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6 Small Loan Apps- Interest Rates And How To Apply

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Capital shortfalls, whether in operating, capital, maintaining the business, or expanding the business, are common causes of business failure. Despite this shortfall in finance, sourcing funds from small loan apps is simple and convenient.

They facilitate access to financial services, to a large segment of small businesses loans, individuals, and enterprises. People who would otherwise have little or no access to small loan facilities run to these apps. In this article, we explore the various small loan apps in Kenya and how they function.

Small-loan-apps-in kenya

What are Small Loan Apps?

Small loan applications are platforms built by lending companies to render small financial products to the people. It is available for individuals with an excellent credit history.

Some apps go as far as reading all your phone’s data. You download the app on Google play store, install and register. Small loan apps are the best platforms to get finance for all your unexpected needs.

6 Eligibility Requirements for Small Loan Apps

  1. Be 18years and above
  2. Have a valid national ID
  3. possess a registered phone number 
  4. Have a smartphone to download the app
  5. Have a good credit history 
  6. Accumulate enough data on your phone to prove your authenticity as a non-dubious customer 

How to Apply for Small Loan Apps

Below are the steps to apply for the loan:

  1. Identify the small loan app you wish to apply from
  2. Download the app on Google play store and install
  3. Register in the app by supplying necessary information 
  4. Apply for the loan

Small Loan Apps Interest Rates 

The interest rates for small loan apps vary as per the platform and the small amount. It can be as low as 1% to 15%. There could be many factors that would affect the interest rate for small loan apps.

Small loan apps in Kenya

The following below are some lists of small loan apps in Kenya. They include:

Berry

Described as a unique mobile money lending app, Berry offers low-cost instant mobile loans in Kenya with flexible repayment schedules.

First, you have to download the app from Google Play Store and then register on Berry. Once the system officials have verified your identity, you can then access their loans.

Mshwari by Safaricom

Mshwari is one of the most widely used mobile loan services in Kenya. It is not just a lending platform, but a paperless banking service that allows users to save besides borrowing.

Saving money through Mshwari earns you a 6.65% interest per annum. You access loans of a minimum of Ksh. 100 and the limit rises based on your credit history. You can only access Mshwari loans if you have Safaricom line.

Branch

Branch is one of the most established mobile money lenders in and outside of the country. Through Branch, one can access up to Ksh. 70,000 from their smartphones. All you have to do is download the Branch app on Google Play Store and follow easy steps to register.

Loans are approved in less than 24 hours, and there are no hidden fees. The lender does not charge late fees or rollover fees, which is why the app is preferred by many people.

iPesa

iPesa loan app offers credits from as low as Ksh. 500 to Ksh. 50,000. The shortest tenor for credits is 91 days while the longest is 180 days, so you will have enough time to repay your credit. Their interest rate stands at 12% with no service fee.

Once you download the app, register with your M-Pesa number and then apply for the exact amount you need. If you repay your credits on time, they will set your credit limit at Ksh. 50,000.

Utunzi

Utunzi credit app is just one of the many such products in the market. It provides you with variety in case you do not want any of the other apps. The mobile money credit platform works through M-Pesa just like many other similar lenders.

The app lends both personal and business credits from Ksh. 300 to Ksh. 1,000,000. The shortest credit tenor is 91 days, while the longest is 36 months. There is a 12% fee and interest of 12% in addition to a Ksh. 400 annual account management fee.

International loans in Kenya

Kopakash

Kopakash credit app applies a service based on the product you choose, and it is in return used to assess your credit score. The credit amount can range from as low as Ksh. 1,000 to Ksh. 50,000 and the repayment tenor has a minimum of 91 days and a maximum of 120 days. The loan amount can be disbursed directly into your M-Pesa or even bank account.

Other loan apps include Zash and Fadhili. Also, with Fadhili loan, borrowers can qualify for a maximum of Ksh. 100,000.

Documents needed for loans on small loan app

  1. ID card proof
  2. Passport 

Things to consider before you apply for loans on a small loan apps

Before applying for loans, you need to take into consideration a lot of factors and they are:

  1. Available for all citizens of Kenyans above 18 years
  2. Opening a bank account or M-Pesa account is required 
  3. knowing that repayment is mostly at the end of the month
  4. The loan amounts are small and not too large
  5. Checking the loan limit and other fees, which are displayed on the app
  6. All necessary checks and steps are mandatory.

