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What is Loan Multiplier?

The loan multiplier is the factor a SACCO applies to a member's deposits to determine the maximum that member may borrow. It is set by each individual SACCO, frequently differs between loan products within the same SACCO, and is revised over time. There is no national standard multiplier in Kenya.

A real Kenyan example

A member with deposits of KES 300,000 at a SACCO applying a multiplier of three has a ceiling of KES 900,000 on that test, reduced by anything already owed to the same SACCO.

Formula

Borrowing ceiling = Deposits × multiplier − outstanding SACCO loan balance

Why it matters

The multiplier is the number members most often learn from an article or a colleague rather than from their SACCO, and it is the number a borrowing plan is built on. Because it varies by SACCO and by product, a plan built on a borrowed figure is a plan built on a guess.

FAQs

What is a typical SACCO loan multiplier?
There is no typical figure that is safe to plan around, because each SACCO sets its own and often applies different multiples to different products. Ask your SACCO for the multiplier that applies to the specific loan you want.
Does the multiplier apply to share capital too?
That depends on the SACCO. Some apply it to deposits only, some include share capital. Ask which balances count.
Why can I not borrow the full multiplier amount?
Because affordability is a second and separate test. If the monthly repayment on the full amount would exceed the share of your pay available for deductions, the SACCO lends the smaller amount your income can service.
How do I raise my borrowing ceiling?
Deposit more and deposit consistently, clear or reduce an existing SACCO loan so it stops consuming the multiplier, and free up repayment headroom by reducing other deductions.

Related terms

SACCO Member DepositsGuarantor (SACCO)Loan AppraisalBOSA (Back Office Service Activity)

See all 72 terms