With the new low interest rates regime, borrowers with good credit records with their banks will do well to take loans and advance their businesses. At Co-op Bank, you can either top up on your old loan or take up a new loan at a reduced percentage of 14 per cent per year.
Interestingly, the bank has developed tailor made loans targeted at farmers. Today, we look at two of the main loans in dairy farming that you can take to boost your farm and increase your output. To apply for these loans, you may visit your nearest Co-operative Bank Branch of CLICK HERE to download application forms.
Maziwa Plus Loan
This loan product if targeted at farmers in dairy production who are looking to boost production and value addition, acquire modern dairy farming equipment and improved animal breeds.
It has the following features:
- Can borrow for joint activities, on-lending to members or for working capital purposes
- Can borrow up to Kshs 10 million
- For Groups, they must be handling at least 500 litres per day
- Must retain at least 50% of the proceeds after loan deductions
- Tri-partite agreements where applicable or letters of undertaking from a reputable milk buyers or aggregators like co-operative societies and must have a current contract
- Groups must have been in existence for at least 2 years
- Companies must have been in existence for at least 12 months
- Must provide security, at least 30% in tangible form
- Willingness to channel milk proceeds through the bank
Other additional features include:
- Maximum tenor: 60 months
- Interest charged at Base + 2% p.a. on reducing balance
- Appraisal fee of 1%of the loan amount
- Annual review fee of 1% of the loan balance whose term exceeds 12 months.
- Collateral includes charge over movable/fixed assets of the group, landed property and guarantees. At least 30% must be tangible
- Personal Guarantee by the group officials is mandatory
- Group assets must be secured in the name of trustees (officials) with provisions on succession clearly spelt out in the group constitution
Vuna Kilimo Loan
This loan product is targeted at farmers looking for loans for the purchase of farm inputs, equipment, set up greenhouses and irrigation systems.
Its features include:
- The individuals, Co-operatives and firms must be engaged in a viable crop, livestock or fish production activity at the primary level.
- Farmers must be residents or ideally own the land used for production
- Proof of viable market e.g. Tri-partite agreement involving buyers, Proof of cash flows
- Applicant must have been in operation for a minimum of 2 production seasons with positive cash flows
- The loan shall be repaid within 24 months matched with the seasons.
- Ability to retain at least 40% of the proceeds after loan deduction.
- Farm enterprise must have a minimum income of Kshs 20,000 per season.
- Applicant must provide proof of farm enterprise cash flows for the last 2 seasons and projection for the current season
- Applicant must provide proof of payments received in respect of the last season’s produce of the farm enterprise
- Collateral includes charge over titles, chattels and guarantees
- Amounts below Kshs 500,000 to have guarantors in additional to chattels. Tangible security for amounts above Kshs. 500,000. In the case of chattels forced sale value covers at least 150% of the loan
- Applicants can borrow between Kshs 10,000 to Kshs 2 million
- Willingness to channel all proceeds through the bank
- Maximum debt ratio of 60%
- Crop insurance not necessary for those who do not meet threshold for minimum acreage for insurance.
- Interest charged at base +2 p.a. on reducing balance
- Application fee to between 1% subject to Kshs 500 minimum
- Appraisal fee to be charged at 1%, minimum Kshs 1,000