Why choose small loans apps

Small loan applications are built programmes that aid in processing and dispensing of funds into various individual’s accounts. The importance ranges from;

  1. Easy to apply
  2. Takes less time 
  3. No long documentation processes
  4. Customer support 
  5. Affordable loan offer
  6. Easy in repayment (manage debts)
  7. For personal urgent purposes
  8. Quick disbursal
  9. Transparent processes 

Conclusion 

Small business apps are aided by Fintech lending companies operating in Kenya. These companies are passionate about using technology to deepen financial inclusion. They offer small and instant personal and business loans from Ksh.100 to Ksh. 50,000 to individuals and entrepreneurs. It goes with a maximum interest rate, savings on some of the apps and fixed deposits.

Government Programmes For Agricultural Loans in Kenya

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The increase in the country’s population and the call for higher-value agricultural production gave the need to invest in agriculture. Also, the constant demand for food and change in dietary preferences of citizens turned the agricultural market as the most sorted for.

There are several ways you can apply for a loan in Kenya, but in this article, we will explore some of this government agricultural loan programmes in Kenya. However, before we go into that, let’s take a quick look at what agricultural loans are..

agric-loans-in-kenya

What are Agricultural Loans?

Agricultural loans are a type of loans designed or mapped out for farmers and Agribusinesses. The loans are used by farmers and Agribusinesses in ways like farming, farm implement purchases, crops for cultivation, and other agriculture-associated activities.

What are Government Programmes for Agricultural Loans 

Government programmes for agricultural loans are a set of related measures or activities or schemes with a peculiar long-term aim of giving loans to farmers. The program is set up by the government intending to support farmers and Agribusinesses in food production.

The programme caters for all Agro-entrepreneur who are ready to work and boost the economy through mechanized agriculture. 

List of Government Programmes for Agricultural Loans in Kenya 

 1. Agricultural Finance Corporation: Agribusiness Loan

They set this programme up to support and encourage beginners in the agricultural sector. They design it to provide capitals for Agribusiness traders and start-ups. 

2. Youth Enterprise Development Fund

The Youth Enterprise Development Fund helps in the provision of mechanized tools to farmers. They have partnered with agencies like smart solutions in Africa (SSA) to support young farmers and beginners in accessing greenhouses and mechanized implements.

Their aim is to provide a shift from traditional farming methods to the modernized methods.

3. Uwezo Fund    

They established it in 2013 geared towards mentoring entrepreneurs which young farmers are inclusive towards eradicating poverty. They off loans between the range of sh. 50,000 and a maximum of sh. 500,000.

It is mainly for youths, women, and people with disabilities. They are also known as Mirroring the youth fund. They also help in achieving gender equality and self-independent.

Contacts: info@uwezo.go.ke/programmes@uwezo.go.ke

 4. Women’s Enterprise Fund

Women’s enterprise fund is an initiative tied to offering women entrepreneurs loans to start up something and be self independent.

They also help in marketing goods and services produced by these women entrepreneurs. It is a social motivation fund by the government to women entrepreneurs. 

contacts: +254 0714606845-6

 5. ICDC

The Industrial and Commercial Development Corporation is a 64-year-old initiative. Moreso, ICDC offers capital, joint-ventures, commercial loans and asset financing to entrepreneurs.

The aim of ICDC is to boost agriculture and industrial development in Kenya. They also offer medium and long-term loans.

Email: info@icdc.co.ke, customerservice@icdc.co.ke

6. Kenya Industrial Estate.

They joined Kenya Industrial Estate to the Ministry of Industrialization to boost the economy. Boosting all aspects of industry, both Agriculture is the key to reaching developed status.

Hence, Kenya industrial Estate is driven to indigenize all sectors of industry in Kenya. They provide subsidized loans and improved entrepreneurial skills to the citizens. They also offer loans of up to 14 million shillings.

   Email: admin@kie.co.ke Contacts: +254 0722 297 636/+254 0733 279 861

 7. Industrial Development Bank   

First Industrial development banks help to establish or expand the business and younger farmers. Their loans come in different forms ranging from projects, assets to tools financing and hire purchase.

They established it in 1973 and disburses secured loans to large industrial enterprises like Agribusinesses. They are capital heavy venture initiatives. 

Email: bizcare@idbkenya.com Mobile: +254 0733 221 111; 0728 970 750

Pros and cons to government programmes for agricultural loans in Kenya 

Pros:

  1. Low interest rates
  2. Opportunity to attend seminars and lectures by the organizing officers of the programme 
  3. Enough fund to achieve your aim
  4. Longer repayment duration
  5. Constant advice and briefing on the current situation in agricultural sector

Cons:

  1. Lack of access to modern instruments of risk management like insurance 
  2. When farmers don’t meet with demand, nobody cares. You must fulfill the contract agreement
  3. Might not see a guarantor to stand for you.

How to apply on each of these government programmes agricultural loan

The steps in applying for any of these programmes are:

  1. Visit their website online and or their physical location 
  2. Fill the application forms online or download the form and fill it. 
  3. Take the filled form to their office
  4. Submit all necessary documents and details
  5. E-Sign if it is available online or meet the loan officer to share necessary information on how to start your loan process.
  6. Click enter if it is online. When it is offline, submit all necessary documents and wait for approval and disbursement. 

Who is eligible for Government programmes for agricultural loans in Kenya 

The programme is for all kinds of farmers such as small and marginal farmers, tenant farmers and entrepreneurs in agricultural sectors or business. Concisely they include:

  1. Farmers who are more than 18years and above and possess a national ID and active phone number 
  2. Agribusinesses 
  3. Entrepreneurs in the agricultural sector.

General required documents for government programmes for agricultural loans 

The general documents required include:

  1. National ID 
  2. Proposed business plan 
  3. Bank account statement 

Note: Each programme has peculiar additional documents they require. 

How to be part of the government programmes for agricultural loans in Kenya

To be part of these programmes and also benefit from it, you need to be:

  1. Be a farmer or a young entrepreneur in the agricultural sector. 
  2. Start a Horticultural projects
  3. Establishment of dairy units and be ready to feed the country.
  4. Establishment of small poultry units and need a working capital for expansion.

Note: There are other criteria included. Contact the program organizers or visit their head office to get more clarifications.

Importance of government programmes for agricultural loans in Kenya

The importance of these programmes are:

  1. The programme plays  a key catalytic role in strengthening the farm business 
  2. It helps in augmenting the productivity of scarce resources.
  3. Bridges the gap between macro and micro agricultural systems. 

Conclusion 

Having food reach every nook and crannies of Kenta is the concern of government and agriculturists. Also, the government being aware of the need of agriculture amongst other sectors of the economy,  they consented to improve agriculture by venturing into government programmes.  These programmes give loans to both farmers and Agribusinesses.  

How To Pay NHIF: All Your Payment Options Explained

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Now that you have joined the NHIF scheme, the next step is to learn more about NHIF payment. Members of the NHIF both self-employed and salaried, must make their monthly contributions.

Paying your NHIF contribution late results in penalties and prevents you from receiving medical care from accredited facilities.

About NHIF and its payment methods

In Kenya, the NHIF provides the best healthcare services at an affordable cost for the citizens of the nation. The National Health Insurance Fund has revised its payment packages to provide quality healthcare to Kenyans from all walks of life.

The payment is simple to make and can be through M-Pesa or via the bank. You are free to choose any method of your choice. NHIF issues a card as evidence of complete registration and card replacement.

NHIF payment methods 

The health platform accepts payment of monthly subscriptions through:

  1.  M-Pesa and,
  2. Bank

How to Pay NHIF via M-Pesa

The most common question we hear from people is, “How can I pay my NHIF subscription via M-Pesa?” If you are self-employed, you can pay your monthly subscriptions using M-Pesa pay bill number 200222 and follow the procedure below:

  1. Click on Lipa na M-Pesa in your M-Pesa menu.
  2. Select Paybill and enter business number 200222. 
  3. Enter the account number and the contributor’s ID number.
  4.  Type the amount, usually in Kshs. 500.00 per month. 
  5. Put in your M-Pesa pin. 
  6. Verify that all details are correct, and then click OK. M-Pesa will send you a confirmation message. It takes 2 to 3 days for the payment to reflect. 
  7. NHIF payments made through M-Pesa are convenient because they can be made at any time and from any location. 

NHIF payment via bank

Alternatively, you can make your monthly payment through any of the four bank accounts: 

  1. National bank 
  2. Co-operative bank 
  3. KCB bank and,
  4. Equity bank. 

NHIF Paybill number 

NHIF’s pay bill number is 200222. Payments should be made via M-Pesa using the paybill number.

What to do when NHIF payment does not reflect 

Once the systems are working properly, the payment will update automatically. To determine whether they have received your payment, check your account status. If it takes time to reflect, you can always contact the NHIF office for help.

NHIF payment deadline 

The payment due date for NHIF is usually on the 9th day of every month. 

NHIF Payment Penalty 

To avoid penalties, members are encouraged to pay on time. Late payments usually incur a penalty charge of 50%. For example, if you were supposed to pay Kshs. 1000, you will have to pay an additional Kshs. 500 as a penalty if you pay after the due date.

