly
captured in accordance with the signed
decision record
3. Liaise with the client to
establish if there are any
IO need to telephonically liaise with the
applicant on a weekly basis to establish
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changes to the original
application
the status of the applicant’s business
and establish when will the client request
the disbursement
Once Weekly
4. Are there changes to the
original applications?
The IO need to establish if there are
material changes to the client’s business
48 hours (2
business day)
5. Yes – Draft a Memo
seeking necessary
approvals
In case where there are material
changes, the IO must compile a memo
outlining such changes and forward to
the RM for sign-off
The RM must consult with Credit in
cases where there are material changes
and (Credit) must be co-signatories to
the memo that outlines the material
changes before it’s presented to the
Sanctioning Authority
Memo template
6. Present the memo to the
sanctioning authority
The RM must then present such
changes to the relevant sanctioning
authority
24 hours (1
business day)
7. Memo request approved? Upon approval of the amendments by
the sanctioning authority, the IO must
transfer the file to the Operations Hub
8. Yes – Transfer the file to
the Operations Hub
9. No – Inform the client In cases where the amendments are not
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approved by the sanctioning authority,
the IO must inform the client and the
client have the right to appeal if not
satisfied with the sanctioning authority’s
decision
24 hours (1
business day)
10. No material changes to
the client’s business
In cases where there are no material
changes, the IO must handover the file
to the Operations Hub Unit and inform
the client regarding the PIM official who
will be responsible for managing the
client’s account
11. Inform the Operations
Hub about the details of
the approval
12. Transfer the file to the
Operations Hub –
Process Ends
Once all the material changes have been
approved (if any) and the IO has
communicated with the client regarding
the PIM official who will be handling the
application, the file must be transferred
to the Operations Hub.
The RM will have to draft an email to the
Operations Hub informing the unit that
the client has made a request for
disbursement and there are no material
changes in the business that that have
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not been approved by the Sanctioning
Authority.
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6. ANNEXURES
6.1. DECISION RECORD (COVER SHEET)
Name of the Committee: (SME Credit Committee / Mancom)
Membership:
Committee Members Members - see signed record sheet
Date : (of the Credit Committee meeting)
Declaration of Interest:
Name Nature and extent of Interest Action Taken Signature
Represented at Credit Committee by: (Name of Investment Officer and Credit Analyst)
Approved Declined Deferred Recommended to Mancom
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6.2. AMENDMENT MEMORANDUM
INTERNAL MEMORANDUM
TO : Indicate the relevant approval authority
FROM : Indicate the name of the regional office
DATE : Date the memo was drafted
SUBJECT : Name of client
1. BACKGROUND
a) Client Brief Background and Nature of Business (Here provide brief details of the
company, when was it established & what does it do)
b) Attach extract of the minutes where the facility was approved
c) sefa’s Involvement (Here provide details of the sefa funding, when was it approved,
how much was approved, what type of funding & what was it to be used for)
Approval
Date
Amount
Approved
Undrawn
Amount
Current
Exposure
Facility
Type
Application of
Funds
Security Details
Security Type Value Status (indicate whether registered)
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2. REQUEST
a) Outline the nature of the material change
3. MOTIVATION
a) Motivate the impact of the material change to sefa’s risk exposure
4. RECOMMENDATION
a) Tabulate your recommendation(s)
Signature Date
Compiled by:
(Name of Investment Officer)
Supported by:
(Name of Credit Analyst)
Recommended by:
(Name of Regional Manager)
Approved by:
(Sanctioning Authority
Chairperson)