Businesses that have defaulted on Youth Fund loans have 30 days to work out new payment plans or risk being included on national credit blacklists.
The Youth Enterprise and Development Fund has issued a warning to enterprises whose loans are non-performing that they have just one month to pay up or negotiate new repayment plans.
The fund has so far lent out some Sh10.6 billion to more than 263,000 groups and firms across the country.
In a notice published Friday, Youth Fund acting chief executive Catherine Namuye said the revolving fund is in the process of registering with the Credit Reference Bureau (CRB) and would list defaulters as provided under CRB regulations.
Once disclosed to CRB, he warned, information on loan defaults will remain in the public record for five years and will be available to banks and other credit grantors who can stop credit existing facilities or deny new ones.
The attempt to crack down on defaulters comes amid plans to merge the Youth fund with other kitties like the Women’s Enterprise fund and the Uwezo fund.
“All Youth Fund loan beneficiaries are advised to visit our regional offices, or the offices of the sub-county headquarters, to check on the status of their loans,” Ms Namuye said.
“Those with non-performing loans (must) repay them or, visit our offices within 30 days effective from (September 5, 2014), to agree on an acceptable payment plan.”
The amnesty also applies to financial institutions that have received money from the fund to lend on to youth groups.
The notice did not indicate which, if any, of the three dozen intermediaries the fund has signed up to help lend out money to the youth are in violation of their agreements.
Launched in 2006, the Youth Enterprise and Development Fund provides business development services and cheap loans (at an interest rate of 8.5 per cent) to youth aged 18 to 34 years.
In 2010, its default rate on the first Sh2.5 billion lent out stood at almost 40 per cent, almost five times the financial services sector’s average of eight per cent.