Cheap Business Loans in Kenya
If you are a start-up entrepreneur who is looking for a loan to fund your small business, there are a lot of options for you. Hundreds of financial institutions including micro-finances, SACCOS or even banks will offer you affordable loans for your business. You may need these money to acquire an inventory, business administration, managing the payroll or even advertising and marketing.
Among the options discussed above, banks play a vital role in anchoring survival and growth of small businesses. This is mainly because banks have customized loan products, low interest rates and flexible lending terms. They are also very helping for financing business investments like fixed assets. This article will give you information about banks in Kenya that offer the cheapest business loans, including the maximum amount you can borrow, the repayment period and of course the interest rate.
Kenya Commercial Bank(KCB) Loan
KCB will offer you a variety of business loans for SMEs and small business entrepreneurs. For SMEs, KCB will offer up to KES. 3Million unsecured loans and up to KES. 250Millioon secured loans. The period for repayment will be 36 months for the unsecured loans and 60 months for the secured ones. The loans will be offered at a 13% interest rate - 9?R and a bank variable margin of 4%. The requirements for an SME loan include a breakdown of the cost of your project and the financing plan and an audited account for the past three years for any money above KES. 5Million.
For small businesses, KCB offers a number of loans. These loans vary in terms of the maximum amount you can borrow, the requirements to get the loans and the repayment period. These loans include:
a. Boresha Biashara Loan
This is a loan that is specifically designed for micro-businesses to enable them access up to KES. 1 Million. The interest rate is still 13% and the repayment period is 36 months.
b. Boda Boda/Tuk Tuk Loan
This loan will offer you up to 70% financing in the purchase of your tuk tuk or boda boda. It will also include a KES. 9600 insurance cover for the boda bod and KES. 15000 for the tuk tuk. The repayment period for the boda boda is 12 months while that of a tuk tuk is 36 months.
c. Jaza Duka Loan
This loan will fund you in stocking you shop in order to meet your customers’ needs.
d. Soko/ Market Loan
This loan offers you as a trader or market official up to KES. 100000 unsecured funds. The repayment period is 12 months.
2. Co-operative Bank Loan
This is another bank in Kenya that is supporting the growth of businesses by providing them with financial strength to keep going. It has different loan categories for micro, small and medium enterprises. These MSME loans come in three packages namely bronze, silver and gold.
a. Bronze
For this package, you will access up to KES. 2Million for a partially secured loan and up to KES. 300,000 for the unsecured one. The repayment period for the secured loan is 60 months while that of unsecured loan is 24 months.
b. Silver
In this package, you are allowed to borrow up to KES. 8Million of a secured loan and KES. 3Million for the unsecured one. Repayment period will be 60 months for the secured loan and 24 months for the unsecured loan.
c. Gold
In this last package, you can borrow up to KES. 10Million of secured loan and up to KES. 5Million of the unsecured loan. The repayment period is 60 months for the secured loan and 24 months for the unsecured loan.
All these loans are offered at a flat interest rate of 13% per month. You will also incur a 2.5% appraisal fee whose maximum tenor is 36 months. The other method is a reducing balance interest. In this method, the interest rate is 13% per annum with an appraisal fee of 3%, negotiations fee in the range of KES. 3000 to 15000 and the maximum tenor is 36 months.
3. Family Bank Loan
Family bank also has a business loan that is designed to support both micro and small businesses grow. The loan is known as Biashara Boost Loan. This loan will offer you funds ranging from KES. 5000 up to KES. 5 Million. The interest rate is 13.5% per annum and the repayment period is 36 months. In this product, it is also possible to get top-up loans.
One requirements for eligibility for this loan product is a period not less than 6 months banking with the family bank. Your business must also have been operational for a period not less than 12 months. You should also demonstrate your ability to repay that loan. This loan product is also available to customers who are new from other financial institutions.
4. NCBA Bank Loan
NCBA offers secured business loans to individuals and businesses who want to expand and grow their businesses. The loan is flexible as it offers you a repayment period of up to 60 months. The period is assessed based on your existing cash flow and projection.
The loan is usually customized in order to fit your business needs. It has no fixed limit as the limit depends on your statements and the provided security. The interest however, is on a reducing balance at 13% per annum. This loan product is available to both customers and non-customers.
5. Standard Chartered Bank
This bank offers you loans to expand you r business, purchase property or acquire assets. The business loan is open to private limited companies, sole proprietorships and partnerships. These business loans have an easy application process, usually demanding no collateral. It has a flexible repayment period of 1-3 years. Loan servicing will be based on a fixed monthly installment. The requirements for eligibility of this loan include either a sole proprietorship, partnership or company. You should also have been in business for a period not less than 3 years.
6. Equity Bank
Equity bank has the greatest clientele among SMEs and small business owners in Kenya. One of their best loan products is the Eazzy Loan. This loan requires you no guarantors or filling of forms. It is processed instantly and hence can act as an emergency loan. The amount ranges from KES. 1000 up to KES. 3 Million. The loan is available for both one month and multiple monthly installment(s).
One of the requirements for eligibility is having an active account for a period not less than 3 months with the bank. You should also be a registered user of EazzyNet and Equity mobile banking. The pre-scored limit that is computed by the bank using its defined parameters will also be considered for your qualification for the loan.
7. ABSA Bank
ABSA, formerly known as Barclays Bank, offers business loans too. The loans have a flexible interest rate that is either charged on variable or fixed rates. The loan is also secured and ranges from KES. 100000 up to KES. 7Million and is available to both existing and new customers. You can also top-up after 9 months of repaying consecutively. Your business must have been operational for a period not less than 12 months to be eligible for the loan. The loan has a debt-service ratio of 50%.
Due to their flexible repayment period, interest rates and customizable loan limits, banks have been the leading source of loans for business entrepreneurs. KCB, ABSA, NCBA, Family Bank, Co-op Bank, Equity Bank and Standard Chartered have particularly led in ensuring this dream of Kenyans. You should however, consider all the requirements of a bank before taking a loan there.
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