Where Can I Find Government Backed Business Loans in Kenya?

Starting or expanding a business in Kenya can be an exciting but challenging endeavor. One of the most significant hurdles entrepreneurs face is securing the necessary funding to get their businesses off the ground or take them to the next level. Fortunately, the Kenyan government, in collaboration with various financial institutions, offers government backed business loans to support the growth and development of local businesses.

This guide takes a look at avenues where entrepreneurs can find government backed business loans in Kenya. We will discuss the key institutions, programs, and eligibility criteria to help you navigate the world of business financing more effectively.

What is a Government Backed Business Loan?

A government-backed business loan, also known as a government-guaranteed business loan, is a type of loan where the government provides a guarantee or insurance to the lender (usually a bank or financial institution) to encourage them to extend credit to businesses.

 These loans are designed to support the growth and development of businesses, particularly small and medium-sized enterprises (SMEs), by reducing the risk for lenders, making it easier for businesses to access financing.

Here are some key characteristics of government-backed business loans:

  1. Government Guarantee: In a government-backed business loan, the government acts as a guarantor, promising to repay a portion or all of the loan amount in case the borrower defaults. This guarantee mitigates the risk for lenders, making them more willing to lend to businesses that might not otherwise qualify for traditional loans.
  2. Lower Interest Rates: Government-backed loans often come with lower interest rates than standard commercial loans. This is because the government’s guarantee reduces the lender’s risk, which, in turn, leads to more favorable borrowing terms for businesses.
  3. Longer Repayment Terms: These loans often offer longer repayment periods, which can be particularly beneficial for businesses, as it allows for lower monthly payments and more manageable cash flow.
  4. Flexible Use of Funds: Government-backed business loans can typically be used for a wide range of business purposes, including working capital, equipment purchase, business expansion, inventory financing, and more.
  5. Targeted Programs: Governments often create specific loan programs targeting various groups of entrepreneurs, such as women, minorities, veterans, or young entrepreneurs. These programs may have unique eligibility criteria and terms tailored to the needs of those specific groups.
  6. Support for Economic Development: Government-backed business loans are often seen as a way to stimulate economic growth and job creation within a country. They are especially valuable for promoting entrepreneurship and small business development.
  7. Collaboration with Financial Institutions: Government-backed loans are typically administered through partnerships with banks, credit unions, microfinance institutions, and other financial organizations. These institutions facilitate the loan application process and disburse funds to eligible businesses.
  8. Stringent Eligibility Criteria: While government-backed loans are designed to be more accessible, borrowers still need to meet certain eligibility requirements, such as demonstrating the ability to repay the loan and having a viable business plan.

Government-Backed Business Loans in Kenya Top of Form

The Kenyan government has established several programs and initiatives aimed at supporting small and medium-sized enterprises (SMEs) through accessible and affordable financing options. Here are some of the government-backed business loan programs you should explore:

Youth Enterprise Development Fund (YEDF)

The Youth Enterprise Development Fund is a government agency that provides loans to young entrepreneurs aged between 18 and 35 years.

These loans are tailored to support youth-led startups and businesses. Eligible businesses can access funds for working capital, asset acquisition, and business expansion. The interest rates are relatively low, making it an attractive option for young entrepreneurs.

Eligibility criteria for Youth Enterprise Development Fund (YEDF)

To access the youth enterprise development fund you must meet the following criteria.

  1. Age Requirement: Applicants must fall within a specific age range, usually between 18 and 35 years old. The fund is specifically designed to support young entrepreneurs in Kenya.
  2. Kenyan Citizenship: Applicants must be Kenyan citizens and residents to qualify for YEDF funding.
  3. Business Registration: To access funding, applicants are often required to have a registered business or demonstrate a clear intention to start a business.
  4. Business Proposal: Applicants need to submit a well-detailed business proposal that outlines their business idea, objectives, operational plan, and financial projections. This proposal is a crucial part of the application process, as it helps assess the viability and sustainability of the business.
  5. Repayment Capacity: YEDF typically assesses an applicant’s ability to repay the loan. This may involve evaluating the applicant’s creditworthiness and financial stability.
  6. Commitment to Youth Employment: The YEDF may prioritize businesses that demonstrate a commitment to creating job opportunities for other young people in the community.
  7. Compliance with Fund Regulations: Applicants must adhere to the rules and regulations set by the Youth Enterprise Development Fund. This includes meeting all the required documentation and application deadlines.
  8. Training and Capacity Building: Some YEDF programs may require applicants to complete entrepreneurship training or capacity-building programs as a condition for accessing the loan.
  9. Submission of Required Documents: Applicants should be prepared to provide various documents, including identification documents, business registration certificates, bank statements, and any other documents specified in the application guidelines.
Types Of Loan Products Offered By YEDF

