Mwalimu Sacco Business Loans – Requirements, Interest Rates, How To Apply

MWALIMU NATIONAL BUSINESS LOANS

Introduction

Mwalimu Business Loans is small and medium enterprise support function of Mwalimu National.

The program has disbursed over KES 2.5 billion business loans benefiting more than 8,000 members since its inception.

The program is designed for Mwalimu National members who are engaged in running business enterprises of commercial, real estate, transport, logistics, trade of goods and services, Agri business among others.

It embraces provision of financial solutions, capacity building, encourages savings culture, and wealth creation to members. It enhances diversification of income streams and members personal growth and Policy 

Business Loans are disbursed to individual members within a group for expansion of existing income generating ventures. Such businesses must have been in operation for at least 12 months.

Senior Saver Loan

Senior Saver is a tailor-made loan product for our senior saver members who have garnered Back Office savings of up to KShs. 1.5M.

Under this product, the 1/3 rule does not apply. Members are encouraged to open a Biashara account at any Mwalimu National FOSA branch. You can channel your business proceeds, Salary, Pension, or any other cash flows through this account.

• A majority of whom are nearing retirement age or are retired and running business
• Eligible members:
• Senior Savers with savings more than their loans and have not guaranteed others can use the difference to get other loans provided the total loan does not exceed 85% of their free
• The loan must be self-guaranteed.
• To qualify, one must maintain direct deposit of his/her pay/ retirement/pension, including social security and retirement cheques, into a Mwalimu FOSA salary or savings account (ECB account). Having direct deposit into a Mwalimu FOSA account will provide member with other benefits like ATM cards, WSF advances and also allows the member a safe, convenient and automatic way to receive his

Product features:

• Minimum deposits of 1.5 million
• Processing fee of 2%
• Security: member deposits and conventional collaterals (where amount borrowed exceeds member’s deposits)
• Maximum loan amount is 15 million
• Maximum loan repayment term is 120 Months
• Loan eligibility is subject to member demonstrating ability to repay, sufficiency of collateral and business

Mwalimu Group Loans

Group Loans Are Done Based On Tiers:

1. Tier one KES 30,000- KES 150,000 – (1.33% pm) payable in maximum
2. Tier two KES 150,001-KES 250,000 (1.33%pm) payable in maximum

• Tier three KES 250,001 –KES 500,000 (1.33%pm) payable in maximum

One has to start from tier one and graduate through the tiers within the program based on business ability. If successful, at tier three one can move to borrow as an individual client without the need of group.

Group loans above Kes 150,000/- must be secured by acceptable and suitable formal collateral.

All group borrowings require a 25% cash collateral as an upfront saving and non-withdrawable/transferrable until the loan is fully paid off.

Motorcycle Loan

Members can source for motorcycle brands from their dealers of choice.

Eligibility:

1. A member must have attained Back Office savings of over 100,000.00.
2. A member shall maintain a monthly saving of 1,000.00 throughout the loan term.

• Member must contribute 30% of the motorcycle invoice

1. The motorcycle logbook shall be jointly registered between Mwalimu National and the member throughout the loan
2. Disbursement is done through bankers Cheques/RTGS to dealers of
3. The motorcycle shall be comprehensively insured at all times during the loan term through MNS RIB

Mwalimu Individual Business Loan Individual

Clients with well established businesses, can access business loans

directly without group requirement.

Amounts range between KShs. 150,000/= to KShs.5,000,000/=

Terms:

• Individual loans are processed at interest rates of 1.25% per month, on reducing Our repayment period is between 36- 60 months depending on amount borrowed.
• The loan is self-secured and acceptable securities/collateral include logbooks and commercial title
• The collaterals shall be valued by our panel of service providers and registered in relevant
• Collaterals are insured appropriately through MNS RIB

• Asset Financing Loan Terms & Conditions

The asset being financed shall be jointly registered between Mwalimu

National Sacco and the Borrowing Member before loan disbursement.

Where the Member is borrowing asset finance to invest in commercial business, the member must demonstrate experience of having been in that line of business and provide proof of; –

1. Ownership of a fleet of not less than 2 assets which one of them must be debt
2. Repayment track

All assets financed by the Sacco shall always be comprehensively insured through MNS RIB Ltd during the loan term and MNS Interest noted as “Financier/First loss payee.”

All movable assets financed by MNS shall always be installed with GPRS tracking device by a tracking company in Mwalimu National Sacco Panel.

Vehicle valuation for used or imported vehicles will be undertaken at Members cost.

Costs associated with Insurance, Valuation and Installation of car tracking devices will be borne by the borrowing member.

