The Youth Fund is a government initiative that aims to provide financial support to young people in Kenya to start and grow their businesses.
The fund offers a variety of loan products, including interest-free loans, to registered youth groups.
The Youth Fund’s interest-free loan program, provides up to Shs. 1 million to eligible youth groups.
Eligibility Criteria for Youth Fund Loans
To be eligible for a Youth Fund loan, the group must meet the following criteria:
Valid Registration Certificate
The group must be registered with the relevant government authority, such as the the Ministry of Labour and Social Protection.The registration certificate should be up to date and valid.
Read How To Register a Youth Group in Kenya Step By Step ( Pictures Attached)
5+ Members, 70% Youth (18-34), 100% Youth Leadership
The group must have at least five members, with 70% of the members being between the ages of 18 and 34.
Read How To Register A Self Help Group For Hustler Fund Application 2023
Additionally, the group must have 100% youth leadership, meaning that all the leaders must be under the age of 35.
Group Bank Account
The group must have a bank account in the name of the group. The account should be active and in good standing.
Completed Loan Application & Repayment Undertaking
The group must submit a completed loan application form, which is available at the Youth Fund offices.
The application should include details about the group’s business and how the loan will be used.
Additionally, the group must sign a repayment undertaking, which outlines the terms and conditions of the loan.
Loan Amount and Terms
The Youth Fund loan program offers loans ranging from Shs. 100,000 to Shs. 1 million.
The loan is interest-free, meaning that the group will not have to pay any interest on the loan amount.
However, there is a 5% management fee that will be deducted from the loan amount at disbursement.
In addition to the loan, the Youth Fund requires that all loan recipients undergo entrepreneurship training.
The training is designed to equip young entrepreneurs with the skills and knowledge they need to start and run successful businesses.
The training is provided free of charge by the Youth Fund and is a mandatory requirement for all loan recipients.
How to Apply for a Youth Fund Loan
To apply for a Youth Fund loan, eligible groups should visit the Youth Fund offices at their county headquarters.
The group should bring all the required documents, including the registration certificate, bank account details, loan application form, and repayment undertaking.
Additionally, the group should be prepared to undergo entrepreneurship training if their loan application is approved.
Types of Youth Fund Loans
Support young people participating in government tenders
ABOUT THE LOAN
This loan is available to youth who have been awarded tenders by government agencies (ministries, parastatals, county governments and constitutional commissions) under the AGPO programme, and from other reputable procuring entities not owned by the government (those listed at the NSE and credible NGOs).
Youth can access the loan as follows:
Local Purchase Orders (LPO) Financing:
The loan is available to individuals, registered groups, partnerships and companies owned and run by the youth.
- Youth can access up to Kshs. 5 million.
- The Fund will finance 70% of the LPO amount.
- The loan attracts an interest of 1.5% after 90 days.
- A commission of 6.5% of the amount borrowed will be charged.
The loan will be secured using Letter of undertaking, Bank guarantees, and conventional security.
- Be registered with the relevant government body.
- A valid LPO from a qualifying agency
- Undertaking by the procuring entity to pay
- the tender proceeds in favour of Youth
- Enterprise Development Fund Board
- Customer account details
The loan is available to youth who wish to start or expand businesses
ABOUT THE LOAN
VUKA is available to youth who wish to start or expand businesses. Applicants may use the loan for working capital or to purchase income generating assets.
Vuka Start Up
- Advanced to youth with alternative verifiable income and business plan.
- Youth can access up to Kshs. 500,000.
- The loan is fully secured by conventional security.
Vuka Expansion Loan
- From Kshs. 100,000 to Kshs. 5,000,000.
- Attracts an interest of 6% and a one-off management fee of 1% netted off from the loan at disbursement.
- Grace period of one month.
- Loan of Kshs. 100,000 will be secured using chattels, stock and business assets. Loan above Kshs. 100,000 will be secured by conventional security.
Vuka Asset Financing
- The Fund will finance 70% of the value of the assets/equipment being purchased.
- Additional security will be provided in addition to the asset financed.
- Loans of Kshs. 100,000 will be secured using chattels, stock, business assets and/or guarantees. Loans above Kshs. 100,000 will require conventional security.
