State Corporations Kenya Tourist Development Corporation (KTDC )
Description
It was established in 1965 to develop tourism facilities and finance private investors. It gives loan financing (a revolving fund). This is an irredeemable seed fund of Sh48 million managed on behalf of the Government.
The objective is to provide concession credit to entrepreneurs in the tourism sector. Loans are, therefore, given to new tourist enterprises at concessional rates. KTDC provides development funds for new start-up hotels, lodges and other facilities. Most properties enjoy an equity element to reduce the impacts on lending costs on their viability and sustainability. It also gives extension and modernizations loans. Currently, many tourism facilities require rehabilitation and addition of facilities to meet guest demands. KTDC has continuously provided such binds at concessional terms. In addition to the funds, the corporation provides business advisory services.
Aviation, tours and travel loans are provided for buying cars and working capital. Business loans are also given for production and working capital for curio shops and export of handicrafts.
In obtaining a loan, the following fees are paid to KTDC:
Sh3,000 ($37.5) loan application fee that is non-refundable. A loan application form is issued on payment of the fee. The completed form must be returned within 30 days.
A non-refundable Sh50, 000 ($625) loan appraisal fee to meet the costs of project evaluation, including a physical site visit.
Commitment fee at the rate of 1 percent of the amount to be borrowed.
Other fees — legal, valuation and other charges are paid to the respective third party.
Interest rates are set as follows: 15 percent for the Commercial Loan Programme and 14 percent for the Revolving Fund Programme. The rates may be reviewed according to KTDC policies. Loans are paid over a maximum of 10 years. Only loans for the purchase of Vehicles are paid in three years.
The legal status of the applicant company shall be required: Certificate of incorporation, memorandum and articles of association and board resolution to borrow. A feasibility study report providing background information of company directors, including age, percentage shareholding, occupation, education, experience and any other relevant information are needed.
Pledge adequate security for KTDC loan and provide a copy of the title deed that must be free of encumbrances. The security value should be at least 30 percent above the principal loan sought. Provide a letter authorizing the corporation to commission valuers to prepare a report valuation of the pledged security and give the undertaking to pay valuation fees directly to the corporation valuers should also be provided.
An environmental impact assessment must be provided on submission of the feasibility study