Features;-

• Receive up to 80% financing for brand new
• Loan repayment period of up to 5 years for brand new vehicles
• Up to 70% financing for used commercial / personal
• Loan repayment period of up to 3 years for used commercial / personal
• Up to 60 % financing for used PSV
• Loan repayment period of up to 2 years for used PSV
• Minimum monthly income for eligibility – KES 40,000
• Insurance for vehicles / equipment will remain comprehensive through MNS Risk and Insurance Brokers Ltd for the period the asset is under finance unless exceptions are
• Repayment period from 1 to 5 years
• Disbursement in cheque/RTGS in favor of the dealer/Vehicle vendor
• Security – Asset financed, and both jointly registered between MNS and respective
• Asset documents lodged with the SACCO’s lending department and held in custody throughout the loan
• 2% Loan appraisal fee (one-off),2% insurance fee (one-off), Interest rate at 15 % yearly reducing balance

Exclusions

• The Sacco will not finance start-ups in

• The Sacco will not finance luxury vehicles and vehicles deemed to depreciate or lose value

ASSET FINANCING SCHEDULE-FINANCING OPTIONS

REQUIREMENTS

1. Individuals
   1. Fill loan application form
   2. Copy of Identification document
   3. Copy of KRA PIN Certificate
   4. Pro forma invoice/sale agreement of asset being
   5. Six months Bank statement duly certified

SUPPORTING DOCUMENTS:

1. Sales agreement/Proforma invoice for asset being
2. Copy of Logbook for used
3. Latest 3-month payslips
4. Contracts being serviced if any for commercial

Other features:

• Insurance premiums financing shall be arranged through MNS Risk and Insurance Brokers
• Mwalimu Insurance Premium Financing Product Features
  • Brand name

Mwalimu Insurance Premium Financing

• • Loan to acquire Insurance Premiums for all needs and other fees g., Motorcycles, Motor car, Machineries, properties, domestic animals and business stock, crop, green house.
  • Loan Term of Up to 10
  • Flexible repayment
  • Disbursement in cheque drawn in favor of the insurance
  • Cover will be through MNS Risk and Insurance brokers
  • Security –

1. Asset documents lodged with the
2. The comprehensive cover
3. The borrower to meet 10% of the total premium before signing of the IPF application and agreement
4. 2 Guarantors
5. Confirmation of Asset bought or being insured

Price

• Interest rate at 10% flat rate
• Default Management:

*   The cover is cancelled as soon as the insured does not respond to 1st notice within 30 days.

• Pricing as per the tariffs schedule

Mwalimu Mortgage Product

Mwalimu National Sacco jointly with other Sacco’s and banks have signed a partnership with Kenya Mortgage refinancing company (KMRC) to support and accelerate implementation of National government agenda on affordable housing by availing mortgage loans to Sacco members for development/purchase of residential houses across the country.

The Key Features of Mortgage product Target market

All Mwalimu Members

Purpose of the loan

• Construction of a residential
• Purchase of a Residential

Maximum Tenor

25 years subject to the borrower’s retirement age of 60 years.

Amounts

1. World Bank Funding;- Loan size up to 8M

In this scheme of affordable mortgage loan financing the following are the key features;-

1. Minimum Loan amount of Ksh500,000
2. Maximum Loan amount of up to Kes 8 million
3. Loan to Value (LTV) ratio is 90% + costs (costs covered by short term loans)

MWALIMU MORTGAGE

Repayment period up to 25 years subject to borrower’s retirement age maximum of 60

Interest Rate

9% p.a on reducing balance basis.

This is equivalent to KMRC rate currently at 5% plus 4%margin=9%.

Any changes on the rate will be determined by KMRC rate and approved by the board.

Negotiation fee

1% one off.

Insurance

Property and life insurance cover by the borrower during the entire term of the mortgage. Incase of failure to renew the insurance policy, the Sacco will renew and pass over the cost to the customer.

Insurance shall be undertaken through MNS Risk and Insurance Brokers Ltd.

Valuation

The property must be valued, and a valuation report submitted. This property will be revalued after every three years. This will be done by Mwalimu National prequalified panel of valuers and valuation costs shall be borne by the borrower.

Disbursement

Mortgage disbursement shall be made upon completion of the security perfection and registration and only upon the member meeting all conditions set out in the letter of offer.

Late payments

Late payments will attract a penalty of 2% of the overdue amount

Mode of loan repayment

Repayment for mortgage loan shall be purely on check-off basis subject to adherence to 2/3rd rule.

Minimum Customer Information Requirements Applicants Identification

• Copy of applicant’s ID / passport
• 3 recent passport-sized color photographs of applicant
• Proof of address (copy of most recent paid utility bills (electricity/ gas/telephone), copy of recent credit card bills and any other credit facilities (if applicable)

Applicants Income Details Employed persons

1. Applicants will be required to have been in their current job for a minimum of six (6) months and at least 18 months of continuous
   1. Employment Letter including date of joining and
   2. present designation &
   3. terms of employment
2. Letter from the employer confirming employment
   1. Original or certified salary slip of last three months
   2. Previous employment proof (if required – copy of contract)
   3. Current account bank / SACCO statement for the most recent 6 months
   4. Evidence of any secondary income that is to be considered
3. Professional association membership certificate Practice license if applicable ( doctors, lawyers, CPAs )
4. Alternative ways of income verification such as bank / SACCO statements
5. Credit history and relationship with other lenders

