This archive report was first published on 29 June 2020.
On June 29, 2020, Equity Bank announced that it would be the beneficiary of a $50 million (Sh5.3 billion) loan from the International Financial Corporation (IFC). The loan is aimed at providing affordable loans to Small and Medium Enterprises (SMEs) that have been severely impacted by the COVID-19 pandemic.
According to IFC, the proposed investment is a senior loan of up to $50 million (Sh5.3 billion) with a tenor of one year, renewable.
Equity Bank has taken a conservative approach during the pandemic, calling back its Sh9 billion dividend and forfeiting an expansion plan that would have seen the bank acquire regional banks.
IFC's investment is expected to give SMEs a much-needed breathing space, as the Central Bank of Kenya (CBK) had projected that 75% of Kenyan SMEs would have run out of reserves by the end of June.
The new loan will take Equity Bank's debt to the global financier to Sh22.7 billion from Sh17.4 billion. IFC did not reveal the cost of the loan but noted that it will be senior, a rank above other loans with regard to claims on the bank's assets.
The loan will be offered to SMEs with between 10 and 300 employees or an annual sales of Sh10 million to Sh1.5 billion. The loan size per borrower will range from Sh1 million to Sh200 million.
Equity Bank is the first Kenyan bank to receive a loan from IFC under its specific programme to support lenders during the pandemic.
