Small and medium-sized businesses will have access to cheap secured loans from banks, starting today, as the state prepares to improve their survival.
It was after Cabinet Secretary of the Treasury Ukur Yatani (on the picture) officially unveiled a credit guarantee scheme that will allow small businesses affected by the pandemic to access cheap loans from seven local banks.
The lenders are KCB, Co-operative Bank, Absa Kenya, NCBA, Diamond Trust Bank, Stanbic Bank and Credit Bank.
Mr Yatani said yesterday that measures to start the process that will see micro, small and medium enterprises (MSMEs) borrow money have been finalized, with companies now ready to start applying for the loans.
“With reduced turnover and disruptions in the market and supply chains, many MSMEs were, and still are, unlikely to attract affordable, quality credit under traditional arrangements. Interventions are needed to cushion the impact of Covid-19 on MSMEs, ”Yatani said yesterday.
The 3 billion shillings credit guarantee program is part of the 58 billion shillings the government will inject into the economy – breathing new life into key sectors that have been devastated by the pandemic.
The National Assembly has since earmarked the money for the deployment in the current fiscal year ending in June 2021.
The government expects to increase allocations to the scheme to Sh7 billion in the next fiscal year.
The borrower must, however, be registered with the county government and hold a valid business license or business license – a requirement that is addressed in the Financial Administration (Amendment) Bill, 2020.
The new regulations on the credit guarantee system aim to reduce the risks of unsecured small business bank loans.
Mr Yatani said the Kenya Mortgage Refinance Company will also play a key role in maintaining adequate liquidity among the major providers of residential mortgages, adding that banks and Saccos will also play a vital role in the credit guarantee program. .
KCB Group Managing Director Joshua Oigara said the program would be extended to 33 other banks to secure support for many MSMEs.
“With this program, we will see almost 30 or 40 percent of our loans go to this important segment of our economy, knowing that the industry lends 2.5 trillion shillings,” said Oigara, who is also chairman of the Kenya Bankers Association.
“The ambition is to reach the entire banking sector.