Minimum period during which the customer has maintained a formal bank / SACCO account with any financial institution; and bank / SACCO account statements

1. CRB report for credit history check
2. Borrower’s Basic Fact Sheet in application form
3. Details of any credit transactions over last two years, including loan and collateral agreements
4. Confirmation that any existing loan agreements are currently up to date
5. Details and turnover of any existing accounts (of all types), for example average monthly balance, average monthly credits, and debits
6. Information about assets with other lenders (securities, savings, )
7. Evidence of past bank / SACCO in audited accounts

Property documents

1. Copy of title of the property (registered in name of seller)
2. Original title of the property if title already registered in name of borrower:
3. A search of land records / Survey of Kenya certifying ownership of the title
4. Photos of the property
5. Construction permit (if applicable), approved building plan,
6. Completion certificate
7. Sale-purchase agreement where property is being purchased
8. Verification that property is not on environment and social (E&S) exclusion list

For construction loans:

Original or where applicable certified true copies of the following:-

• Approved bill of quantity by a qualified and duly licensed quantity surveyor as
• Approved building plans by relevant
• NEMA approval as may be
• A copy of title/lease or other form of title for affordable housing and official search report
• Current receipts for payment of land rates and rent, if
• Surveyors report confirming location and identity of property
• Applicable insurance

Others

• Budget planner outlining income and key expenses
• Map to property for viewing and valuation of proposed security

Eligibility criteria for the housing mortgages

1. The eligible property to secure the loan must either
2. owner occupied
3. title residential properties
4. Free-standing or apartment
5. Properties occupied by close relatives of
6. The title must be free from any delinquencies and
7. The mortgage loan limit will be KShs 8 million
8. The tenure of the collateral:
   1. Full
   2. Leasehold with a minimum of 40 years from the date the loan is

Frequently Asked Questions in Business Loans

As an individual in a group what do I need to get a loan?

1. Become a member of Mwalimu
2. Open and operate a S.F Account.

• Be a member of a registered social welfare group of not less than 5

1. Have an operating business
2. Must be having /Deposit 20% of loan amount as initial deposits (cash collateral) in business loans

As a group what do we need to get a loan?

1. Willingness to meet and make savings of KES 500 per individual on monthly
2. Willingness and capacity to be a guarantor to other members of the

• A valid copy of the group’s registration

1. A copy of the group’s
2. A copy of the minutes for the group’s first

What are the benefits of Mwalimu Business Loans?

• We fund running business enterprises with both medium term financing of up to a maximum of Kes 5 million repayable in 60 Months and long-term financing of up to 15 million repayable in 120
• Business loan financing is based on ability to pay, character assessment and viability of business project being We Use both Payslip and business ability/capacity to appraise your Mwalimu Business Loans ability to pay.
• Our service delivery comes to your doorstep; we have a business loans team entrusted with duties of bringing our services to you as opposed to a scenario where you must come to our
• Your loan application is processed within a shortest time; there is no lobbying for business loans, once your documents are

received, we have a standard turnaround time to be followed when processing your business loan.

• We also offer in-depth business advisory and advisory services; clients are trained on business- best – practices on yearly
• All business loans are secured by suitable and acceptable collateral, The collaterals offered for business loan are usually valued by MNS panel of professional valuers and registered appropriately in relevant registries before loans are disbursed
• All Mwalimu National Sacco Business loan facilities are independently appraised, verified, approved and upon approval relevant documents like offer letters, loan schedules, loan security covenants are issued to guide the contractual
• On regular basis Mwalimu Business loan officers will nurture the business relationships by undertaking regular visits to members businesses and tracking loan repayment of the loans until its fully
• Businesses financed through Business loans are required to bank with Mwalimu National Sacco FOSA branches
• Business assets/business enterprises financed through business loans are required to be always insured through MNS Risk & Insurance Brokers Ltd during the loan

What are the requirements For Individual Loan?

1. Existing business enterprise that is more than 12 months old
2. An active Sacco Member with regular contributions for deposits, BBF and

• A member must have an account with

1. The savings in business loan account must constitute at least 20%% of the loan
2. The member shall save a minimum of 1,000 on monthly basis under business loans.
3. The minimum loan to be granted under this category will be KES 150,000 and maximum 5

• Certified six-month business account statement will be
• Permanent residence is a requirement for all

1. Must be having /Deposit 20% of loan amount as initial deposit (cash collateral) in business loans

1. Loan must be secured by suitable and acceptable collateral which shall be valued and charged/mortgaged appropriately
2. Loan repayment period is up to 60 Months

• Loan can be serviced through either check-off or through business proceeds channeled through MNS Biashara
• Individual loans are offered at an interest rate of 25% p.m. on reducing balance.
• Our repayment period is between 36-60 months depending on the amount

1. The loan is self-secured and acceptable securities include logbooks and commercial title

Business Loans Staff: