5 Sources of Instant Business Loans in Kenya in 2022

sources of instant business loans in Kenya

You need money to make money, and sometimes you will need people’s money to make your money. But as you know, business-wise, time is of the essence. Therefore, you need to know the sources of instant business loans in Kenya.

The time it takes to get capital to start a business in Kenya plays a critical role in the success of your venture. For instance, If you run a seasonal business, you must have funds available as soon as the high season begins, or you may miss out on a significant revenue opportunity.

In addition, without proper funding, many businesses die before their first anniversary. Depending on the business type, you will need regular capital boosters. You can use them to fund ordinary day-to-day business activities such as inventory demand and payroll expenses or finance innovative projects that would help the business grow.

You need to have a source that can give instant business loans for whichever reason. Here is a list of sources of instant business loans in Kenya from which you can pick the one that meets your business needs.

1. Mobile Banking

Sources of instant business loans in Kenya
Mobile Banking in Kenya

Digital loans are most likely to be the fastest and most accessible source of loans. They’re unsecured credit loans that you can apply for right from your phone.

You can obtain the loan through a mobile app or a USSD, and in most cases, the funds are usually paid directly to the mobile wallet. But in some cases, though few, you will have to wait for your loan to be approved. They also have a short repayment period.

It’s also critical to learn that most mobile loans begin with a small amount and increase as you borrow and repay. So if you’re anticipating using mobile loans as a source of quick cash to boost your business, start building a relationship with a digital lender to raise your limit.

Note that some banks and Saccos also offer quick digital loans that you can get instantly. To qualify for a mobile loan, you only need to become a member of such an institution.

The short repayment duration means you have to be sure you can repay the owed amount on time and accordingly.

Some of the digital lenders that offer a vast amount of loans include

KCB M-PESA

This savings and loans account results from Safaricom and Kenya Commercial Bank partnership. It’s an online-based bank that allows customers to borrow loans between Kshs.50 and Kshs.1million.

To activate it, go to the M-Pesa menu, loans, savings options, and KCB M-Pesa. In this case, your M-Pesa transaction history plus the amount you have saved in your KCB account will determine the amount of loan you will get.

To qualify for this loan, you must be 18 years and above, have a registered and active M-Pesa account for at least 6 months and have an updated M-Pesa menu.

mKey

It’s a digital banking service launched by Finserve Africa in September. This app allows customers to read news, chat with their friends, pay bills, shop, and even take loans.  You can download the app on the Google Play store.

mKey offers loans from a minimum of Kshs 300 to a maximum of Kshs 1 million at an interest rate of 9%.

Find Out: The 5 Guaranteed Agribusiness Funding in Kenya

2. Banks

Banks in Kenya offers loans to both individual and businesses. However, these loans tend to have high-interest rates. But here are some good news for you.  Many banks have offered low-interest rates on loans for startup businesses or people who require a significant sum of money to get their business venture off the ground.

So if you’re looking for a startup business loan, consider banks as your source for business loans.

3. Microfinance Institutions

Microfinancing is one of the sources of instant business loans in Kenya.

Most microfinance institutions in Kenya offer business loans. These institutions step in when banks are not an option.

They are easy and more flexible to work with compared to banks. But on the other hand, they charge higher interest rates than banks.

Here are some of the microfinance institutions that you may consider working with.

  • Faulu
  • U&I microfinance
  • Juhudi Kilimo
  • ECLOF Kenya
  • Letshego Kenya

4. Venture Capital

The venture capital market is another excellent source to look for a business loan. However, because it’s a private-sector investment, you must have a track record of creditworthiness before venture capitalists consider you.  

Most entrepreneurs have been able to obtain business loans through this sector. But also, there are several cases of failure. So you need to do thorough research to know how it functions.

It’s good to note that venture capitalists might be your only option for a private enterprise since they will know you.  This type of loan is also advantageous because it offers long payback terms with low-interest rates.

5. Crowd-sourcing Institution

Crow-sourcing institutions are among the sources you can get business loans in Kenya.  These institutions provide platforms where lenders support a new business.

Crow-sourcing platforms in Kenya include:

  • Seedstars
  • Zidisha
  • Kiva
  • Indiegogo
  • Kickstarter

Questions to Ask Yourself Before Getting a Business Loan

Businesses now have more funding alternatives than ever before, but helming the maze types of loans and lenders can make selecting the suitable lender and loan for your business complex.

The times when banks were the only options for business loans are gone. This means that business owners must be more knowledgeable about their borrowing alternatives. Before you get a business loan, you should ask yourself these questions. The questions will help you determine your source of loan and the type of loan that will best suit you.

1. What is the Purpose of  Extra Funds?

In short, what is the loan for?  It seems to be a simple question, but it’s a question that borrowers seeking additional funds tend to overlook.  It should be the foremost question because describing loan purposes will assist you in answering subsequent questions. 

The loan purpose will help you identify if you need to fill a short-term or long-term need. It will also assist you in determining the loan term that is most appropriate for your needs.

2. How Much Money Do You Need?

This is another simple question. Unfortunately, popular culture has many entrepreneurs believing that a large amount of money will fix their problems. When you ask borrowers  how much they need, they say, “as much as I can get.” This response tells a possible lender that you don’t know the loan’s purpose.

The purpose of your loan should drive the response to this question. In other words, borrow what is necessary to meet business needs and not more. Knowing how much money you require will help you determine which lender to approach.

3. How Quickly Do I Need The Funds?

Some loan purposes cannot wait for weeks for a loan to gain approval. For instance, increasing your capability to serve a new client contract may necessitate additional financing within the next few days, and waiting weeks for a business loan may incur higher opportunity costs.

According to the ETA research, the speed of funding is a key reason people choose a specific loan. Which emphasizes the significance of this question and why your first query should be, “What is the purpose of the extra fund?”

Frequently Asked Questions

Where can I get a loan to start a business in Kenya?

You can get a loan to start a business in Kenya from microfinance institutions, mobile banking, and banks. However, you must assess these institutions before taking their loans. Find one whose interest terms are favorable.

Where can I borrow 100k in Kenya?

You can borrow 100K in Kenya from three places: KCB MPESA, M-Shwari, or banks. However, make sure you have a good credit score before applying for a loan from these institutions.

Bottom Line

The business funding process can be lengthy, challenging, and full of hoops that need to be jumped.   Depending on the business need you want to fund, you can choose from various lenders available in Kenya.

Weigh the pros and cons of the above sources of instant business loans in Kenya and make sure you’re borrowing for the right purpose. This will get you closest to finding the best fit for your business.  

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