Vital Capital has launched a new debt facility providing loans to promising businesses in sub-Saharan Africa to help them get through the coronavirus pandemic. The Vital Impact Relief Facility will dedicate US$ 10 million, offering firms immediate access to capital to weather the economic consequences of the virus while building a bridge to realizing their visions of becoming prosperous companies that can benefit millions of Africans.
With foreign direct investment globally expected to fall by 30%-40% as a result of COVID-19, the potential economic crisis facing Africa is severe and companies offering essential services in the developing world are among the most vulnerable to the coming financial shocks. With millions of people’s livelihoods disrupted with a disproportionate impact on the poor, it’s a situation that demands bold and immediate action. This is why we have announced an emergency debt facility to help such companies continue to offer their critical services and get them through the coronavirus pandemic.
We are prepared to double down on our impact approach, seeking to help companies continue to deliver essential products, services and infrastructure that provide decent and quality jobs for the population.
Criteria for business
The Vital Impact Relief Facility is offering debt for companies that meet the following criteria:
Geography – We are initially launching in Kenya and Uganda. In the coming weeks and months, we will expand into Cote d’Ivoire, DRC, Senegal, Angola and Ghana.
Sectors – We will primarily target companies active in our strategic sectors, such as healthcare, agro-industry and processing, sustainable infrastructure and education.
Loan size – Between US $800,000 to $1.2 million.
Company revenues – Most businesses with an EBITDA above $1.5 million will qualify. Moreover, as this facility is intended to support businesses that would have grown regardless this global crisis, we require that companies demonstrate year on year EBITDA growth for the last three fiscal years.
Impact – At the core of every investment and decision we make at Vital is our impact mission. We utilize an outcomes-based approach, seeking to invest in companies with products or services that improve economic, personal and social well-being for low to middle-income communities in sub-Saharan Africa. See Our Impact page for more on our impact criteria.
ESG – To Vital, being a responsible investor is a pre-condition for being an impact investor. Vital’s ESG management systems are therefore comprehensive and guided by the IFC’s sustainability framework and standards. ESG factors are part of our decision making and investment monitoring processes throughout the entire investment cycle.
For further details, see the Relief Facility’s Financing Policy and Criteria.
What is your expected average loan?
We aim to provide loans between US $800,000 and $1.2 million.
What should the financial performance of my business be to qualify for your loan?
Given that at this stage, we will seek to provide a minimum of $800k per loan, most likely only businesses with an EBITDA above $1.5 million will qualify. Moreover, as this facility is intended to support businesses that would have grown even further had this crisis not happened, we require that you demonstrate year on year EBITDA growth for the last three fiscal years.
How do I apply for a loan?
Please review our Financing Policy and Criteria (link in the criteria above). Should your venture fit with our criteria we welcome you to submit an application.
When can I expect disbursement after applying?
We will strive to provide a first response within a week from receiving your application and we expect the overall process to take around 30 days.
What sort of collateral should I anticipate?
We will look at collateral provisions on a case by case basis. However, we acknowledge that some businesses might not have collateral readily available due to prior mortgages and on its own, that would not exclude businesses from being considered. In fact, this is the reason why we will look at each opportunity on its own.
In what currency will your loans be?
At this stage, we are only able to consider USD loans.
What interest charge should I expect?
We look at each company on its own and seek to adjust our interest rates according to both your company’s needs and market considerations. As impact investors, we will strive to provide capital at the most competitive rate.
What purpose can the loan be used for?
The Vital Impact Relief Facility is intended to support companies going through this difficult time. As such, our facility is directed towards working capital requirements.
What is the tenure of the loan? Is there any grace period?
We are flexible. We will provide loans of up to 48 months and, in specific circumstances, these can have grace periods.
If my business strives, will I be able to repay the loan early?
Yes, absolutely. Once your business strives, our job is done.
I have existing debt. Will I still be able to borrow from the Facility?
Yes. Though please bear in mind that we are witnessing unprecedented and unpredictable times and, therefore, we will only seek to lend when your financials allow the business to take on additional debt. This means that we are looking at businesses with a relatively low debt / EBITDA ratio. We do not want your business to default on its current obligations because of our loan.
Can you support our business beyond providing just debt?
Yes, absolutely. Our investment team and consultants will be available to support your business throughout the journey we embark on. In fact, we will require that you provide us with monthly reports so that we can proactively help you.
My organization would like to join the Vital Impact Relief Facility as an investor, how can we get involved?
We are excited to extend the available pool of capital for promising businesses. Please reach out to us for more information at firstname.lastname@example.org
What is impact investing?
Impact investing can be defined as investments made into companies or organizations with the intent to contribute to measurable positive social or environmental impact, alongside financial returns. Impact investments have the potential to make a significant contribution to important outcomes by addressing challenges related to, for example, economic inequality, access to clean water and sanitation, agriculture productivity, and natural resource conservation.
How do you define impact?
Material effects experienced by people and the planet, both positive and negative. Effects are material if they are deep and/or occur for many people and/or last for a long time, relate to important positive or negative outcomes and occur for people (or planet) who are not well-served in relation to those outcomes.
What does ESG stand for?
Environmental, Social and Governance Criteria. A set of standards for a company’s operations that socially conscious investors use to screen investments.
How do you assess ESG risks?
From screening, due diligence to investment management and exit, we assess a company’s adherence to the IFC’s Sustainability Framework, including its Performance Standards (seeking to add value and minimize risks in terms of labor, resource efficiency, community, land resettlement, biodiversity, indigenous peoples and cultural heritage) and Environmental, Health and Safety Guidelines.
Agribusiness, Clean technology and energy, EdTech, Education, Green transportation and electric motors, Healthcare, HealthTech, Smart city solutions, Waste management and recycling, Water, sanitation and hygiene