Cashflow lending option for the unemployed
11 November 2021 | Agriculture
Agribank has a cashflow lending facility that is primarily targeted at the unemployed and was developed with distinct requirements to benefit women, young people and agriculture professionals.
According to the bank, this cashflow lending is an option under the Women and Youth loan scheme.
Bank spokesperson Fillemon Nangonya explains that as a short-term loan, the cashflow lending facility requires no collateral for clients who do not have fixed property or have limited collateral scope on their fixed property.
“In addition, the special option was designed to address the barrier of limited access to finance due to lack of ownership of fixed properties to offer as collateral, especially among the unemployed members of the community.”
He says that women and young people who own fixed property are also faced with the barrier of limited collateral scope on their properties, hence they experience difficulties to access finance.
Nangonya said clients applying under this option are required to provide a valid off-take/supply agreement based on the project’s cashflow projections.
He said this agreement is a commitment between the farmer and an off-taker, who is the buyer of the produce, whereby the farmer commits to supply the produce and the off-taker pledges to buy the produce from the farm.
To ensure that a buyer is legitimate, the bank conducts a due diligence check on the buyer prior to loan approval.
Once funding is approved, a tripartite agreement is signed between the client, Agribank and the buyer. Through the tripartite agreement, the buyer, when purchasing from the farmer, agrees to first pay the loan instalment amount to Agribank and then pay the difference to the farmer, explained Nangonya.
“Thus, public members especially the target market being women, youth, agricultural professionals, who are interested and eager to start or expand their agricultural projects are encouraged to approach the bank for funding.”
Nangonya said as a state-owned development finance institution, Agribank will continue to play a meaningful role in ensuring that both communal and commercial farmers have affordable access to financing, to transform the agricultural sector to optimum sustainable productive status for prosperity.