The African Development Bank (AfDB) has approved a $150 million subordinated loan to Equity Bank Kenya to expand lending to small and medium-sized enterprises (SMEs), in a deal aimed at unlocking more long-term finance for Kenyan businesses. The bank said on Monday, 9 November 2026, that its board approved the eight-year facility on 30 October.

The money is intended to strengthen Equity Bank Kenya's capital base so it can lend more to small businesses, which often struggle to secure the longer-term loans they need to buy equipment, expand premises or take on bigger orders. The facility carries a five-year grace period, according to the AfDB.

What the $150 million package includes

Alongside the loan, the package includes up to $250,000 in technical assistance through the AfDB's Affirmative Finance Action for Women in Africa (AFAWA) initiative, to support lending to women-led businesses. A further $900,000 in non-financial support will come through the bank's SME Credit Catalyst Program, which helps build business advisory services and tailor products for women and young entrepreneurs.

Taken together, the support around the loan amounts to up to $1.15 million. Neither the AfDB nor Equity has published the interest rate on the facility.

Who the funding is meant to reach

The AfDB says the facility should benefit entrepreneurs across Kenya, especially in agriculture, manufacturing, trade, logistics and green businesses, with a strong focus on women-led and youth-run enterprises. By 2030, the operation is expected to support about 9,000 new SME loans, and to raise the share of Equity's lending that goes to women-led and youth-led small businesses. Equity also plans to grow the share of its trade finance that covers trade within Africa.

Equity Bank Kenya already serves roughly 1.9 million SME clients across the country. The loan supports the bank's wider $500 million capital-raising initiative, as Kenyan banks work towards the Central Bank of Kenya's higher minimum core capital requirement.

"Small businesses are the backbone of Kenya's economy, yet too many entrepreneurs lack the financing needed to turn their ambitions into thriving enterprises," said Ahmed Attout, director of financial sector development at the African Development Bank.

Why small business lending matters in Kenya

Small and medium-sized enterprises contribute more than 30 per cent of Kenya's GDP and employ over 80 per cent of its workforce, yet many still struggle to access long-term credit, with lending rates still around 14 per cent. A subordinated loan ranks behind depositors and ordinary creditors if a bank fails, and under Central Bank of Kenya rules this kind of debt usually counts towards a bank's supplementary, or tier 2, capital. That allows the bank to carry a bigger loan book without breaching its capital ratios.

For business owners, the practical effect should be more long-tenor money available for equipment and expansion loans through Equity's normal SME loan products and approval process. The AfDB lends to Equity Bank, and businesses borrow through the bank itself; small firms cannot apply to the AfDB directly for this money. Development finance lines like this one do not change a bank's credit checks, so lenders will still look at cash flow, collateral or guarantees, and repayment history.

Part of a wider push into Kenyan banks

The loan is part of a competitive push to channel development-finance capital through Kenyan banks. The AfDB recently announced a $60 million trade-finance guarantee for Equity, and IFC-backed risk-sharing deals are expected to mobilise about $144 million in SME lending across Equity, KCB and 4G Capital. KCB has separately secured a $100 million credit line from the European Bank for Reconstruction and Development for underserved small businesses.

Whether the new funding reaches the smallest firms will depend on how Equity prices and distributes the loans in the months ahead, but for now the AfDB's backing gives one of Kenya's largest lenders more room to lend to the businesses that employ most of the country's workers.