The youth enterprise fund offers the following business loan products.


LPO/LSO financing is offered to youth awarded tenders by government agencies such as Ministries, parastatals, county governments and constitutional commissions under the AGPO programme.In addition you can also get this financing if you win a tender from procuring entities not owned by the government (those listed at the NSE and credible NGOs).

Youths can get up to  5million in loans. Main features of the loan include

  1. The business loan is available to individuals, registered groups, partnerships and companies owned and run by the youth.
  2. The Fund will finance 70% of the LPO amount.
  3. The Loan attracts an interest of 1.5% after 90 days.
  4. 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.

You will need an LPO from a qualifying agency, the procuring entity will have to pay the proceed to the fund and  provide the fund with customer details.


Vuka loans are designed to support start up and already established businesses. Vuka loans are divided into:

  1. Business expansion loans

 These loans are designed to support young entrepreneurs whose business have been running for more than six months and one year if it’s a limited company. Features of the loan are as follows:

  • Youth can access from Kshs. 100,000 up to Kshs. 5,000,000
  • Attracts and interest of 6% and a one-off management fee of 1% netted off from the Loan at disbursement.
  • Grace period is one month.
  • Start-up Capital Loans:

YEDF provides loans to young individuals or groups who are in the early stages of starting a new business. These loans can help cover initial costs such as product development, marketing, and infrastructure.

 To get the loan you need a verifiable source of income and a business plan. Youths can access up to Ksh 500, 000.

  • Asset Financing Loans:

Asset financing loans are intended to help young entrepreneurs acquire essential assets and equipment required for their businesses, such as machinery, vehicles, or technology.

Features of the asset financing loans are as follows:

  • The Fund will finance 75% of the value of the asset being purchased.
  • In the case of motor vehicles, the Fund will finance up to 90% of the value of motor vehicles (including PSVs, tuk-tuks & motorcycles) being purchased and must be new.
  • Motor vehicles to be purchased must not exceed eight years from the year of manufacture.
  • The financed motor vehicle will be fitted with a tracking device and comprehensively insured.
  • The asset should relate directly to the business being undertaken.
  • You will provide additional security in addition to the asset financed.
  • Repayment period depends on the amount advanced to the client. They give a repayment of up to 6 years for Ksh 5million.

Uwezo Fund

The Uwezo Fund was created to empower women, youth, and persons with disabilities in Kenya. It offers financial support for income-generating activities and business projects. The fund provides both grants and loans to eligible individuals or groups who wish to start or expand businesses.

Uwezo Fund Loan Products

Uwezo fund has two main loan products.


This is a constituency based group loan for first time borrowers. The loan amount range from Ksh 50,000 to Ksh 100,000. Here are the eligibility criteria.

  • Group membership must be as guided by the registration entity.
  • Group Membership must be at least
  • For youth groups; 70% youth (18-35 years), and leadership, 100% youth.
  • Women groups 70% women, and leadership, 100% women
  • PWDs 70% PWDs, and leadership, 100% PWDs.
  • The applicant group must apply for the loan from the constituency, be appraised and recommended for funding by the respective Constituency Uwezo Fund Management Committee (CUFMCs).
  • Operating bank account in the name of the group.

The loan is repayable in 12 monthly instalments after expiry of 6 months grace period.


Endeleza loan is loan product for those who have borrowed and repaid their first loans. The loans amounts are based on incremental percentage of between 150 to 200% of the initial loan but not more Kshs 500,000.

