Frequently Asked Questions
The following are some FAQs on the Inuka Enterprise Program. Please contact your bank’s SME Relationship Manager for more information.
What is the SME Program?The Inuka Enterprise Program consists of the SME Support Facility and MSME Capacity Building or technical assistance program.
What is the SME Support Facility?
To enhance financial access for SMEs, including women-and youth-owned businesses, the banks have committed to allocate Sh.30 billion to support this critical sector and segment of the economy. Of the total fund, Sh. 10 billion will be allocated to women-and youth-owned micro enterprises.
The lending rates on this facility to be concessionary and not to exceed 14%. The loan will be on a reducing balance basis with the interest rate fixed for a two-year period.
This program will materially address the issue of affordability of loans for business owners and entrepreneurs with good credit track records; and support clients in areas such as working capital.
The banks are working with Kenya Bankers Association (KBA) Secretariat to operationalize this SME program. Banks will formerly declare their allocation to KBA and report progress on a quarterly basis with the first reporting cycle on 1st November 2016. Central Bank of Kenya will monitor the progress.
What is the MSME Capacity Building Program?Banks through Kenya Bankers Association will set up a Sh.100 million technical assistance program for micro, small and medium-sized enterprises (MSMEs) towards enhancing their ability to secure financing from banks. The industry will establish a governance framework including sector stakeholders to oversee the implementation of this program which will be launched in January 2017.
How will the SME Fund be structured?Each bank will earmark a proportion of their loan portfolio to the SME Support Facility program. Banks will declare how much they have allocated so far on 1st November 2016. Thereafter, banks will be reporting on a quarterly basis to Central Bank and Kenya Bankers Association how much they have disbursed and how many businesses have benefited from the concessionary rate loans.
Who will qualify for the SME Fund?Both existing customers and new loan applicants that meet the criteria will qualify for the concessionary rate of 14%. Priority will be placed on borrowers with a good credit track record and can demonstrate that they are able to repay the loan within two years. After two years, the market rates will apply.
What is the definition of MSMEs? What are the criterion for MSMEs to qualify?
There are various definitions of micro, small and medium-sized enterprises. The National Government in the Micro and Small Enterprise Act No. 55 of 2012 has defined micro and small businesses. The World Bank has an international standard. Meanwhile, individual financial firms each have specific definitions based on their institutional requirements.
For the purpose of the SME Support Facility, specific indicators have been defined by a working group which included Kenya Bankers Association Secretariat, local and regional banks, entrepreneurs, the Micro and Small Enterprise Authority, Ministry of Industry, Trade and Cooperatives, Kenya Institute of Management, and the Kenya Association of Manufacturers. This working group helped harmonise definitions for the purposes of guiding banks on their disbursements and reporting.
How much can one borrow under the fund?The maximum limit is Ksh 10 million per customer. The limit has been set so that as many businesses as possible can benefit from the program.
Will the low interest rate be for secured or unsecured loans?The criteria on collateral will be determined by each bank and based on their credit risk assessment process.
When will businesses be able to get the low rate SME loans?The banks have committed to immediately review their loan portfolios and identify customers who would qualify for this program. MSMEs are also invited to apply for the facility. We expect the application process to take a month.