The Purchase Order Financing Agreement is essential for businesses operating in Nigeria that require working capital to fulfill customer orders but lack immediate funds for procurement or production. This document type is particularly relevant when a company has received substantial purchase orders from creditworthy buyers but needs financing to execute them. The agreement, governed by Nigerian law and compliant with local banking regulations, establishes the terms under which a financial institution provides advance funding against these purchase orders, typically ranging from 70-80% of the order value. It includes comprehensive provisions for security, repayment mechanisms, monitoring arrangements, and risk mitigation measures, while ensuring compliance with Nigerian financial regulations including BOFIA 2020 and CBN directives. The document is structured to protect both the lender's interests through various security mechanisms and the borrower's ability to execute their business operations.

1. Parties: Identifies the finance provider, the client (borrower), and any guarantors

2. Background: Sets out the context of the agreement, including the client's business and purpose of the financing

3. Definitions and Interpretation: Defines key terms used throughout the agreement and interpretation rules

4. Facility and Purpose: Details of the financing facility, including amount, purpose, and disbursement mechanisms

5. Conditions Precedent: Prerequisites that must be satisfied before the facility becomes available

6. Purchase Order Requirements: Criteria for eligible purchase orders and verification procedures

7. Representations and Warranties: Standard and specific declarations made by the client regarding their business and the transaction

8. Security and Collateral: Details of security arrangements and collateral requirements

9. Disbursement Mechanics: Process for requesting and receiving financing against purchase orders

10. Fees and Interest: All charges, interest rates, and payment terms

11. Repayment Terms: Repayment schedule and mechanisms

12. Covenants: Ongoing obligations of the client during the facility term

13. Events of Default: Circumstances constituting default and consequences

14. Enforcement Rights: Lender's rights and remedies upon default

15. Governing Law and Jurisdiction: Confirms Nigerian law as governing law and jurisdiction for disputes

16. Boilerplate Provisions: Standard contractual provisions including notices, amendments, and assignment