Understanding the various types of financing options available for small businesses is crucial for their sustainability and growth. In Kenya, obtaining a small business loan has been facilitated by numerous financial institutions and innovative digital platforms. These loans offer attractive interest rates, flexible repayment terms, and accessibility, making them a viable option for small businesses in need. Here, we explore five different small business loans in Kenya and how to qualify for such loans.
Understanding 5 Small Business Loans in Kenya
In Kenya, small businesses have several loan options. They include M-Shwari, KCB M-PESA, Tala, Branch, and Equity Bank’s Eazzy loan. M-Shwari, provided by Safaricom in partnership with Commercial Bank of Africa, is a mobile-based savings and loans product accessible through M-PESA. KCB M-PESA, a product of Kenya Commercial Bank (KCB) and Safaricom, offers loans to M-PESA customers.
Tala, on the other hand, is a mobile technology and data science company that provides a credit scoring and reporting platform to financial institutions. With Tala, businesses can access loans right from their mobile phones. Branch, a similar digital platform, offers loans to businesses based on their transaction history. Lastly, Equity Bank provides Eazzy loans, accessible through the Eazzy banking app or Equitel mobile banking service. These loans are designed with the small business owner in mind, offering flexible terms and lower interest rates.
How to Qualify for Small Business Loans in Kenya
To qualify for a small business loan in Kenya, there are general requirements that businesses must meet. First, the business should be registered and possess a valid business permit. It should have been operational for a certain duration, usually six months to a year, with a steady income stream. In some cases, the business may be required to provide collateral.
For mobile-based loans like M-Shwari, KCB M-PESA, Tala, and Branch, your transaction history on the platform is crucial as it determines your credit score. Timely repayment of previous loans improves your creditworthiness and increases the loan amount you can access. For Eazzy loans, applicants must be account holders with Equity Bank and should have a consistent transaction history. In some instances, the bank may request for bank statements, invoices, and financial statements to assess the business’s financial health.
In conclusion, various small business loans in Kenya cater to the needs of different businesses. The choice of loan will depend on the business’s needs and its financial capability. However, it is crucial that small businesses maintain good financial records and a healthy credit score to improve their chances of loan approval. Lastly, businesses should understand the terms and conditions of the loan before committing to it, to avoid any future misunderstandings or legal confrontations.
