Co-operative Bank dishes out unsecured loans to business owners

Micro, Small and Medium Enterprises (MSMEs) will from now on be able to access unsecured loans from the Co-operative Bank of Kenya.

This means that business owners will be able to access loans without collateral. The bank will credit borrowers based on their credit history and income.

The financial solution, the first of its kind in Kenya will allow enterprises to borrow up to Ksh2 million via the MCo-op Cash App.

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Speaking during the launch of the solution on August 23 at Hilton Hotel, Co-operative Bank’s Head of Business Banking Moses Gitau  said the lender has had to revise its strategy  in the wake of key trends in the current business dispensation where MSMEs are key drivers of the economy.

“This sector (MSMEs) forms the backbone of the Kenyan economy as over 90 per cent of the Kenyan private sector consists of MSMES; with over 15 million Kenyans employed in either the 1.7 million registered businesses or 7 million unregistered,”

“We have also aligned ourselves  with the regulator’s (CBK) requirement of ensuring that a minimum of 20% of its lending goes to the MSME sector,” said Mr. Gitau.

The financial solution groups enterprises according to their annual turnover. The Gold package targets enterprises with an annual turnover of Ksh500 million while the Silver and Bronze packages target enterprises with turnovers of Ksh100 million and 10 million respectively.

In the arrangement, the enterprises will also be able to access packaged insurance covers handpicked and specifically negotiated to suit various segments under MSMEs as well as revised and pre-approved limits on overdrafts and loans.

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The packages will also include diversified financial solutions to include letters of credit, guarantees and supply chain financing.

Co-operative bank recently acquired a Ksh15 billion loan from the International Finance Corporation (IFC) to finance the project.