Endeleza Loan Eligibility Criteria
  • Completed repayment and demonstrated proper utilization of Wezesha Loan
  • Demonstrable evidence of potential for growth and employment creation
  • Group must be registered with the relevant government body with a valid group registration certificate.
  • Group membership must be as guided by the registering entity.
  • Group Membership must be at least;
  • For youth groups; 70% youth (18-35 years), and leadership, 100% youth.
  • Women groups 70% women, and leadership, 100% women
  • PWDs- 70% PWDs, and leadership, 100% PWDs.
  • The applicant group must apply from the constituency and be appraised and recommended by the respective CUFMCs.

The repayment period depends on the amount borrowed. You can either pay in in twelve (12), Eighteen (18) and twenty-four (24) equal instalments proportionate to the amounts borrowed.

You can apply the loan from the Uwezo fund website and submit the forms at the your constituency office. Wait for the vetting and they will call your group for verification.

Women Enterprise Fund (WEF)

The Women Enterprise Fund aims to uplift women in Kenya by providing them with financial resources to start or grow their businesses. Women entrepreneurs can access loans from this fund to invest in various sectors, from agriculture to retail.  

WEF Loan Products

WEF offers the following loan products


Tuinuke is a group loan to help them start or expand their business. The loan amount ranges from Ksh 50, 000 to Ksh 750,000. You can access the loan by dialling *254# on your mobile phone. Below is the eligibility criteria

  • A member must be a Kenyan Citizen of 18 years and above.
  • Must hold a valid ID document (National ID / Passport).
  • Must have a registered sim card which should have been in operation for at least 6 months and 3 months active on M-PESA.
  • All members must be of the female gender.
  • The borrower must be a member of a group.
  • The group will have a minimum of 10 members with maximum of 30 Members.
  • All members will be responsible for group loan.
  • Members must pay their default loan on the hustler products i.e., Personal Loan or Biashara Loan
  • Group Must have identified the three officials in line with their registration certificate before setting up the account.
Features of the Tuinuke Loan
  • Repayment period varying from 3 to 12 months.
  • Interest rate of 3.5% p.a on reducing balance
  • Administration fees of 2.5% and
  • 5% savings component.

Commercial Banks

Commercial banks in Kenya also offer government-backed business loans through partnerships with government agencies. Here are some banks known for their involvement in providing such loans:

a. Equity Bank: Equity Bank has a strong presence in Kenya and offers various loan products designed for SMEs. They collaborate with government agencies like the Youth Enterprise Development Fund and Uwezo Fund to provide entrepreneurs with accessible financing options. The bank offers loans with competitive interest rates and flexible repayment terms.

b. KCB Bank: Kenya Commercial Bank (KCB) is another major player in the Kenyan banking sector. KCB partners with government programs to provide financial support to businesses. They offer tailored loan products for startups and existing businesses, making it easier for entrepreneurs to access credit.

c. Co-operative Bank: Co-operative Bank has a history of supporting SMEs in Kenya. They have established partnerships with government agencies like the Biashara Fund to provide loans to entrepreneurs. Co-operative Bank’s loan products come with favorable terms and conditions for businesses of all sizes.

  1. Microfinance Institutions

Microfinance institutions (MFIs) play a crucial role in providing financial services to underserved communities and small businesses in Kenya. Many MFIs collaborate with government programs to offer government-backed business loans. Here are a few well-known MFIs:

a. Faulu Kenya: Faulu Kenya is a leading microfinance institution that offers financial products and services to entrepreneurs and SMEs. They provide government-backed loans to eligible borrowers, helping them access the capital they need to grow their businesses.

b. K-Rep Bank: K-Rep Bank, now known as Sidian Bank, focuses on providing financial solutions to small businesses and micro-entrepreneurs. They participate in government-funded programs to offer affordable loans to Kenyan entrepreneurs.

Development Finance Institutions (DFIs)

Development Finance Institutions are specialized financial institutions that support economic development and job creation in Kenya. They often collaborate with the government to provide business loans with longer repayment terms and favorable interest rates. Some notable DFIs in Kenya include:

Kenya Development Corporation (KDC):

 KDC plays a crucial role in supporting the industrialization of Kenya. They offer financial assistance to businesses in various sectors, including manufacturing, agribusiness, and technology. KDC provides Debt financing and equity financing to eligible businesses.


KDC provides debt financing to eligible businesses. Here are the main products and services.

Project Finance

Project finance is suitable for infrastructure and industrial enterprises looking to establish , modernize ,refurbish and diversify their business.

Working Capital

Provides business financing to enable enterprises to run their daily operations.

Asset Finance

Assists businesses acquire assets such as machinery, plant, equipment and non-P.S.V commercial vehicles.

Energy Efficiency

KDC provides financing to energy conservation projects.

Technology Transfer from India

KDC provides finance to enable technology transfer from India. They enable businesses to purchase machinery, plants from India.


This product enables eligible KDC borrowers obtain financing from third party lenders or access goods and services on credit


KDC offers the following equity financing options.

Ordinary Equity

This facility offer  KDC an opportunity  to invest in new or existing enterprises in the priority sectors by taking up shareholding.

Redeemable Preference Capital

KDC supports eligible enterprises to raise financing by taking up redeemable preference share capital that will be repaid over a specified period.

Requirement for Getting Financing from KDC
  • A formal application letter for a facility
  • Board Resolution to borrow or to invite KDC to acquire a stake in theCompany
  • Feasibility Study /Business plan including Financial projections for the duration of the facility
  • Copy of Certificate of Incorporation
  • Copy of Memorandum and Articles of Association
  • Copy of Company’s PIN and CR 12
  • Tax Compliance Certificate
  • Copy of latest Annual Return
  • Copy of ID and PIN of Directors
  • 2 recent coloured passport photographs of Directors
  • Profiles of Shareholders / Directors and key Management
  • Bank Statements and / or Money Transfer Statements for the last 6 months
  • Audited Accounts for the last 3 years and Management Accounts for the current financial year
  • Copy of Bill of Quantities (BQs) / Quotations / Proforma Invoice
  • Proposed Security for the loan
  • Tenancy agreement long enough to cover the tenure of KDC’s facility, in respect of suitable rented property.
  • Copies of relevant Government of Kenya Licences& Regulatory permits
  • Confirmation that leads promoters shall finance at least 33% of the cost of the project

Start Up

  • A formal application letter for a facility
  • Board Resolution to borrow or to invite KDC to acquire a stake in the Company.
  • Feasibility Study /Business plan including financial projections for the duration of the facility
  • Copy of Certificate of Incorporation
  • Copy of Memorandum and Articles of Association
  • Copy of Company’s PIN and CR 12
  • Tax compliance for the company
  • Copy of ID and PIN of Directors
  • 2 recent coloured passport photographs of Directors
  • Profiles of Shareholders/ Directors and key Management
  • Copy of Contractors Estimate / Bill of Quantities (BQs) / Quotations / Proforma Invoice
  • Proposed Security for the loan
  • Copies of relevant Government of Kenya Licences& Regulatory permits
  • Confirmation that lead promoters shall finance at least 33% of the cost of the project

 Kenya Industrial Estates (KIE):

KIE specializes in promoting and developing micro, small, and medium-sized enterprises. They offer a range of financial products, including loans, to support entrepreneurs in various industries. KIE offers financing establishing and rehabilitating industrial workspace.

KIE  provides financing for  start-ups, expansion, modernization or rehabilitation focusing on priority sectors identified in Vision 2030.These  include:

  • Agro-industries,
  • Textile & apparels,
  • Leather,
  • Water and irrigation technology,
  • Building materials
  • Paper and printing,
  • Motor vehicle works and components,
  • Wood and furniture,
  • Tools/equipment,
  • Metallic and fabrication and
  • Electrical and electrical installations.


Securing funding for your business in Kenya has become more accessible, thanks to the various government-backed loan programs and partnerships with financial institutions. Whether you are a young entrepreneur, a woman-owned business, or an established SME, there are options available to help you access the capital you need to start or grow your business.

Before applying for a government-backed business loan, it’s essential to thoroughly research the specific program’s eligibility criteria, interest rates, and terms. Additionally, it’s wise to consult with financial advisors or experts who can guide you through the application process and help you make informed decisions.

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