Credit Indemnity Scheme

Credit Indemnity Scheme

What is the Khula Credit Indemnity Scheme?

The Khula Credit Indemnity Scheme was established to give access to finance to people who wish to start or expand small to medium sized businesses but do not have sufficient collateral / security to support facilities provided by participating banks. The scheme covers facilities from R10 000 to R3 million.

Who qualifies?

Owner-managed businesses - the owner should be involved in the day-to-day running of the business on a full-time basis.
Business activity must be situated in the Republic of South Africa.
Business must be conducted with a profit motive and be economically viable.
The borrower must be able to repay the bank facility.
Individual or person holding a controlling interest must be a citizen of the Republic of South Africa.
Borrower with proven and sufficient entrepreneurship, knowledge, skills and experience directly related to the nature of the business.
The entrepreneur must provide own contribution towards a start-up or expansion of the business.

How do I access finance?

As an owner or potential owner of a small or medium business, you can approach any of the following retail financial intermediaries:

Participating Financial Institutions

Nedbank Ltd
ABSA Bank Ltd
First National Bank Ltd
Standard Bank of South Africa Ltd

You may also choose to approach one of the Khula Regional Offices for assistance with a business plan development and or advice on which institution supports the scheme. The financial institution will assess the business plan and facilities application in terms of its lending criteria.

Once the application has been approved, the financial institution will approach Khula for indemnity cover and a mentor may be appointed to help with implementation of the business plan, setting up operational systems and general business management. The financial institution manages the facility and collects payments for the duration of the facility.The full payment of the facility remains the responsibility of the applicant.

How to apply

Approach any participating bank of your choice and submit your business plan to a business development officer for a facility application.

If you do not have enough collateral, inform the bank and request them to approach Khula for an indemnity on your behalf.

The bank will assess the business plan and your application in terms of the bank's own lending criteria and decide if the business will be able to cover the business expenses and the monthly instalments and remain sustainable.

If the bank believes that the business will succeed, the facility is then approved and a facility proposal is submitted to Khula for an indemnity application.

Khula considers the proposal and assesses the need for assisting the business with indemnity. The indemnity can only be used when the SME cannot provide enough collateral or security themselves. The bank manages the loan and collects your instalments for the duration of the loan.