Left to Right: Finance minister Matia Kasaija, Uganda Bankers Association chairman Mathias Katamba and BoU Deputy Governor Dr Michael Atingi-Ego at the signing of the MoU on Tuesday, 23 November 2021. PHOTO/COURTESY

The Small Business Recovery Fund was launched on November 23, 2021 by the Government of Uganda in partnership with all the Commercial Banks, Licensed Credit Institutions and Micro-Finance Deposit-taking Institutions supervised by Bank of Uganda. The Fund aims to support businesses that have been adversely affected by the COVID-19 pandemic, have suffered financial distress, and can show potential for recovery if provided with loans and liquidity assistance. Here is a list of some frequently asked questions about the Fund.

  1. What is the Small Business Recovery Fund?

The Small Business Recovery Fund (SBRF) is a fund set up by Government of Uganda to provide loans to small businesses that have been adversely affected by the COVID-19 pandemic and have suffered financial distress and can show potential for recovery if provided with financial support.

  • What is the objective of the Fund?

To provide affordable credit facilities to small businesses that have suffered financial distress arising from the effects of COVID-19 pandemic.

3. Who is providing the financing under the SBRF? The SBRF is a risk sharing Fund between Government of Uganda and the participating financial institutions that are regulated by Bank of Uganda. The Government of Uganda provides 50% of the funds while the participating financial institutions also contribute 50% of the funds.

4. Who is eligible to borrow under this Fund?

Small businesses operated by individuals, groups, partnerships and companies, employing between 5-49 people and with annual turnover of UGX 10 million to UGX 100 million are eligible to borrow under this Fund. The businesses should be able to demonstrate capacity for recovery. However, agri-businesses or agricultural activities that are eligible under the Agricultural Credit Facility (ACF) and those that have already been financed under ACF are not eligible for funding under this Small Business Recovery Fund.

5. How can one access the fund?

Eligible borrowers can access loans only through participating financial institutions, which include all the Commercial Banks, Licensed Credit Institutions and Micro-Finance Deposit-taking institutions regulated by the Bank of Uganda. The participating financial institutions are responsible for assessing potential borrowers in line with the Fund’s guidelines and their credit policies and thereafter disburse the funds to them.

6. Can one borrow more than once under this Fund?

No, a borrower can only access financing once and there will be no top-ups. This is to give an opportunity to other eligible borrowers to access financing. 7. What is the borrowing interest rate on loans under this fund? The interest rate to be charged by the banks shall not exceed 10% per annum and shall be on reducing balance.

8. What is the repayment period for these loans? The loan repayment period is a minimum of 6 months and a maximum of 4 years, which includes a grace period of a maximum of 1 year depending on the nature of the project and as determined by the respective participating financial institution.

9. Is there a maximum or minimum loan amount?

 The maximum loan amount shall be UGX100 million, however there is no minimum loan amount.

10. Does one require collateral to access a loan under this Fund?

Yes, the borrower will be expected to provide collateral/ security for the loan and this will be determined by the participating financial institution where the borrower will access the loan.

11. How much are the loan processing fees?

Loan processing fees will not exceed 0.5% of the total loan amount and shall be a one-off charge. The borrower shall be responsible for paying the costs of legal documentation and registration as well as insurance fees.

12. What is the role of Bank of Uganda in the SBRF?

Bank of Uganda is the Fund administrator and will be responsible for managing the Fund on behalf of Government of Uganda. They will also be responsible for processing refinance claims from the participating financial institutions and sensitizing the public on the availability of financing for small businesses under the SBRF.