If an employer fails to submit his employees’ standard contribution, he will be liable for a penalty under the NHIF Act. Employees in this scenario will not have to pay any penalty for the time they were employed by the employer. The reactivation fee for NHIF cards will be Kshs 1500 if you haven’t contributed for more than 12 months.

You can still access NHIF services once you start paying after defaulting for a while. Paying penalties is the same as paying monthly contributions. 

NHIF payment rates for salaried employees 

Anyone who is 18 years or older and is a Kenyan citizen can make their contributions directly to NHIF for their medical insurance.

How much should you pay for NHIF per month? Under the voluntary category, members pay Kshs. 500 per month, that is, Kshs. 6000 per year.

Depending on how much each member makes per month, the contributions are usually deducted directly from their salaries. For salaried employees, here’s the NHIF rate breakdown: Up to ksh. 5,999 pay Kshs. 150.

Kshs. 6000 – 7999 pays Kshs. 300. 

Kshs. 8000 – 11,999 – Kshs. 400. 

Kshs. 12,000 – 14,999 – Kshs. 500. 

Kshs. 15,000 – 19,999 – Kshs. 600. 

Kshs. 20,000 – 24,999 – Kshs. 750. 

Ksh 25,000 – 29,999 – Kshs. 850. 

Kshs. 30,000 – 34,999 – Kshs. 900. 

Kshs. 35,000 – 39,000 – Kshs. 950. 

Kshs. 40,000 – 44,999 – Kshs. 1,000. 

Kshs. 45,000 – 49,000 – Kshs. 1,100. 

Kshs. 50,000 – 59,999 – Kshs. 1,200. 

Kshs. 60, 000 – 69,999 – Kshs. 1,300. Kshs.70, 000 – 79,999 – Kshs. 1,400. 

Kshs. 80,000 – 89,000 – Kshs. 1,500. 

Kshs. 90,000 – 99,999 – Kshs. 1,600. 

Kshs. 100,000 and above – Kshs. 1,700.

NHIF contact 

NHIF can be reached at 0800720601 toll-free or at customercare@nhif.or.ke. The service points are also available to provide assistance. For enquiries, you can use the following contact details:

 Enquiry: customercare@nhif.or.ke

 Complaints: complaints@nhif.or.ke

 Laise: info@nhif.or.ke

 Fraud: fraud@nhif.or.ke or (020) 271 4803

 Fax: (020) 271 4806

Phone: (020) 272 3246

Working Hours are usually Monday to Friday from 8am to 5pm

NHIF portal login account login 

Login to the portal by visiting http://www.nhif.or.ke. If you want to know what your account status is via your mobile phone, compose a new text message.

Type the letters “ID”, a space, then your ID number (or passport number if applicable ) e.g ID 12345678 and send to 21101

Note: Charge for this service is Kshs 10 only.

Conclusion 

The above information in this article should answer all of your questions about NHIF payments. NHIF rates are very affordable, so you should not hesitate to join if you have not already done so.

To avoid penalties and receive the best treatment options, be sure to pay your monthly contribution on time. 

CRB status: How to check your CRB status in Kenya

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We will explore CRB status and how to check your CRB status in Kenya if you default. The law in Kenya entitles borrowers to get a free CRB report once a year.

If you want to go for an additional report within that same year, you have to pay for it. Thus, they urge borrowers to check their CRB status and get a report.

Hence, make sure the information on the report is up to date. Try as much as possible to pay outstanding loans.

We will take you through how to painlessly check your status and get your CRB report.

What is CRB 

CRB stands for credit reference bureau. It is an organization licenced by the central bank of Kenya to collect and analyse data on loans from lenders and financial institutions.

About Credit Reference Bureau

This is a big organization that checks and monitors the attitude of borrowers to enable lenders to reduce loan default. They also use it to tackle nonperforming loans issues. In addition, they were licenced and legislated CRB legally on 11th July 2008. They also control and maintain stability, effectiveness and access to financial services.

What is CRB status?

It is the state of your loan repayment as it concerns curbing nonperforming loans. The status displays if you have defaulted or paid off all outstanding loans. The status also displays your eligibility to go for another loan. In addition, if you do not pay off the previous loan, you will get blacklisted and not liable to go for another loan from some big lenders. It is important you clear your outstanding loans because some companies, when they want to employ you, ask for a CRB clearance certificate. 

