Direct Lending

The Direct lending product targets youth (18-34 years) in existing formal businesses. It is strictly for financing business expansion. This may include working capital financing and income generating assets.

Features of direct lending

(i) Loan amount

The amount of Loan will be a minimum of Kes.100, 000/= and a maximum of Kshs 2,000,000 (Two Million Kenya Shillings). Loans above Kes.100,000/= must be secured by tangible assets. For loans of Kes.100,000/=,security may include chattels, stock and business assets.

(ii) Loan term

The loan term will vary as follows:

• Upto Kes.300,000/= :Maximum of 3 years
• Upto Kes.1,000,000/= :Maximum 5 years
• Above Kes.1 million/=: Maximum of 6 years.

(iii) Pricing

• YEDF will charge an interest rate of 8% Flat per annum.
• A loan application fee of 1% of the loan amount will be charged upon approval of a loan facility. This will be netted off the loan amount at disbursement. The amount will take care of the pre-disbursement processes, including training.

iv) Insurance

• All borrowers must be insured against death and permanent disabilities. In addition, all collateral will be covered against fire, death (livestock) and theft.
• The borrower will bear the cost of insurance.

(iv)  Collateral.

All loans will be secured, as follow:

• Loans of Kes.100,000/= will be secured by flexible security such as chattels, stock, business assets and/or guarantee.
• All loans above Kes. 100,000/= will be fully secured by tangible assets such as Financed Capital Assets/Machines, car logbooks, landed property, lien on treasury bills, bonds and shares and undeveloped property . Other forms of securities may be considered. YEDFB will endeavour to observe flexibility in determining appropriate collateral.

For the purpose of this requirement, the following security discounting margins will be applicable:

a)      Chattels:

• Business and household goods will be discounted at 50%.
• Hypothefication of stock will be at 20%

b)       Car Logbooks:

• Newly registered Vehicles(0-5 yrs) will be discounted at 80%
• Used Vehicles (up to 8 years) will be discounted at 70%.

c)      Lien on treasury bonds/bills and shares: 80%

d)     Landed Property:

• City Urban(Mombasa/Nairobi and its environs):90%
• Urban Town(Nakuru, Eldoret, Kisumu, Nyeri, Thika, Malindi):80%
• Rural Urban:50%
• Undeveloped Property:50%

v) Documentation

• Youth Business Loan Application Form
• Loan appraisal Form
• Loan insurance form
• Chattels document, where applicable
• Guarantee Form where applicable
• Loan offer letter
• Loan Repayment Schedule
• Copy of Title/Relevant proposed security document
• Site visit report

vi)  Mode of disbursement/repayment

The Loan proceeds will be disbursed by cheque in the name of the borrower. The loan will be repayable on a monthly basis through cash deposit into the Fund`s account as advised in writing.