KENYA – Sidian Bank, an SME and Trade Finance-focused lender, has removed rate cap and made SMEs bankable once again.
Sidian said the rate caps had locked out thousands of small businesses from the loans market, negatively impacting on economic growth.
Sidian Bank has assured current customers that the cost of their outstanding loans will not be varied while calling on unbanked SMEs to take advantage of the removal of the rate cap to resume borrowing.
Sidian Chief Executive Officer Chege Thumbi said, “We have seen a lot of interest from new and old customers who want to re-open credit lines with us, what we’re telling them is that we’re now open to finance their growth and expansion plans. Old customers will continue servicing their loans at the old rates with no change in terms.”
Sidian Bank supports SMEs through innovative solutions in Trade Finance in form of bid bonds, performance guarantees, advance payment guarantees, local and foreign letters of credit, invoice discounting, contract financing, LPO financing, and supplier financing.
The trade finance solutions allow customers to execute the projects and or do business without the need to large funded loans.
“Removal of caps means that the bank has an opportunity to adequately price loans for customers who were considered riskier in the interest cap regime,” he added.
Sidian Bank’s current average loan size ranges between KSh3.5 (US$0.03) and 5 Million (US$50,000), which confirms that the bank is focused on small and medium entrepreneurs.
“This average has grown from KSh2Million (US$20,000) in 2017. That growth is attributed to Trade Finance and therefore the bank can easily double the disbursements with the removal of the caps,” said Thumbi.
Sidian Bank was founded in 1984 as K-Rep Bank. In the beginning, the organization provided grants and technical assistance to non-governmental organizations (NGO). The NGOs then made loans to micro-enterprises.
Sidian Bank is a commercial bank in Kenya, licensed by the Central Bank of Kenya, the national banking regulator.
The bank is a medium-sized financial services provider, serving the urban and rural poor and small-to-medium business enterprises in Kenya.