Small businesses in the logistics sub-sector can now access loans to buy heavy commercial vehicles at affordable rates.
This follows a deal between General Motors East Africa (GMEA) and Co-operative Bank of Kenya that will see SMEs receive 95 per cent financing to buy Isuzu vehicles at an interest rate of 14 per cent on reducing balance.
GMEA Managing Director Rita Kavashe and Co-operative Bank Director for Retail and Business Banking Maurice Matumo signed the agreement on behalf of the two entities yesterday at GMEA headquarters in Nairobi.
In addition to the loan facility, Ms Kavashe said borrowers will also receive a working capital loan of a maximum of Sh300,000.
“The working capital loan will be repayable in 12 months. The asset finance repayment period is up to five years,” she said.
Ms Kavashe explained that after introduction of the interest capping law last year, some 1.6 million SMEs in the motor vehicles repair business closed shop due to lack of finance.
“The main reason cited for the closure of these businesses was shortage of operating funds owing to increased operating expenses, declining income and losses incurred from businesses,” she said.