This document provides application guidelines for the window of applications for the Furniture Industry Challenge Fund a programme managed by the IDC on behalf of the dtic.

The objective of the Fund is to assist qualifying manufacturing SMMEs in the furniture industry to:

• Improve their competitiveness.
• Assist companies in distress to survive the current economic downturn.
• Increase the localisation of production activities within the value chain.
• Promote economic inclusion to support equitable economic growth.
• Maintain and increase current employment.

FICF is a concessionary loan programme that offers non-bank intermediaries (NBIs) up to R30 million of funding to on-lend to SMMEs in the furniture industry within the following subsectors:

• Mattresses and Bedding;
• Lounge and upholstered goods;
• Case goods – items of furniture based on board products, such a cupboard, tables, pedestals, display and storage units;
• Kitchen and built in units;
• Office and school furniture;

Note: SMMEs that will benefit are those that manufacture these goods and retailers will be excluded for funding under this Fund.

Applications can be made by existing NBIs that have a track record to on-lend to SMMEs within the targeted furniture industry.

NBIs with at least two years track record who have a sustainable business model will be eligible to apply. The application should therefore outline how it will provide finance to end beneficiaries that will lead to achievement of the objectives of the Fund.

The funds can be provided by the intermediaries to sustainable end beneficiaries (investees) as loans repayable within a specified period. These loans can be applied towards plant and equipment, working capital and other business-related costs.

NBIs should meet the following criteria:

• At least two years proven track record and capabilities in servicing the requisite targeted SMMEs within the furniture industry.
• Demonstration of a strong pipeline of transactions within the furniture industry sectors.
• Only available towards end beneficiaries that are within the furniture industry sector which include: Mattresses and Bedding; Lounge and upholstered goods; Case goods – items of furniture based on board products, such a cupboard, tables, pedestals, display and storage units; Kitchen and built in units; Office and school furniture; and any other furniture related business.
• The maximum funding per intermediary is R30 million.
• Proven financially sustainable business model.
• Fair, accountable, responsible and transparent intermediaries will be considered.
• Intermediaries must provide evidence of ability to provide detailed reports on performance of end beneficiaries.
• FIFC funding must be ring-fenced from other intermediary activities and not be pooled with other
• Funding from FIFC should not be used to replace existing loans.
• NBIs with clearly defined approval process that are followed to advance funding to end beneficiaries.
• NBI must be compliant with legislation such as NCR.
• NBIs must be socially and environmentally responsible, with established Environmental, Social and Governance (ESG) policies.
• NBIs must display ability to provide or source grant funding for pre and post non-financial support.
• Pricing to end beneficiaries should be advanced at rates that take into account the concessionary funding from FIFC.
• Investment criteria that will be applied to end beneficiaries should be provided by the NBI.
• A loan from FIFC will be provided to intermediaries which could be blended with other funds secured by the intermediaries in order to extend reach.
• Priority will be given to intermediaries that crowd-in match funding.
• Only South African owned and registered company will be considered.
• Black and/or Woman and/or Youth owned and managed intermediaries will be prioritized.

• Applicants are required to submit their proposals through this open window process. An application form is available on-line at idc.co.za/ficf. Applicants must fill in the application form, and submit attachments required. Applications will only be considered if email is received on time
• All applications received within the submission deadline will be checked for administrative compliance and only compliant applications will be scored and evaluated against the predetermined criteria as set out in this document.

There will be a threshold score to be achieved and these will be reviewed as follows:

• Scoring will be done to identify applications that best align with the FIFC requirements. Applications that meet a threshold score will be shortlisted and further information may be requested from applicant.
• Shortlisted applications based on the scores will be assigned to the FIFC administration team who will assess the application further and conduct a due diligence investigations which will include meetings with applicants, further information where required, as well as site visits.
• Due diligence reports will be compiled and submitted to the approving Investment Committee. The Committee will decide which applicant should be funded. Note: Due to limited available funding, not all applications that meet the threshold score will be funded. Approvals will be granted to applicants that are deemed to be the “best fit” with the FICF requirements and available funds.
• The FICF team will administer contracting once applicant has been approved by the Investment Committee.

