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Access to affordable credit is one of the key challenges faced by farmers and agribusinesses in Kenya. The Agricultural Finance Corporation (AFC) plays a major role in providing financial support to individuals and institutions engaged in agriculture. As a government-owned development finance institution, AFC’s main objective is to promote agricultural development by offering short, medium, and long-term loans at affordable interest rates.

AFC provides financing for various agricultural activities including crop production, dairy farming, poultry, fish farming, mechanization, agro-processing, irrigation, and land purchase. Loans are available to individual farmers, registered groups, cooperatives, companies, and institutions involved in agriculture. The loan products are tailored to meet the different needs of small-scale and large-scale agricultural ventures.

Applying for an AFC loan requires understanding the eligibility requirements, having a clear business plan, and submitting the correct documents. The process is designed to ensure that borrowers can effectively utilize the funds and repay without strain. With AFC’s support, many Kenyan farmers have been able to expand their operations, improve productivity, and transition from subsistence to commercial agriculture.

This article explains the five key steps to follow when applying for an AFC loan in Kenya. The first step involves understanding the loan types and choosing the one that suits your project. The second step focuses on eligibility and requirements. We then look at the application process, followed by the evaluation and approval procedures. Finally, we discuss the disbursement and repayment terms to help farmers prepare for a successful borrowing experience.

Whether you are a first-time borrower or seeking funding to scale your agribusiness, understanding how the AFC loan process works is essential for accessing financial support and achieving agricultural growth.

1. Understand the Types of AFC Loans

Before applying for a loan, it is important to understand the different types of financing offered by the Agricultural Finance Corporation. AFC has developed several loan products to cater to the diverse needs of farmers and agribusinesses across Kenya. These loans are generally categorized into short-term, medium-term, and long-term facilities.

Short-term loans are typically repaid within one year and are used to finance seasonal agricultural activities such as land preparation, seeds, fertilizers, pesticides, and labor. These loans are ideal for crop farming, poultry, and other fast-return agribusinesses.

Medium-term loans have a repayment period of one to five years. They are used for projects such as purchase of livestock, establishment of orchards, dairy unit construction, and acquisition of farm machinery. These loans are suitable for farmers who need more time to generate returns from their investment.

Long-term loans have repayment periods of more than five years. They are ideal for large projects such as land purchase, irrigation infrastructure, agro-processing equipment, and large-scale farm development. These loans are often accessed by cooperatives, agricultural institutions, and commercial farmers.

AFC also offers specialized loans for youth and women in agriculture, as well as group loans for registered cooperatives and self-help groups. Some loans may come with grace periods to allow the borrower time to start generating income before repayment begins.

Understanding the specific type of loan that fits your agricultural project is the first step toward a successful application. It allows you to prepare the right documents, anticipate repayment schedules, and select a product that matches your production cycle.

Visit the nearest AFC branch or check their website to get details on loan limits, interest rates, repayment periods, and eligibility for each loan type.

Read Also: How to Access Agricultural Loans in Kenya

2. Check Eligibility and Prepare Requirements

To apply for an AFC loan, you must meet certain eligibility criteria and prepare the necessary documents. These requirements help AFC assess the viability of your project and your ability to repay the loan. Understanding and fulfilling them in advance increases your chances of approval.

Eligible applicants include individual farmers, registered groups, cooperative societies, agribusiness companies, and institutions engaged in agricultural activities. Youth, women, and persons with disabilities are also encouraged to apply through dedicated programs.

Basic eligibility requirements for individuals often include:

 a. Kenyan citizenship and a valid national ID

 b. Proof of land ownership, lease agreement, or access to the farming site

 c. A viable agricultural project or agribusiness plan

 d. A good credit history or guarantor if required

 e. A recent bank statement or mobile money statement

In the case of groups or cooperatives, additional requirements may include:

 a. A certificate of registration

 b. Group constitution and member list

 c. Minutes authorizing the loan application

 d. Valid tax compliance certificate for registered entities

In addition to identity and ownership documents, applicants must prepare a detailed proposal or business plan. This should outline the nature of the project, projected costs, expected returns, and how the loan will be used.

It is also advisable to include market access strategies, risk management plans, and repayment plans in your proposal. This demonstrates seriousness and readiness to use the funds effectively.

Gather all documents before visiting the AFC office. This saves time and ensures that your application is processed without unnecessary delays.

3. Submit the Loan Application

Once you have identified the right loan product and gathered the necessary documents, the next step is to submit your application. Loan applications are made at AFC branch offices, which are available in various counties across Kenya.

At the branch, an AFC officer will provide you with an application form. Complete the form accurately, ensuring all sections are filled in clearly and honestly. Any false information or omission may lead to disqualification or delays in processing.

Attach all supporting documents to your application form. This may include your ID, PIN certificate, title deed or lease agreement, business plan, and any other documents requested by the officer. For group applications, the registration certificate and resolution minutes should also be included.

The AFC officer will review your documents to ensure completeness and guide you through the next steps. You may be required to attend an interview or clarify aspects of your proposal. Be prepared to explain how you intend to use the funds, how much you need, and how you plan to repay.

After submission, you will receive an acknowledgment slip or reference number for tracking purposes. The processing time varies depending on the complexity of the loan and availability of documentation. In some cases, a farm visit may be scheduled to assess the project location and feasibility.

Timely and complete submission of your loan application helps avoid unnecessary delays and improves your chances of approval.

4. Loan Evaluation and Approval

Once your application is received, AFC carries out a thorough evaluation process to determine whether your loan can be approved. This process is designed to assess the viability of your agricultural project, your financial capacity, and any risks involved.

The evaluation begins with a desk review of your documents. The officer checks the business plan, proposed budget, cash flow projections, and repayment plan. If the documents are in order, a loan appraisal team may be assigned to visit your farm or business premises.

During the site visit, officers assess the size and condition of the land, availability of water, progress of the ongoing project, or readiness for implementation. They also verify ownership documents and may interview you or your group members to gather more information.

The results of the appraisal are then presented to the loan approval committee. This committee evaluates the loan request based on internal lending policies, risk assessment, available collateral, and repayment ability. If approved, a loan offer letter is issued outlining the loan amount, interest rate, repayment period, and terms.

In some cases, the committee may request additional documents or adjustments to the loan application. If the loan is rejected, the applicant is informed of the reasons and may reapply after addressing the gaps.

The evaluation and approval process may take several days to a few weeks depending on loan type and complexity. During this period, maintaining communication with the AFC branch helps stay updated on the progress.

5. Loan Disbursement and Repayment

Once your loan is approved and you accept the terms, AFC will begin the disbursement process. The funds may be released in full or in phases depending on the loan type and agreement. For example, a loan for equipment purchase may be disbursed as a lump sum, while seasonal farming loans may be released in stages.

Disbursement is typically done through a bank account or mobile money transfer registered in your name. In some cases, AFC may make payments directly to input suppliers or contractors, especially for large infrastructure projects. You will be informed of the exact disbursement method when signing the loan agreement.

After disbursement, repayment begins as per the agreed schedule. Most AFC loans have flexible repayment terms that align with the agricultural cycle. For seasonal crops, repayment may be due after harvest. For livestock and long-term projects, periodic payments may be agreed upon.

It is crucial to keep accurate records of how the loan is used and maintain regular communication with your AFC loan officer. This helps address any challenges that may arise and ensures you remain on track with your repayments.

Late repayments may attract penalties or affect your creditworthiness. If you face genuine financial difficulties, reach out early to renegotiate repayment terms or seek restructuring.

Successful repayment builds your credibility and opens opportunities for larger loans or repeat financing in future.

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