What this tool computes, and bank calculators do not

Six Algerian banks offer a public calculator: BNA, BEA, BDL, BADR, CNEP, Société Générale. The architecture is the same everywhere, an income, an age, a price, then a monthly payment out. They address the salaried buyer. For a project owner they are silent on what matters.

An investment loan is not described by its instalment. It is described by four quantities: the burden during the grace period, the principal genuinely left to amortise once the grace period ends, the total cost including every fee, and the effective global rate that finally makes two offers comparable. This tool returns all four.

The grace period: the variable that decides whether the project survives

A plant invoices nothing while it is being built. The grace period covers that gap. Its cost has to be known, and two radically different mechanics travel under the same name.

Under a partial grace period, the company pays the interest at each due date and the principal stays intact. Cash is called upon from month one, but the debt does not grow.

Under a full grace period, nothing is paid: interest accrues, is capitalised and is added to the principal. That is interim interest. On 40 million dinars at 6.34% with two years of full grace, it exceeds 5.3 million dinars. The principal to amortise rises from 40 to over 45 million. No bank calculator shows that figure. This one puts it on its own line.

The fees nobody displays

Between the rate quoted at the counter and the rate actually borne sit the arrangement fee, the commitment commission, insurance on outstanding principal, the FGAR or CGCI-PME guarantee commission, and the 19% VAT that applies to bank commissions.

Every one of those lines is editable in the form, because none is standardised: they are negotiated. Their effect shows in the effective global rate. That rate is computed by discounting the real cash flows, not by adding percentages together. On one side the principal received net of fees, on the other the instalments and add-ons.

This half-year's regulatory ceiling

The Bank of Algeria publishes excessive interest rates every half-year: beyond them, a loan is deemed usurious. These ceilings are the only official, public rate reference in Algeria, and the tool relies on them rather than inventing a schedule per bank.

The calculator infers the applicable category from the total term of the financing. Short term up to 2 years, medium term up to 7, long term beyond. It flags any rate entered above the threshold without forbidding it, because testing an unfavourable assumption is part of the job.

What the bank looks at once the simulation is done

A credit committee does not judge an instalment. It judges the project's ability to produce one. The first number an analyst computes is the debt service coverage ratio, forecast annual cash flow divided by annual debt service; below 1.2 the file goes back with a request for a longer term, a larger contribution or additional security.

Then come the coherence of the feasibility study, the credibility of the revenue assumptions, the tax and social security position, and the structure of the guarantees. The simulation opens the file; it never closes it.

Frequently asked questions

Going further

Your simulation holds. Will your file?

A favourable simulation does not make a bankable file. The credit committee judges the feasibility study, the coherence of the projections and the strength of the security. That is the firm's work.

Bank file preparation Feasibility study