- In the case of motor vehicles, the Fund will finance up to 90% of the value of motor vehicles (including PSVs, tuktuks & motorcycles) being purchased and must be new. Used motor vehicles shall not exceed 8 years of age. The financed motor vehicle will be fitted with a tracking device and comprehensively insured.
Amount Repayment Period
Up to kshs. 100,000-2 years
Up to kshs. 300,0003 years
Up to kshs. 500,0004 years
Up to kshs. 1000,0005 yearsAbove 1000,0006 years
- In case of partnerships, 70% of the partners should be between 18-34 years.
- Borrower will bear all costs such as insurance, security perfection, valuation, registration of charge/chattel and legal fees.
CONSTITUENCY BASED LOANS
Support young people start income generating activities at the constituency level
ABOUT THE LOAN
The Youth Enterprise Development Fund provides the following loans to groups and individuals at the constituency level:
Rausha is a group loan for startup businesses or other income generating activities.
Loan amount is Kshs. 100,000.
Rausha loan has a three-month grace period. Repayment will be made in twelve (12) equal monthly instalments.
Inua is a business expansion loan for groups. It is advanced to groups with running businesses.
Groups which have fully repaid Rausha or loans from other institutions can apply for Inua.
Loan amount starts from Kshs. 200,000 and groups can progressively graduate up to Kshs. 1,000,000.
1 st loan: Maximum Kshs. 200,000 Payable in 18 months
2 nd Loan: Maximum Kshs. 400,000 Payable in 24 months
3 rd Loan: Maximum Kshs. 600, 000 Payable in 30 months
4 th Loan: Maximum Kshs. 800, 000 Payable in 36 months
5 th Loan: Maximum Kshs. 1,000,000 Payable in 36 months
The first Inua loan has a one month grace period.
No grace periods for subsequent loans. Loan amounts for up to Kshs. 500,000 will be secured using chattels while conventional securities will be required for loans above Kshs. 500,000.
Special is available only to groups running business projects that generate money on periodical or pre-determinable irregular periods. It will be available for:
- Agricultural production-horticulture
- Livestock trading or fattening
- Fish farming
- Poultry (broiler) projects
- Supplies (specific)
1 st loan: Maximum Kshs. 100,000 Payable in 12 months
2 nd Loan: Maximum Kshs. 200,000 Payable in 18 months
3 rd Loan: Maximum Kshs. 400, 000Payable in 24 months
4 th Loan: Maximum Kshs. 500, 000Payable in 36 months
Smart is available to individuals belonging to a group that has benefitted from YEDF and repaid its loan.
It graduates group members to individual borrowers.The borrower could be a startup or for expansion.
- Be a member of a group and be recommended by 75% members of the group
- Minutes of the group indicating authority to borrow and guarantee the loan must be attached as part of the application documentation to the YEDF head office.
- A maximum of 80% of the group members shall borrow at the first instance. Subsequent funding to the next batch of members (20% of the members not previously financed) shall be after two instalments on the first loans have been paid.
- Swift is for groups that are new consumers of YEDFB products
Loan Amount and repayment period:
The maximum loan amount will be graduated as a repayment incentive as follows;
- Start-ups (Grace period of 3 months)
1st loan to member Kshs. 25,000 maximum for 9 months
2nd loan to memberKshs. 50,000 maximum for 12 months
3rd loan to memberKshs 100,000 maximum for 18 months
4th & final loan Kshs 200,000 maximum for 24 months
2. Existing businesses (No grace period)
1st loan to member without bank statement kshs 50,000 in 12 Months
Ksh 35,000-9 Months
2nd loan to member Ksh 100,000 in18 months
3rd loan to member Ksh 150,000 in 24 months
4th loan to member Ksh 200,000 in 24 months
- Security:Group members shall sign a guarantee/undertaking to repay the loan should the individual member default
- Every loan shall be insured by taking an appropriate life insurance cover of the borrower.
- A sworn affidavit for the items provided as security for the loan. The borrower should provide his/her items as security, but in cases where s/he does not own any, a close relative e.g. parent should guarantee the loan with their items
- Loans above Sh100,000 will require registered Chattel Mortgage to be attached to the application
For group loans the following documents should be provided at application:
- Copy of certified valid group registration certificate and list of membership
- Copies of IDs for ALL the members
- A signed undertaking by the group to pay loans guaranteed to its members
- Group minutes nominating/authorising an applicant to a particular round of the loan
- Duly completed YEDF loan application form