In Kenya, being a member of any of the licensed saccos signifies commitment towards achieving future financial independence.
Anyone above the age of 18 years of age is at liberty to acquire membership at any of the registered saccos regardless of gender, tribe, religion, income-level etc subject to the attainment of the necessary membership eligibility criteria and requirements.
Such requirements may include; payment of registration fees, minimum monthly contributions as well as filling in of the relevant membership forms.
Upon successful completion of the above, full membership attainment at any given sacco usually provides access to its wide range of products and services beneficial to one’s preference.
Some of benefits accrued from such include; dividend payouts on share capital, interest rates on deposits, access to salary-based loans, deposit-based loans & mobile loans, convenient loan processing periods, access to alternative channels eg mobile banking/online portals and many more.
In general, most saccos have a large portfolio dedicated to credit facilities ranging from personal loans, salary advances, development loans, education loans, asset financing etc
However, access to some of these options is limited to certain qualifications that have to be met prior to using them.
Our focus in this article will be to highlight some of these requirements needed inorder to be able to qualify for a sacco loan.
How to qualify for a sacco loan
As earlier stated, simply being a member of a sacco does not guarantee one access to a particular loan product. Be that as it may, attaining eligibility is quite simple and mainly revolves around the below factors.
1. Account duration
This refers to the amount of time a member actively maintained an account with the sacco. The duration required to qualify for a loan may range from at least a period of 3-6 months.
2. Sacco deposits
Sacco deposits refer to the monthly contributions made by a member. Such deposits usually earn interest and are withdrawable after a certain period.
In addition, they can also be used for loan considerations whereby members can be granted 3 or 4 times their deposit amounts.
Likewise in the event of a pending loan, one can offset the remaining balance using deposits of a similar value.
3. Availability of guarantors
Guarantors are signatories who pledge to repay a portion of a borrower’s loan based on agreed amounts in the event that the principal borrower defaults.
Generally, sacco loans are granted subject to the availability of a particular number of guarantors.
However, there are instances whereby borrowers can self-guarantee against their deposits.
4. Availability of collateral/security
With the exception of guarantors, some saccos may accept title deeds, logbooks, fixed deposit funds or NSE shares as forms of security prior to loan approvals.
5. Registration process
Some sacco loans especially on mobile-based platforms require prior registration and activation before one can make a loan application.
Such services are usually accessible via ussd codes or downloadable apps which provide instant short term loans.
6. Availability of verification documents
Depending on the type of loan, saccos may need to verify the details of a borrower and such may require submission of various documents such as copy of ID card, KRA Pin, bank statements etc
Failure to submit any of the necessary documents without valid reason may result in not being able to qualify for a loan.
7. Type of loan
Most sacco loans are usually specific to their purposes and intended clients i.e one cannot use a particular loan for a different purpose. Likewise, men cannot qualify for loans targeted for women.
8. CRB report
A CRB report is an official document detailing the credit status of an individual. It shows serviced loans, active loans as well as defaulted loans.
This report typically advises the sacco on the risk profile of a borrower.