The hustler fund, launched yesterday by President Ruto, is aimed at providing financial support to “hustlers” to boost their hustles, as promised during his campaign.
The minimum amount one can borrow is Sh500 while the largest amount advanced will be Sh50,000 at an interest rate of eight percent. With the 8 percent interest, a customer who borrows Sh500 will pay back Sh501.53 after 14 days, representing Sh1.53 in interest.
The repayment period for loans for small businesses through the Hustlers Fund will be capped at 14 days in a plan that looks set to open a window for small businesses to access cheaper credit.
At eight percent per month, the interest is lower than the latest average bank borrowing cost of 12.38 percent and annualized M-Shwari charges of 108 percent.
According to Cabinet Secretary Simon Chelugui, Sh408 million was disbursed to 1.14 million Kenyans in under 12 hours, following the launch of the hustlers’ fund on Wednesday.
Even though the hustler fund is a loan and not a grant as earlier promised, the interest is still cheaper than the market average; bank credit at 12.38 percent and annual M-Shwari charges of 108 percent.
“We have about eight million Kenyans who have been blacklisted by lenders. The Hustlers fund will give them a second chance… Even those who had been sent away by lending apps, this is your chance to redeem yourself,” said President William Ruto during the launch of the Fund.
Terms and Conditions
To register for the hustler fund, a borrower needs to dial the USSD code *254# from their phones and follow the instructions.
When a borrower does not refund the facility in 14 days, they will get an extra 15 days to repay and if the loan is still not settled within this period, the interest rate increases to 9.5 percent per year.
In the event one is not able to repay back the loan after the extension, their Hustler Fund account will be frozen and the borrower will lose all accumulated credit scores after more than 30 days of default.
There is also no CRB listing under the Sh50 billion kitty, which means that if someone defaults it will not affect their credit score with other lenders.
When a customer borrows, the approved loan is sent to their mobile money account, deposits 95 percent of it in their money wallet, and places five percent of it in their savings account.
The five percent that goes toward the savings plan is split into 30 percent for short-term savings and 70 percent for long-term (pension) savings.