How to check your CRB status

There are three CRBs licenced by the central bank of Kenya to control, collect, manage and share financial information. They are:

  1. Metropol Corporation
  2. TransUnion (CRB Africa)
  3. Creditinfo

Metropol corporation

To use this CRM agency to check your status, go to their website. You can also download their Crystobol app or dial *433#. To check your score, follow the process below:

  1. You have to pay ksh. 50 as the registration fee with the paybill number 220388
  2. Make use of your national ID number as the account number
  3. Then you will receive an SMS with your unique PIN details, a reference number, and a special link.

For credit score

Pay ksh. 150 to get your score per year. They will award marks between 200- 900. If your mark falls below 400, it means “Low rating” showing that you defaulted. Rating near 800-900 means you have a high score and don’t have a loan default.

For credit report

You will pay ksh. 250 to get full detailed information on how financial firms have listed you.

For credit clearance

After clearing your outstanding loans and you are no longer owing, they will issue you a clearance certificate at ksh 2200 if you need it.

Transunion CRB Kenya

To check your score, follow the procedure:

  1. Send your full personal name to 21272
  2. Input your ID Number 
  3. Select credit status
  4. Receive your CRB status

For credit report

Pay ksh. 650 in order to view or see your credit report and institutions that have listed you

Clearance certificate

For your clearance certificate, you will pay ksh. 2,200 and make sure you have paid off all your outstanding loans.

Note: you can access TransUnion app on google play store,

Credit info CRB Kenya

To register under this CRB in order to get your credit score and other necessary information. Visit their site, after registration, you will receive your credit report in your email address. Everything they do is sent to their customers’ email address. 

What is CRB clearance certificate?

It is a document that shows that a customer has no nonperforming account. It is a certificate given to an individual or citizens of Kenya after checking their credit score and report. Firms use it to know the individual they are employing and his/her credit status.

How to Check CRB Status through SMS Code *433#

To check your CRB status using an SMS code, you pay ksh. 100. Below is the procedure:

  1. Dial *433#
  2. Input your ID number (make sure is the phone number associated with your M-Pesa account)
  3. Make use of the agent code: 222000
  4. Confirm the details
  5. Pay the registration fee
  1. To make payment, go to M-Pesa and choose Lipa and M-Pesa
  2. Enter the business number @ 220388
  3. Put the account number @ your ID no
  4. Input the ksh. 100
  5. Send it
  6. You have your details displayed.

When is an individual’s negative listing submitted to a CRB

It takes 90 days. Banks give individuals 90 days and mobile lenders give 30 days. After the duration, the person gets a notification. They list them If they don’t make any repayment.

Reasons for checking CRB score or knowing your CRB status

There are lots of reasons why citizens of Kenya check their CRB status. The reasons are:

  1. Find out the true state of their credit performance
  2. To also know if their loan repayments have been reflecting on the lender’s dashboard. 
  3. To give them peace of mind or sort out ways to pay off loan default.

What is CRB Negative status

CRB negative status means being listed on CRB badly or negatively for loan default or forgery.

Do lenders pay to have your records updated by a CRB

The answer is NO. No charges are applied. Sharing data with CRB by lenders is free of charge.

Errors on CRB status/Report

They often give wrong credit reports. When you detect the error, you can dispute the information by:

  1. Contacting the CRB that gave you the report
  2. By filling the form given to you by the CRB and highlighting the errors
  3. The CRB contacts the lender or financial institution that gave out the data for confirmation
  4. The lending institution will investigate the error and give their feedback within fourteen (140) days. They confirm:
  5. If the information is correct and should not be charged
  6. Should the error be true and deleted
  7. If the information is not up to date and correct changes made immediately.

When CRB has being contacted, and the report or status does not yet satisfy borrower

In this case, they allow the borrower to append the summary of that dispute on their credit report.

Note: You can visit Tatua center. It is an alternative dispute resolution center. They deal with CRB related issues and disputes. You can access them via their website.

Can I get a loan if I have a negative CRB status

 The quick answer is “Yes”, you can. The thing about ‘negative credit’ is that not all financial institutions see it in the same way. Different financial institutions have different metrics when considering someone’s credit status.

