Youth business loan
Image Source: TechEngage Pakistan

Imran Khanโ€™s Youth Business Loan is a dream come true for all up and coming entrepreneurs. The loan is offered under the Youth Business Scheme, and itโ€™s something you need to know about.

For instance, many have big dreams but fall short on resources. On the other hand, many jumped ship but now are struggling. If you’re anyone of those or fall in the middle, keep reading!

The Youth Loan Scheme

The scheme was developed to aid the youth trying to make a mark in the business sector. Moreover, the loan is available to either set up a new business or expand a currently existing one. Furthermore, it exists presently in collaboration with three departments that distribute the loans.

State Bank of Pakistan (SBP), Small and Medium Enterprise Authority (SMEDA), and Pakistan Poverty Alleviation Fund (PPAF) all work together. 

youth business loan
Image Source: KamyabJawan.gov.pk

A subsidized loan is given to provide the youth with financial assistance to create successful businesses. Therefore, if you want to avail of the loan, you need to get acquainted with the criteria.

The Eligibility Criteria

  1. All men/women/transgender holding a CNIC, aged between 21 and 45 years with entrepreneurial potential can apply for the loan 
  2. Small Enterprises (start-ups and existing businesses), according to the definition of SBP, owned by people in the age mentioned above brackets can apply.
  3. For IT/E-Commerce related businesses, the minimum degree of enrollment and experience of at least six months will be required
  4. Lastly, for IT/E-Commerce related businesses, the minimum age limit is additionally 18 years.

A Special Womenโ€™s Quota

In addition to those requirements, there’s an individual quota for women. Under the scheme, it has been decided that 25% of the loans will go to female borrowers.

Loan Types

Two types of loans can be received:

  1. Working capital loan
  2. Term loans

Firstly, the maximum duration allowed for the repayment of the loan is eight years. In addition to that, the maximum grace period allocated can be of 1 year.

On the other hand, the duration of loan repayment and grace period can also be subject to change. In other words, the judgment of the parties involved will be used depending on the borrower.

youth led businesses
Image Source: Nestle

Loan Amounts and Securities

Three tiers are created to make the process efficient and transparent.

  • Tier 1: Rs. One hundred thousand to Rs. 1 million (without collateral).
  • Tier 2: Above Rs. 1 million up to Rs. 10 million (with collateral).
  • Tier 3: Above Rs. 10 million up to Rs. 25 million (with collateral).

For the tier 1 loan, the lender does not require a guarantee. A personal guarantee from the borrower is deemed sufficient.

On the other hand, for tier 2 and 3 loans, collateral is required. It can be anything bankable like a commercial vehicle, gold ornaments, government securities (among others). Moreover, the decision on the collateral will be made by the participating banks.

Mark-Up Rate

Lastly, there is a mark-up rate thatโ€™s applied to all three tiers:

  • Tier 1: a fixed 3% rate per annum for the borrower.
  • Tier 2:  fixed 4% rate per annum for the borrower.
  • Tier 3: fixed 5% rate per annum for the borrower.

Note: The registration for the first phase of the loan scheme has closed. However, you will be able to apply in the upcoming step 2 of the program! 

All in all, this is a fantastic scheme that’s bound to have long-term benefits. Prime Minister always pledged to empower the youth of Pakistan and align his mandate with their needs. This scheme proves that entirely, hereโ€™s to the child thatโ€™s going to uplift our country.

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