Commercial Banking - Small and Medium Enterprises


Short Term Finance

Short term loans are facilities offered for the period of less than one year. These are generally used by the businesses to finance their working capital requirements. These short term loans are intended to finance inventory, account receivable and seasonal business needs. The short term finance comprises of the following:

  1. 1- Overdraft – Running Finance

Running finance or overdraft facility is a short term finance provided to customers to fulfill their working capital needs by allowing withdrawals from their account in excess of the credit balance, maintained with the Bank.

Salient Features

  • Available for working capital requirements e.g. purchase of stocks, raw material etc.
  • One year tenor. (Renewable upon expiry).
  • Principal with multiple withdrawals and deposits to be adjusted on or before expiry.
  • Mark-up to be paid on monthly/quarterly basis.
  • Facility will be primarily secured  against mortgage of property and/or hypothecation of stock.

2- Pledge Financing

The pledge financing facility is offered to the customer against delivery of goods to the Bank. The goods are held as security and are placed under the custody of the Bank’s approved Mucaddum. Drawing power is determined on the basis of value of the goods placed under pledge along with stipulated margin.


Salient Features

  • Available for procurement of various local commodities, including (but not limited to) purchase of rice, wheat, yarn etc.
  • Each drawdown is required to be adjusted within a stipulated period along with proportionate mark-up.
  • Drawdown is allowed on receipt of goods for pledge
  • To be adjusted within six months (maximum).
  • Mark-up to be paid on monthly or quarterly basis as per agreement.

Short Term Trade Facilities

In order to facilitate trade business of SMEs, FBL offers a number of products to its customers

  1. a) Letter of Credit –Foreign & Inland

FBL offers to issue letter of credits (LCs) on behalf of SME clients for routing their imports through the Bank. A letter of credit (LC) is the assurance given by FBL to pay the beneficiary on behalf of the importer as per agreement, provided that certain documentary delivery conditions are met. Sight & Usance are two of the main types of LCs offered to the customers.

Salient Features

  • Facility offered for Import of goods from foreign countries and also for local purchases, where the seller requires a surety of payment.
  • LC – Sight: the assurance is given to pay at sight of the goods and the relevant documents are held by the Bank as security, until the same are retired by the applicant.
  • LC – Usance: where the assurance is given to pay at certain time or date on behalf of the customer. The imported goods are released to the applicant upon his acceptance to make the payment at maturity.
  • Tenor of Sight LC is 5 working days from date of presentation of documents and 180 days for usance LC.
  • Minimum Cash Margin is determined on case to case basis or as per requirement of SBP.
  1. Finance against Imported Merchandise ( FIM )

FIM is a short term facility offered by FBL to the importers for retirement of Sight-LC. The facility is given against the pledge of imported goods. FIM is settled thorough release of pledged goods against gradual or lump sum payments made by borrower.

Salient Features

  • Available for retirement of LC & procurement of imported commodities
  • Time period for adjustment is around 6 months (maximum)
  • Mainly secured through pledge of imported commodities
  • Mark-up to be paid on monthly or quarterly basis as per agreement.
  1. Finance Against Trust Receipt (FATR)

FATR is a type of import financing offered to FBL customers. In FATR deals, the imported goods are released to the importer on the basis of a trust receipt. This is a short term facility for financing imported goods.

Salient Features

  • Available for retirement of Sight LC or procurement of  commodities
  • Should be adjusted within 6 months (maximum)
  • Secured through trust receipt signed by the borrower.
  • Mark-up to be paid on monthly or quarterly basis as per agreement.

Export Finance Facilities

The exporters usually require financing for production and supply of goods as per their contracts with the buyers. In order to support the export business, Bank offers Pre & Post Shipment financing (own sources), SBP Refinance (Pre/post) and bill discounting facilities. The salient features of these facilities are as follows:

Salient Features

  • Available for catering working capital needs of exporters & manufacturers.
  • Financing is available in both local and foreign currencies (FE-25).
  • Standard Tenor is 180 days, but can be varied on the basis of contract.
  • Secured through lien over Export Contract/LC or Purchase Order (for Local manufacturer) in addition to other security that may be required by the Bank.
  1. Pre-shipment (own sources)

Pre-shipment Finance or ‘Packing credit’ is offered to exporters for catering their financing needs for purchasing, processing, manufacturing or packing of goods prior to shipment. In some cases, this facility is also used by local producers for financing supply to reputed buyers

  1. Post shipment (own sources)

Post-shipment (own) is the financing facility offered to manufacturers and exporters of goods after shipment of goods till the date of realization of export or local proceeds. Through post shipment finance facility, exporters and other local manufacturers obtain finance and run day to day business without waiting for sales proceeds from their overseas or local buyers.

Export Refinance Finance Facility under SBP

As per directives from State Bank of Pakistan, FBL offers Export finance facility under SBP ERF scheme to support export oriented companies. Both pre-shipment and post shipment finance facilities are available at subsidized rates communicated by SBP.

All major value added commodities exported from Pakistan are eligible for financing excluding exceptions identified by SBP.

(i) Pre-shipment & Post-shipment ERF (Part 1)

This is a transaction-specific facility offered by FBL to provide export finance to the exporters on case‐to‐case basis for pre or post shipments against firm export orders, contracts & LCs. The exporter is required to show export proceeds equivalent to the loan amount as performance.

(ii) Pre-shipment ERF (Part 2)

Pre-shipment ERF Part 2 is a specialized working capital facility available to traditional exporters for purchasing, processing, manufacturing or packing goods prior to shipment. Under this facility, a company can avail finance facility from the SBP equal to half of the export volume routed in the previous year, as long as the company shows export performance twice the utilized limit.

Bank Guarantees

Bank Guarantee is a binding undertaking given by the bank (the guarantor), to pay against the presentation of a written statement of the guarantee holder (the beneficiary), if a contract is not fulfilled by the customer (the applicant).

Salient Features

  • Different types of guarantees like Bid Bonds, Performance Bonds and guarantees against advance payments are offered by FBL.
  • Cash margin (varying from case to case basis) is required by the bank for offering guarantees.

Long Term Exposure

Long Term finance facility (LTF) is offered for financing fixed assets like immovable properties i.e. land and buildings, machinery, vehicles etc.  The loan is offered for pre-determined length of time, usually for more than 12 months. Repayments are required on monthly, quarterly or per mutually agreed repayment frequencies.

Salient Features

  • Available for catering the fixed assets investment needs of a business.
  • Tenor is usually 1-5 years
  • Repayments through equal monthly or quarterly installments including principal & markup.
  • Collateral can be the underlying fixed assets and/or mortgage of property