A CIDB Financial Sponsorship is a cash guarantee or financial undertaking made available to your company by a third party for future construction projects.
It can be used to boost your net assets value on the financial statements, especially in instances whereby, your CIDB application was rejected as a result of a low net assets value as reflected on the financial statements.
Please note, contrary to popular belief, a financial sponsorship is NOT compulsory for CIDB upgrade applications especially if you have already got a good score on the financial statements submitted to the CIDB.
The cidb will recognize any of the following as a financial sponsorship
- A copy of a bank guaranteed cheque issued in the name of your company.
- A financial guarantee issued by a reputable institution registered with the FSB.
- A maximum of 15% of the net assets value reflected on the financial statements of a private sponsor, if sponsor has a 0% controlling interest in the applicant.
- 100% of the available excess capital if sponsor is registered on the CIDB’s database.
- 100% of the required available capital if sponsor holds more than 50% of a control stake within the applicant.
- 75% of the required available capital if sponsor holds less than 50% but more than 25% of a control stake within the applicant.
- 50% of the required available capital if sponsor holds less than 25% of the control stake in the applicant.
- 15% of the required available capital if the sponsor holds 0% control stake within the applicant.There are 2 broad categories of financial sponsor ships.The first category is in the form of a bank guaranteed cheque or an undertaking taken by a financial institution registered with the financial services board. If this type of financial sponsor ship is to be presented to the CIDB, a simple written description on your company’s letterhead together with its accompanying documentary proof such as the photocopied cheque or the financial acceptance letter issued by the financial institution can suffice to be forwarded to the CIDB.The second category is the financial sponsor ship made from another company such as a close corporation or a PTY. If you get a sponsor ship of this type, the evidence required by the CIDB will consist of annual financial statements together with a board or members resolution passed by the company’s directors to that effect.
These documents must be submitted to the CIDB as documentary proof of the financial sponsorship.
The Rand value of the maximum financial sponsorship value recognized by the CIDB is added to the existing net assets value of your company in order to determine your new available capital.
Available capital is defined by the CIDB as your net assets value which consists of the fair Rand value of your assets such as construction plant, equipment, motor vehicles & materials etc less total liabilities.
The higher your net assets value, the greater your available capital and as such, the greater the score on your CIDB rating.