Contacting CRBs Organizations

Metropol contacts

Their phone numbers are: (+254) 20 26 89 88 1  OR 0709 834 000  or 0709 228 000  or 0730884000

Email them @ creditbureau@metropol.co.ke

Work Address: Barclays Plaza, 9th Floor, Loita Street, Nairobi

Creditinfo details and contacts

Their phone numbers are: +254 735 880880  or +254 718 842833 or 0709593000

Email them via cikinfo@creditinfo.co.ke

Their address in case you wish to visit them: Park Suites, Parklands Road, Nairobi

TransUnion CRB Contacts and details 

Name: Credit Reference Bureau Africa Limited (TransUnion)

Phone numbers: +254730 651 000 or +2540203751344

You can email them @ info@transunion.co.ke

Physical Address: 2nd Floor Delta Annex, Ring road, Westlands, Nairobi

SMS: 21272

Conclusion

A lot of borrowers make a lot of effort in loan repayment, but not get rewarded for it. CRB is here to give you a full report or status on your loan information. Kenya has made substantial progress in improving financial control and efficiency through CRB. check your status and try as much as possible to pay off your outstanding loan. You might find it interesting to know that there are loan apps without CRB in Kenya.

How to borrow Airtime from Telkom Kenya

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Imagine this scenario: You’re in the middle of an important conversation, and suddenly, your airtime runs out. Or perhaps you need to send an urgent message, but you’ve exhausted your balance. These situations can be frustrating and inconvenient, especially when you have no immediate access to a recharge outlet.

Fear not! Telkom’s PEWA allows you to borrow emergency airtime by just dialing *133#. The PEWA service is similar to Safaricom’s Okoa Jahazi and Airtel’s Kopa and is available to Telkom prepaid subscribers.

One stand-out thing is that you can borrow airtime in the middle of a call. No matter the situation, PEWA enables you to remain connected to the people you care about.

How-To-Borrow-Airtime-On-Telkom-Kenya

About PEWA emergency airtime

Telkom Kenya’s PEWA Emergency Credit service is designed to provide a lifeline when you run out of airtime, similar to Kopa Kredo and Okoa Jahazi from other carriers.

Eligible Telkom prepaid customers can access PEWA by dialing the simple code *133# on their phones. Depending on your needs, you can borrow PEWA 20, PEWA 50, or PEWA 100 on your Telkom line.

A 10% service fee applies to each request, meaning if you borrow PEWA 100, you’ll receive Ksh 90 worth of airtime. With PEWA, Telkom ensures you stay connected even during unexpected moments.

It’s important to note that a 10% service fee is applied to each PEWA request. This means if you borrow PEWA 100, you will receive Ksh 90 worth of airtime, with Ksh 10 being the service fee.

How to borrow airtime from Telkom 

Accessing PEWA emergency airtime is an easy process. Dial *133# on a phone with a Telkom number to initiate the process. Select the amount of airtime that best suits your needs(typically Kshs. 20, 50, or 100). Follow the prompts to complete the loan and get back to calling or texting!

Eligibility for Telkom airtime

To be eligible for this service, Telkom requires the subscribers:

  1. To must have been an active user for the previous two months. 
  2. To have your account airtime balance between Ksh 10 and Ksh 20. 
  3. To have an accumulated spend of at least Ksh 50 in the previous month.

Understanding PEWA’s Terms and Conditions

Being familiar with PEWA’s terms and conditions is just as important as meeting their eligibility criteria. Here’s a breakdown of key points to remember:

  • PEWA charges a 10% advance fee on each request. This means you’ll receive the requested airtime minus the 10% fee. For example, requesting Ksh 50 will result in Ksh 45 of usable airtime.
  • PEWA airtime is valid for 30 days and cannot be used for international roaming.
  • You have 7 days to settle your PEWA advance. If payment isn’t received within that timeframe, your access to the service will be suspended for 14 days.

Benefits of PEWA emergency airtime

  1. PEWA gives you instant airtime on loan if you are eligible
  2. It enhances quick airtime when there is no shop around to purchase airtime
  3. It is simple to master and convenient to use.

How to Check Your Telkom PEWA Balance

To check your Telkom PEWA balance, dial *131# on your phone.

how-to-check-your-telkom-pewa-balance. *131#

How to repay airtime from Telkom Kenya

There are two main ways to repay airtime borrowed through Telkom Kenya’s PEWA service:

1. Top-up your Telkom Line:

  • This is the most straightforward method. Simply recharge your Telkom phone number with enough credit to cover the borrowed amount and the 10% service fee. Once the top-up is successful, Telkom will automatically deduct the PEWA amount and fee from your main balance.
  • You can top up your phone using various methods: Mobile Money services like M-Pesa, Agent shops, Telkom Self-care platforms (*160# or My Telkom App), or by purchasing a scratch card.

2. Pay Bill using T-Kash:

  • If you’re a registered T-Kash user, you can use it to repay your PEWA balance directly.
  • Dial *160# or access the My Telkom App and navigate to the T-Kash menu.
  • Select “Pay Bill” and then choose “Popular Paybills.”
  • Find “Telkom Kenya” from the list or enter the business number (220220).
  • Enter your Telkom phone number as the “Account Number” and the total amount to be paid (borrowed amount + 10% fee).
  • Confirm the transaction by entering your T-Kash PIN.
  • You’ll receive a confirmation SMS upon successful repayment.

