Where to bank with your investment group

It’s very difficult for women to get credit from banks to start businesses and most banks limit the financing to the security available.

Banking analysts say three out of every five Kenyans are part of a Chama and banks have been moving to profit from this niche market.

Some banks have even created products that specifically target Chama groups, with favorable interest rates and sizeable loan potential, many of them coming up with goodies to entice Chamas to join them.  However, while the loans are easily available and approved in the shortest time possible, there is a catch.  The interest rates of some of the banks tend to be very high, therefore you should keep an eye on where and what favors you most.

Let’s look into a few of the commonly used banks for group investments,

Bank of Africa Kenya.

Provides investment groups with an opportunity to make monthly savings while earning a high rate of return. Also enables the groups to access loans of upto 3 times their savings.

The features include:

• Access to e-Chama
• The Chama should be a registered company for borrowing purposes
• Need to have saved for 6 months with BOA
• Scope of loans to be limited to wealth creation activities
• Loan amounts to be based on the groups’ savings Up to 3 times of savings
• Minimum lending of Kshs 500,000 and a maximum of Kshs 50,000,000
• Longer repayment period, up to 48 months
• Security to be provided including Directors guarantees
• Group members can co-guarantee one another

Benefits:

• No monthly charges
• Competitive interest rates
• No minimum monthly contribution once account is operational
• Chama Loan can be advanced up to 3 times the groups savings
• Inclusion of a free current account with free standing orders to the savings account
• Interest paid on the current account pegged at market rates
• Inclusion of fixed deposit account with competitive interest rates
• Free standing orders to the Chama account for BOA account holders
• Assignment of a dedicated Relationship Manager who will also be involved in the Chama loan credit processing
• Access to free regular Chama clinics
• Interest paid every 6 months
• Unsecured loan of upto Kshs 1.5M

Faulu bank

Faulu Microfinance Bank is a subsidiary of Old Mutual Kenya. Chama account offers savings account for formal and informal groups with the aim of securing and preparing for investment opportunities.

Faulu Chama account has a membership of 5 and above. It targets table banking groups, Investment groups and family Chamas.

Key Product Benefits

• Safe place to keep your money, Faulu is licensed by Central Bank of Kenya
• Easy account opening requirements
• Competitive interests rates on your Chama money of up to 5% per year
• Access to cheque books and bankers cheques.
• No monthly ledger fees
• No account maintenance fees
• Chama loan of up to 10 times cumulative Chama savings up to 300 million.
• Access to individual loans for Chama members against Chama account
• Two free statements in a year on request
• Flexible repayment period.
• Access to loans
• Free Financial advice
• Members can individually access loans
• Minimum five members and no maximum

Kenya Women Microfinance Bank (KWFT)

Targets almost exclusively women, KWFT proposes its services in remote areas that are poorest in Kenya. 70% of its clients live in rural areas. KWFT has the largest network of rural agencies in the country. The aim of KWFT is to support women with small and medium scaled businesses to access affordable financial services. It aids in creation of employment and reduction of rural – urban migration.

Requirements:

• Group of 15 – 30 members
• Be in a business

Features:

• Flexible security requirement
• Monthly meetings and loan repayments
• Flexible loan amounts
• Business skills training
• Low processing fee
• Low monthly savings
• Loan from KES 10,000
• Insurance cover at a low premium

Women Enterprise Fund (WEF)

The W.E.F under Jamii Bora bank, is a facility available to women individuals and groups who need financing for working capital for their businesses. You can access this loan with simple security requirements that include: group guarantees, household items, business stock and quoted shares and can get upto Ksh.500, 000.The loan size amounts from Kshs. 50,000 to Kshs. 500,000

Security/Collateral:

• Charge on movable or immovable property.
• Consent of the Borrowers spouse to execute the Chattels mortgage particularly of the household properties is required.
• A security of goods over Stock in trade to be a collateral to borrow funds.

Loan terms:

Loans less than 100,000 take up to 12 months of repayment.

Loans more than 100,000 up to 18 months of repayment.

Rafiki microfinance bank

Rafiki has Chama Supreme Banking for investment groups with 2 bouquet solutions

1. Club Account

Helps members to pull funds together to resources that can be invested in various investment options.

Benefits:

• No monthly ledger fees; free internal transfers
• Free banker’s Cheque
• Affordable Internet & Mobile banking
• Competitive interest rates on your deposits
• Free monthly and quarterly members’ contribution statements
• Free book keeping software
• Cheque book available
• A dedicated Relationship Manager
• 7 day Banking at our Biashara street and Kitengela Branch

2. Credit Products
3. Super Investment Loans

Get financed up to 9 times on group savings. Financing options include land, construction, properties, agri/business, shares, bonds, trade & asset finance. Financing is available up to Kes 200 million.

•  Tujenge Pamoja Loan

Helps Chamas to undertake long term housing project for its members, for their individual residential or investment purpose. For both commercial and residential properties, finance is up to 90%.

•  Invest Flexi Advance

Appropriate funding option that recognizes the individual emergency needs of members in an investment group.

Features

• Advance size-maximum KShs.500, 000
• Tenor-maximum 24 months
• The group should have cash flows/contributions running for at least 6 month

Benefits

• Emergency cash/Quick Cash within 24 hours
• Can be used to purchase assets/household goods
• Can be used for small businesses boost of cash flow
• Can be used for school fees/hospital bills payments
• Flexible security requirement
• Enhanced Capacity Building

Rafiki Microfinance Bank seeks to add value to investment clubs through well-structured trainings that revolve around business/entrepreneurial process skills and personal finance management.

All these banks offer tempting services and opportunities but Rafiki beats them all, the bank not only caters for women but the youth and physically disabled. With this bank, any Chama comprising of at least three people can open a savings account where they put in their savings.

It also protects them from sudden exit of members through the constitution.

As a business woman or member of an investment group, it is important to review all banks available so that you understand all you need to know about Chama loans.