AVAILABLE FINANCING OPTIONS FOR YOUTH SME's AND STARTUPS.
Since the advent of the Covid-19 pandemic the Government of Kenya has been tinkering with a raft of measures aimed at curbing the spread of the ravaging virus. Some of the measures the government came up with included but not limited to; ordering the closure of some businesses, reducing the number of business/working hours and restriction of movement into and out of specified areas within and out of the country.
Kenyan youth, who make up about 30% of the population, have continued to suffer from the impact of these containment measures since March 2020. Most Small and Micro-Enterprises in Kenya are owned and, or, run by the youth. For these SMEs and other startups to grow they require adequate funding and an enabling environment to thrive. The Covid-19 pandemic hasn't provided such an environment since most of the measures to contain it led to closure of most startups, massive job losses and scaling down of operations in most business enterprises.
As part of the recovery strategy, these startups and SMEs require funding to stay afloat and, or, grow.
There are a number of financing options specifically made available for the youth in Kenya. Below are some of these options and the procedure to acquire them:
1. The Youth Enterprise Development Fund.
The Youth Enterprise Development Fund is a state corporation under the Ministry of Public Service, Gender and Youth Affairs. The Fund seeks to create employment opportunities for young people through entrepreneurship and encouraging them to be job creators and not job seekers. It does this by providing easy and affordable financial and business development support services to youth who are keen on starting or expanding businesses.
The fund provides loans to youth enterprises, provides business development services to youth owned enterprises among others.
Loan Products
(A) Vuka Start Up
- Advanced to youth with alternative verifiable income and business plan.
- Youth can access up to Kshs. 500,000.
- The loan is fully secured by conventional security.
Vuka Expansion Loan
- From Kshs. 100,000 to Kshs. 5,000,000.
- Attracts an interest of 6% and a one-off management fee of 1% netted off from the loan at disbursement.
- Grace period of one month.
- Loan of Kshs. 100,000 will be secured using chattels, stock and business assets. Loan above Kshs. 100,000 will be secured by conventional security.
Vuka Asset Financing
- The Fund will finance 70% of the value of the assets/equipment being purchased.
- Additional security will be provided in addition to the asset financed.
- Loans of Kshs. 100,000 will be secured using chattels, stock, business assets and/or guarantees. Loans above Kshs. 100,000 will require conventional security.
- In the case of motor vehicles, the Fund will finance up to 90% of the value of motor vehicles (including PSVs, tuktuks & motorcycles) being purchased and must be new. Used motor vehicles shall not exceed 8 years of age. The financed motor vehicle will be fitted with a tracking device and comprehensively insured
(B) Constituency Based Loans
These loans support young people start income generating activities at the constituency level. Some of the products here include;
1. Rausha
Rausha is a group loan for startup businesses or other income generating activities. Loan amount is Kshs. 100,000. Rausha loan has a three-month grace period. Repayment will be made in twelve (12) equal monthly instalments.2. Inua
Inua is a business expansion loan for groups. It is advanced to groups with running businesses. Groups which have fully repaid Rausha or loans from other institutions can apply for Inua. Loan amount starts from Kshs. 200,000 and groups can progressively graduate up to Kshs. 1,000,000.3. Special
Special is available only to groups running business projects that generate money on periodical or pre-determinable irregular periods. It will be available for:- Agricultural production-horticulture
- Livestock trading or fattening
- Fish farming
- Poultry (broiler) projects
- Supplies (specific)
4. Smart
Smart is available to individuals belonging to a group that has benefitted from YEDF and repaid its loan. It graduates group members to individual borrowers.The borrower could be a startup or for expansion.
Conditions:
- Be a member of a group and be recommended by 75% members of the group
- Minutes of the group indicating authority to borrow and guarantee the loan must be attached as part of the application documentation to the YEDF head office.
- A maximum of 80% of the group members shall borrow at the first instance. Subsequent funding to the next batch of members (20% of the members not previously financed) shall be after two instalments on the first loans have been paid.
(C) LPO Financing
Support young people participating in government tenders
LPO Financing Application Form
BID/BOND Loan Application form
For more information visit the Youth Enterprise Develpment Fund website:http://www.youthfund.go.ke/
2. Uwezo Fund
Uwezo Fund is a flagship programme for vision 2030 aimed at enabling women, youth and persons with disability access finances to promote businesses and enterprises at the constituency level, thereby enhancing economic growth towards the realization of the same and the Millennium Development Goals No.1 (eradicate extreme poverty and hunger) and 3 (promote gender equality and empower women).
Uwezo Fund offers loans for first time borrowers through the Wezesha Loan.
Wezesha loan is a constituency-based loan intended to finance first time borrowers’ projects and enterprises. The loan amount ranges between Kshs. 50,000 to Kshs.100,000.
Uwezo Fund Loan Application Form
For more information visit Uwezo Fund Website:https://www.uwezo.go.ke/
3. The Kenya Youth Employment Opportunities Project (KYEOP)
Kenya Youth Employment and Opportunities Project (KYEOP) is a transformational project that aims to empower and uplift the well being of the youth in Kenya by equipping them with essential training, internship, and business grant opportunities.
KYEOP has two youth business grants;
- Support for self-employed- Provides Grants and Business Development Services (BDS) to the youth who are in or want to begin a business with a 40,000 business grant or coaching on running a business. To learn more visit : http://katz.co.ke/kyeop/business-support/
- The MbeleNaBiz Business Plan Competition aims to expand new and existing youth-led enterprises by providing them with grant funding of either Ksh. 900,000 or Ksh. 3.6 million if the business idea has the potential of creating jobs. To learn more visit: http://www.mbelenabiz.go.ke/
The youth who intend to grow their businesses should utilize these grants and even the loan facilities listed above that are offered at very low interest rates. Equally important is the need to have as many registered youth groups in order to support each other in this journey towards youth empowwerment and the realization of Sustainble Growth in line with the Sustainable Development Goals (SDGs), more especially Goal 8: Decent Work and Economic Growth.
Twitter @steve_Momanyi21
Good read.
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