Conclusion

Telkom Kenya renders integrated telecommunications solutions to individuals and agencies in Kenya. They can give you instant airtime through a service called PEWA by charging a 10% fee.

You should always read the terms and conditions before you engage in any borrowing service in Kenya, since it is important to know what you are getting into.

Frequently Asked Questions

1. Can I get Okoa Jahazi on Telkom?

No, Telkom’s airtime borrowing service is called PEWA, not Okoa Jahazi. While both offer emergency airtime, PEWA is specific to Telkom.

2. What are PEWA Telkom bundles?

PEWA doesn’t function like traditional data or airtime bundles. Instead, it provides you with a set amount of emergency airtime – Kshs. 20, Kshs. 50, or Kshs. 100 – to make calls or send SMS.

3. How long do I have to repay PEWA?

You have seven days to repay the borrowed PEWA amount.

4. What happens if I don’t repay PEWA on time?

If you default on repayment, you won’t be able to access PEWA services for 14 days as a penalty.

5. Is PEWA free to use?

No, PEWA is not free. Telkom charges a 10% advance fee on every PEWA request you make.

Shika Loan App – How To Apply And All You Need To Know

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Shika platform understands that even if you are employed, sometimes you need some extra cash to take care of some needs and waiting for payday could seem like forever, hence Shika empowers you financially to keep you going.

Shika, as a loan access platform, understands the need to lower the barriers preventing accessibility of credit and hence offers swift and flexible access to loans irrespective of your class without jeopardizing credit risk/loss. 

There are more interesting things about the Shika loan app that we’ll let you know in this article.

shika loans kenya

About Shika Loan

Shika Loan and its app was the first product of Alternative Circle founded by Kevin Mutiso in March 2016 with a mission to render financial access to over 200 million people worldwide. 

Shika is a lending platform that provides instant access to micro loans and flexible repayment plans for people who meet their basic eligibility criteria.

Customers using Shika are able to know their loan limits before taking loans. Shika only requires you to have an active M-Pesa mobile money account registered with a Safaricom number.

The platform is also available for financial institutions who can leverage on it to reach potential borrowers.

Maximum and Minimum Loan to Get From Shika Loan App

Shika loan app offers its customers a minimum of Kshs. 500 and up to Kshs. 10,000 which is to be repaid in 30 days with no hidden charges.

Shika will predict your loan limit and how much you would have to repay before you proceed with your loan application. This limit is determined by your credit history. A good loan history earns you higher loan limits.

How to Apply for a Shika Loan.

Getting a loan from Shika is very easy and you can get it within 3 minutes as long as you meet their basic eligibility criteria. You can get a Shika loan through the following steps:

1. Download the Shika Loan App: You can download this application from the website.

2. Create an account: To create an account, you would provide a valid national ID and an M-Pesa account registered with a Safaricom phone number.

3. Apply for a loan: Once you successfully create a Shika account, you can view your loan limits on the dashboard and click on apply for a loan, which is within your eligible loan limit/duration.

4. Upon application, your loan request is sent in for approval and once approved, your loan would be disbursed to your M-Pesa account within three minutes.

Interest Rates

They fix interest rate for Shika loan at a rate of 15% for 30 days irrespective of the loan amount.

Elegibility Criteria

Getting a loan from Shika requires you to meet their basic eligibility criteria. Which are:

  1. Signing up for a Shika account already requires you to have an active M-Pesa mobile money account.

2. As a new user on the Shika app, you build your loan eligibility from your M-Pesa transaction history. However, subsequent eligibility is from your reputation on the Shika app which they draw from your frequency of loan requests and repayments.

Note: A good transaction/loan history often qualifies you for higher loan amounts on the Shika app.

Requirements for Taking up Shika Loan

You would need to meet the under listed requirements before you can access Shika loans through its app.

  1. Be at least 18 years of age at the time of registration on Shika
  2. Have/possess a valid National ID card
  3. Have an M-Pesa mobile money account registered with a Safaricom mobile number and have at least 4 months of active M-Pesa transactions.
  4. Have an excellent credit history with Shika and other loan providers
  5. The Credit Bureau of Kenya must not blacklist you

Shika App Review

Shika loan is ideal for financing your personal or small business needs and can be accessed through the app. With the Shika app, you don’t need to wait for long hours to get a loan. The features of Shika app range from:

  1. Easy access and flow of command and response.
  1. The intuitive design of the Shika loan application makes loan application, disbursement and repayment process seamless. 
  1. Shika app is secured and offers flexible eligibility loan limit repayment options on the dashboard.

