The Energy Access Relief Fund (EARF) will provide relief funding to viable energy access companies in sub-Saharan Africa and Asia that are facing disruptions caused by COVID-19.
New York City, September 23, 2021 — Social Investment Managers and Advisors (SIMA) is pleased to invite applications for the Energy Access Relief Fund (EARF), which has a target closing of $84 million by end of the year. Companies in sub-Saharan Africa and Asia Pacific that are having more than 50% of their annual revenues deriving from energy access activities are encouraged to apply. EARF is actively looking out for applicants having an annual revenue in the range of $75k to $50M. Companies operating predominantly in the business of Solar Home Systems (SHS), Solar Productive Use, Clean Cooking and Mini Grids will qualify.
Even after 18 months after the onset of COVID, many companies are still facing business threats caused by COVID related disruptions including supply chain disruptions, increasing commodity prices, and slower sales and collections from the bottom of the pyramid customers, who are facing economic hardship resulting from intermittent lockdowns and restrictions in movement. As per SIMA’s estimation, about 77% of the small and medium-sized companies that have applied to the EARF so far are facing liquidity crisis, and with limited access to capital, these companies are struggling to fund local jobs and operating expenses for their business continuity. EARF aims to support these companies by providing them a relief loan and reducing liquidity stress within the shortest possible time.
EARF will provide to all qualifying applicants a subordinated and collateral free loan with an interest rate in the range of 2% to 5% in USD, medium tenure of up to 3.5 years and at least 2 years of principal moratorium. The loan will provide subordination to existing senior debt lenders and has also proven to provide comfort to follow up equity investments in the sector.
SIMA, the Fund Manager of EARF, has undertaken the task of processing hundreds of applications and is estimating to provide relief loans to about 90-100 companies. So far, 33 companies have been approved by the EARF’s independent investment committee, leaving room to support another 60-70 companies in the next 6 months. As EARF’s initial closing of $68M is expected to expand to $84M by end of the year, the support may increase to a total of 100-120 companies.
While SIMA has been receiving hundreds of applications, the innovative underwriting mechanism designed by SIMA will reduce the time of processing these applications. A Relationship Manager will be assigned to an application, and he or she is expected to provide a loan to an applicant in as less as 6-8 weeks provided the applicant submits a comprehensive application.
“We are receiving hundreds of applications, and we are trying to prioritize those companies that have made a comprehensive application by submitting all the requested information. The applicants meeting the eligibility and underwriting criteria will qualify for a relief funding, which will be provided in 2-3 tranches depending on their business requirements” said Asad Mahmood, CEO of SIMA Funds
Given the huge demand of relief loans, the applications are processed in two phases. In Phase-I, all the potential borrowers are encouraged to assess themselves of the initial eligibility criteria and apply at https://simafunds.com/fund-management/earf/. The successful applicants in Phase-I are invited to Phase-II. Odyssey, a technology partner to EARF, will sent invitations to successful applicants, inviting them to Phase-II. In this phase, the applicant is requested to submit detailed business information, and all applicants are assigned a Relationship Manager (RM) by SIMA, who will assess their applications against EARF’s underwriting criteria. The RM will engage with the qualifying applicant to understand the business needs, conduct Due Diligence, and will further discuss the application with both internal and external investment committee. The applicants approved by both the committees will get an EARF loan in the subsequent 2-3 weeks.
As the applications are processed on a rolling basis, the prospective borrowers are encouraged to apply at the earliest to be considered for EARF credit. While EARF understands that many applicants are small and medium sized companies with various business models, a special care is taken to assess an application based on the underlying business model. In addition to providing FAQs, EARF also provides client support, clarifying queries sent to earf@simafunds.com.
SIMA has been developing technical assistance, particularly for the smaller borrowers, to build up their capacities and to help the EARF meet its social objectives. Furthermore, SIMA has also implemented a gender lens into the investment approach, providing extra support to companies that are led, managed, or owned by women.
TO APPLY: https://simafunds.com/fund-management/earf/
CONTACT FOR QUERIES: earf@simafunds.com