[dropcap]I[/dropcap]f you are a youth business owner looking for capital to start or grow your business, one thing you may be dreaming of (other than winning the gamble or lottery) is getting interest free loans. Unlike a loan that you have to pay back with an interest, most government loans attract low interest or zero, that you only have to pay back the principal amount.
In Kenya we have several government funds whose main mandate is to finance Small and Medium Enterprises (SMEs). The most common funds are; Women Enterprise Fund, Youth Enterprise Development Fund (YEDF) and Uwezo Fund among others.
The youth account for about 60% of the unemployed in Kenya. In this regard the government has intervened and initiated the funds. This in a move to address unemployment which is a challenge in today’s economy.The Youth Enterprise Development Fund(YEDF), for instance, is a great source of capital to yout- owned business enterprises.
Recent data shows the fund has only lent out Ksh11 billiion to one million youths across the country. The fund which was started in December 2006 has a low uptake. Pundits have attributed this to inadequate awareness creation and training. How best youths are using the available alternative resources is an assignment for everyone.
YEDF is also attractive since entrepreneurship training is conducted for free, loans have zero interest rate and flexible collateral is required. The Fund offers Bid Bonds and Local Purchase Order (LPO /Local Service Order (LSO) financing to youth participating in government tenders.Under LPO financing, one can access up to Ksh5 million, YEDf finances 70% of the LPO amount that attracts low interest of 1.5% after 90 days grace period. The loan is available to registered sole proprietors,partnerships and companies owned by young people (18-35 years of age).
Constituency based loans is another product that is given out to groups and individuals at the constituency level.
The Funds’ objectives is to provide on lending to the youth enterprises,attract and facilitate investments in micro, small and medium oriented commercial infrastructure that will be beneficial to youth businesses,support youth oriented SMEs to develop linkages with large enterprises and facilitate marketing of products and services of the youth.
The common loan product given out is the business expansion loans. The loan is advanced to youth who have existing businesses and are able to provide security. They are friendly large scale financing for business expansion.
Applicants may be individual, partnership or limited companies. Constituency based loans is another product that is given out to groups and individuals at the constituency level. They are given out at zero interest rate starting from Ksh100,000 up to Ksh 1 million.
To access YEDf loans it is simple,just register your business, own company or belong to a registered group with relevant government ministry. Visit your constituency office for guidance.
Youth fund is playing very important role in the economy. Young people should grab this opportunity to expand, improve and maximise profits from these cheap credit facilities. Bill Gates once said, “To be born poor is not your choice but to die poor is a personal choice.”