Kenyans hoping to take advantage of the new Hustler Fund group loans must first repay any outstanding personal loans from the program, President William Ruto announced Thursday.
Speaking in Nyandarua County, Ruto said “A number of Kenyans are behind on repaying their loans. Money has been set aside for new business loans, but borrowers with overdue payments will need to become current on their accounts first.”
The government has allocated KES 10 billion for the Hustler Fund group loan product. The loans are intended to help small informal groups and micro-enterprises access financing to grow their businesses.
To qualify, groups must have a minimum of five members, each with an active mobile phone line and no history of defaulting on a Hustler Fund personal loan. The loans, ranging from KES 20,000 to KES 1 million, will carry a 7% annual reducing interest rate with a 1.5% default fee and a six-month repayment period.
In addition to the new group loan product, the Hustler Fund also offers an individual micro enterprise loan (IMELP) for Kenyans seeking financing to scale up solely owned businesses registered under the Business Registration Service.
To qualify for an individual micro enterprise loan ranging from KES 10,000 to KES 200,000, applicants must be Kenyan citizens over 18 with a national ID card and an active mobile phone line for at least 90 days. They must operate a formally registered business under the BRS and possess a KRA tax pin.
Individual borrowers cannot have defaulted on any previous Hustler Fund personal loans. Their credit scoring will also factor in consent-based sharing of financial information from mobile networks and financial institutions.
The IMELP loans carry the same 7% annual reducing interest rate and six-month repayment period as the group product. Five percent of the approved loan amount goes into a mandatory savings scheme for the borrower.
Since its launch last year, the Hustler Fund has disbursed over KES 22 billion in personal unsecured loans to informal borrowers and micro-enterprises.
The new group and individual micro enterprise loan products aim to expand financing to more small businesses in priority sectors like agriculture, retail and manufacturing.
According to the Hustler Fund website, 38,407 groups comprising 906,056 members have registered and completed the application process, with KES 125,351,441 disbursed so far. The groups have accumulated KES 6,267,572 in loan-supported savings accounts.