Loans for small businesses through the Hustlers Fund will be capped at Sh50, 000 and offered at an annual interest of 8.0 percent.
A dispatch from State House last evening indicated that the minimum loan from the Sh50 billion State-backed funds will be Sh500.
At 8.0 percent per month, the interest is lower than the latest average bank borrowing cost of 12.38 percent and annualised M-Shwari charges of 108 percent.
The loans, which will be provided to businesses with an annual turnover of less than Sh100 million, will be provided mainly through commercial banks and saccos.
“As a first single-digit credit product in the country and the region, the loan interest rate will be capped at 8.0 percent per annum computed on a pro-rated basis,” said the State House statement, adding that the fund will be launched on November 30.
The Hustlers Fund will provide State-backed concessional loans to small businesses that have struggled to access financing from mainstream banks.
The fund will be the centerpiece of President Ruto’s job creation agenda, especially with the outgoing government had extended the hiring freeze in parastatals, dashing the hopes of thousands of jobless Kenyans in an economy where companies are shedding jobs.
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Similar affirmative action funds, including Uwezo Fund, have over the years chalked up massive bad debt, creating a liquidity crisis that has threatened their sustainability.
Persons found guilty of offences related to the misappropriation of money from the Hustler Fund will be fined Sh10 million or handed a prison term of five years.
Borrowers who fail to give information or falsify information while applying for the funds will face the same penalties.