The decision of the Investment Committee will be final and no correspondence will be entered into between the FICF administrative team and the applicant after the decision of the IC. Unsuccessful applicants will be informed of the outcome through a letter informing the applicant that the application was not successful. Successful applicants will enter into an agreement with the IDC and implementation can start as soon as the IDC and the applicant have signed the agreement.  

• During project implementation, the applicant will provide monthly progress reports to the FIFC Administration Team.

Should any approved project(s) not progress to implementation, funding could be withdrawn. It is therefore important for applicants to propose projects that are “implementation ready”.

The following should be included in an application:

• APPLICATION FORM – Application form available here. The application form should be accompanied by the following attachments:
• ATTACHMENT 1: HISTORIC AUDITED FINANCIAL STATEMENTS OF APPLICANT – Audited financials for the past 2 years.
• ATTACHMENT 2: MANAGEMENT ACCOUNTS – Applicant Management Accounts for the year- to-date.
• ATTACHMENT 3: FINANCIAL PROJECTION – Detailed financial projections for at least 2 years, done in Excel with detailed assumptions. The first year to be done monthly, and yearly thereafter.
• ATTACHMENT 4: FUND COMMITMENT AND DISBURSEMENT PROFILE – Template provided to be filled in full.
• ATTACHMENT 5: DETAILED FUND APPROVAL PROCESS
• ATTACHMENT 6: INVESTMENT CRITERIA
• ATTACHMENT 7: PIPELINE OF QUALIFYING TRANSACTIONS
• ATTACHMENT 8: CVs OF KEY TEAM MEMBERS
• ATTACHMENT 9: TEAM PROFILE – template provided to be filled in full
• ATTACHMENT10: CVs OF THE BOARD OF DIRECTORS.
• ATTACHMENT 11: ORGANOGRAM
• ATTACHMENT 12: SHAREHOLDING STRUCTURE – Shareholding structure and information on shareholders.
• ATTACHMENT 13: MATCH FUNDING – Detailed information on existing funders and terms of the funding.
• ATTACHMENT 14: An indication (signed letter) that the shareholder(s) are in support of the application.
• ATTACHMENT 15: An indication (signed letter) that the shareholder(s) are willing to provide guarantees.

The NBI on a monthly basis will be required to submit progress reports as per IDC’s specifications. The report to include the following:

• Portfolio information on the following:
  • Approvals as a percentage of Fund Size
  • Disbursements as a percentage of total approvals
  • Ratio of NPLs – as a percentage of the total debtors’ book exposure
  • Write off levels – as a percentage of total approvals
  • Arrear’s ratio – total arrears exposure as percentage of the total loan book.
  • Instalment conversion rate (i.e., percentage of repayments/instalments received versus the expected repayments/instalments due per debtor)
  • First instalment default rate (i.e., the percentage of clients who fail to meet the first instalment/repayment)
  • Collateral coverage – total collateral value as a percentage of the total facility amount)
  • Undertaking breaches – number of clients with undertaking breaches versus the total portfolio)
• A breakdown (a list) of the approved transactions indication at least the following information on each approval: Investee Name, Amount, Application of funds, brief project description, pricing, term of loan, status of the application; jobs created, location, shareholding by women/youth/black, BBBEE Level, current status of client indicating whether a client is on track, arrears, remedial actions, cancelled, written off, reasons for cancelations, write-offs, rejections and/or withdrawals.
• Portfolio limits reporting as will be agreed with Applicant an IDC.

If you have any queries, please contact Ms Bukelwa Zweni via email at the email address ficf@idc.co.za before 17 February 2023 (17h00). No queries will be responded to after this date.

• All documents submitted must be in English.
• Applications must be submitted via email to ficf@idc.co.za on or before the closing date.
• Only applications received through the prescribed process will be accepted.
• The IDC e-mail servers are configured to receive e-mails with attachments up to 50MB. In cases where e-mail and attachments size exceed 50MB, bids should be divided into more than one e-mail and the cover e-mail should state such division, with appropriate numbering of each email. The IDC will not download information from shared drives and will only accept emails.
• No late applications will be accepted.