Growing a small business takes work, time and money. And, for many small business owners, the money part is a challenge.
Many small businesses in Kenya cannot grow their business solely on the profit they make or on the savings of their business owners. And many small businesses die a short while after they start. And this is mostly because they don’t have the reserves to sustain and grow. Apart from the lack of reserves, others die due to a lack of knowledge on how to manage their finances.
Thus many financial institutions in Kenya, from loan agencies to banks offer business loans. Others go to the extent of offering business support in terms of expert advice and continuous guidance to SMEs to grow their businesses.
Most of these institutions offer loans to established businesses and come with similar loan requirements such as collateral requirements.
Financial institutions are the most common sources of financial support for SMEs in Kenya. They include banks, Saccos, and microfinance institutions.
Most established SMEs in Kenya and business owners that have collateral easily turn to these institutions for business loans.
As a small business owner, there are so many institutions you could consider to acquire a loan to grow your business.
Loan Agencies, Saccos and Microfinance Institutions in Kenya
ECLOF Kenya is a Microfinance Institution that provides financial support and non-financial services to SMEs in Kenya. Its credit facilities are used to empower men, women, and youth as they run their businesses and their income-generating activities.
ECLOF has many offices around the country – Nairobi, Machakos, Ruiru, Kayole, Rongai, Githunguri, Thika, Matuu, Murang’a, Nyeri, etc.
Visit their website and check the other locations. you will be able to get as much information about available loans and the one that suits you. Their average loan amount is KES 40,000.
Musoni provides quick loans from as low as KES 500 and applications are processed within 72 hours.
Their agricultural loans are meant to finance smallholder farmers to improve their farms and make a higher income. These agricultural loans come in groups: Group Kilimo Booster (A) with amounts ranging from 5k to 140k. Group Kilimo Booster (B) ranging from 100k to 500k and Individual Kilimo Booster ranging from 100k to 3M.
For eligibility, your business must be in operation at least for 1 year.
Jijenge Credit Limited
Jijenge Credit Limited offers microfinance products to SMEs unable to access financial services.
Jijenge offers quick credit something most banks don’t process speedily. They even offer loans to those who need quick money for as short a period as one day.
Mwananchi Credit Limited
Mwananchi Credit Limited is known for asset financing.
For example, they have Boda Boda Asset Financing. This loan enables entrepreneurs who don’t have full capital have access to funds to purchase a Boda Boda.
With this loan type, the customers first pay KES 15,000. They then receive a loan to be serviced within 18 months. As a customer, you service your loan by paying KES 300 daily or on weekly basis through a Mpesa Paybill number. This loan comes with comprehensive insurance for your bike and a tracking device.
They also offer title deed or logbook secured loans to SMEs in need of working capital.
Inuka Africa Microfinance
Inuka Africa supports small businesses that have an impact on the local communities.
They provide microloans that range from KES 5,000 to KES 3,000. Microloans are serviced between 1 to 6 months. No formal collateral is actually needed for you to get a microloan. Microloans are offered to groups and individuals.
They also offer SME loans that go up-to KES 300,000 limit and are serviced over 12 months. Only individuals are offered SME loans and collateral is required.
Inuka also offers agribusiness loans to farmers and other actors in the value-chain, especially in the dairy sector. Agribusiness loans are serviced within 24 months and can start from as low as KES 5,000 without an upper limit. Collateral is needed and in this case, your livestock is used as collateral. Your animal has to be insured and Inuka facilitates the insurance for you.
Taslimu capital offers business loans ideal for short-term working capital requirements. For example, if your receivables are running behind schedule and you need to pay your workers, Taslimu loans come in handy.
Their repayment plans are flexible with tenors of up to 6 months. All you need to do is fill out the Business Loan Form to contact them. A Business Relationship Officer (BRO) will then be assigned to you. The BRO will give you more instructions on the documents needed to assess your application. These documents include your business permit, your financial records of the last 6 months, etc.
Once your application is assessed and is successful, you will be notified by your BRO. Your BRO then provides you with a letter of offer and other documents. The next process will lead you to receive your loan within 24 hours.
GroFin offers an SME loan to support your growing business. This loan is meant for businesses making a social and economic impact such as empowering women, creating jobs, etc.
Your business needs to be established having been operating for 2-3 years. Additionally, your business needs to have an annual turnover of 1.5 times the loan amount. This is to ensure your business can actually service the loan you are applying for.
Loans are offered to Small businesses in Education, Healthcare, Agri-Processing, Manufacturing, or Key Services in Energy, Waste, Water, or Recycling.
They offer medium-term loan capital for a loan duration of 3-8 years.
Pamoja Women Development Program
PAWDEP provides microfinance solutions to women groups running small scale industry and farming. They aim to empower Kenyan women financially to run viable businesses in the community.
PAWDEP has several loan products: Diamond loans, Inuka loans, Haraka loans, and Jaza loans. They also have Pesa Plus Loans, Angaza loans, Msingi Bora loans, and Mabawa loans. Some loans are only available to individuals and others to groups and they all come with different interest rates.
KCB For Your Biashara offers different loans to businesses: Loans for small businesses, for SMEs, for Agri-business, and Chama loans.
Equity bank provides micro-business loans to the youth seeking to empower them with the tools and resources they need to create and grow businesses. They mainly finance projects to do with agriculture: dairy and horticulture.
These loans are available to all youth 18-35 years who are Equity bank account holders.
Family Banks offers ‘Biashara Boost Loan’ to finance micro-businesses. You need to be a Family bank account holder for at least 6 months but new customers from other banks can be eligible.
Biashara Boost Loan is designed for micro-businesses that have been operating for at least 12 months and need funds to expand their existing business line profitably. Financing ranges from KES 5,000 up-to KES 5 Million. There is an additional eligibility to top up existing loans enjoying flexible repayment plans of up to 36 months (3 years).
Absa offers start-ups and established business owners loans to grow their businesses and with good interest rates. You choose the interest rate that suits your business and get flexible repayment options. You also get an opportunity to top up 9 months of consecutive repayments.
Absa not only gives you a loan but also gives you access to a forum that gives you insights and helps you grow your business network.
Your business must have been in operation for at least 12 months. The minimum facility amount you can get is KES 100,000.
These are not the only institutions you could get a business loan for your business. Do your research of the banks, Saccos, and microfinance institutions in your area in order to know which suits your business.
Family, Friends and groups (chamas)
Financial institutions do not have to be your only option.
Not all small business entrepreneurs can manage to get loans from SACCOS, banks, and microfinance institutions. Getting business loans especially for entrepreneurs without established businesses or collateral can prove difficult.
If you cannot get a loan from a financial institution you can always look at other options. Consider your family members, your friends, community groups you are in, and the personal groups (chamas) you are a member of.
If you are not a member of any community group that offers financial support to its members, consider becoming a part of one or even two.
The entrepreneurship journey is not a solo journey per se. You can thrive on your business revenue and your savings for a while. But you will need some extra cash once in a while to help your business reach the next level.
Financial support in Kenya comes in many ways and with a wide array of options to choose from, knowing which option works for you is crucial. Know your business and your financial abilities and limits to avoid falling into a loan hole. The wrong loan might make you lose your business and your security.
Before you apply for a loan, evaluate your business’ ability to service the loan, and still stay afloat.