How to Repay Your Shika Loan

You can repay loans collected from the Shika app either through M-Pesa or the Shika loan app.

Loan repayments on Shika are flexible, so one can choose to repay in daily or weekly installments as long as the repayment window is not exceeded. For loan repayments via the Shika loan app:

1. Login to the Shika loan app

2. Click on the Repay button on your dashboard

3. Copy the displayed Shika loan number

4. Complete your payment on the displayed M-Pesa page

For loan repayments via M-Pesa:

  1.  Login to your M-Pesa account
  2. Click on “Lipan a M-Pesa” and select PayBill
  3. Enter the Shika loan PayBill number
  4. Put in your phone number on the Shika app
  5. Enter repayment amount
  6. Authorize the transaction with your M-Pesa transaction PIN
  7. Check for payment notifications from M-Pesa and Shika

Extra Important Information on Shika Loan and its App

  • Please take note and heed that failure to repay a loan within stipulated repayment window attracts extra charges on the collected loan.
  • If you do not repay a loan 30 days after the repayment window, they add an extra charge of 10% to the loan amount to repay.
  •  Failure to comply and repay the loan after 60 days, they blacklist the customer on the Credit Bureau of Kenya.

How to Reach out Shika Loans 

For more information on Shika loans, you can reach out to their support via email@ shika-app.com or call 0742143999.

Conclusion 

Shika loan app and its platform have proven to be helpful to individuals and businesses who need access to easy finance without going through the stress of tight and stringent documentation obtainable in most financial institutions.

Shika app and its platform also offer one of the competitive rates in the Kenyan micro lending space, there’s no doubt that more individuals and businesses would resort to Shika loan app and its full platform.

Unsecured Loans in Kenya – Everything You Should Know

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Unsecured loans in Kenya are loans that are granted with no collateral. If a borrower defaults on the loan, it leaves the lender with few options to get paid outside of filing a lawsuit.

In the course of this article, we will be looking more into unsecured loans and if they’re right for you.

What is an Unsecured Loan?

unsecured-loans-in-kenya

As stated above, an unsecured loan is a form of loan that doesn’t need collateral or a security deposit to receive. With an unsecured loan, instead of pledging assets, borrowers qualify based on their credit history and income.

Lenders do not receive the right to take physical assets if borrowers stop making payments on unsecured loans. You promise to repay, but you don’t back up that promise by pledging collateral. 

An unsecured loan generally comes in three forms:

How Unsecured Loans in Kenya work

When applying for an unsecured loan, most lenders check applicants’ history to see if you’ve successfully paid off loans in the past.

Based on the information in your credit report, a computer creates a credit score, which is a shortcut for evaluating your creditworthiness.

Lenders will also want to be sure that you have the financial capacity to repay any new loans. When you apply for a loan, whether secured or unsecured, lenders will ask for proof of income.

Then, evaluation is done to ascertain how much of a burden your new loan payment will be relative to your monthly income. They typically do this by calculating a debt-to-income ratio.

Documents required for obtaining an unsecured loan

The following document requirements are obtainable with most unsecured loan providers;

  • Office address proof for self-employed individuals
  • Proof of continuity of business
  • Processing fee cheque
  • Duly filled loan application form
  • Couple of passport-size photographs of loan borrower
  • Identity proof – passport, driving license, voters ID, PAN card (any one proof)
  • Proof of residence – utility bill, passport, etc.
  • Salary slips for last 3 or last 6 months

How to Apply for Unsecured Loans?

The following are ways to apply for unsecured loans;

Company website: A great percentage of lenders in the market now provide their services through their websites. You can visit the official website of the bank and apply for a loan with your credentials.

Loan aggregators: These are third-party loan aggregators that can help you find the best deals available in the market. With them, you can compare the different loan products and choose the best product that suits your specific needs.

Branch office: Lastly, you may also visit the lender’s branch office and apply for a loan in person. With the Internet, this choice of application is gradually going extinct. However, if you are not Internet savvy, you may use this option to apply for a loan.

Top banks in Kenya that offer Unsecured loans

Knowing the fact that a great percentage of the risk involved in granting an unsecured loan rest on the shoulders of the lender.

Not every credit provider out there welcomes the idea of granting unsecured loans. The following banks offer unsecured loans in Kenya;

  • ICICI Bank

ICICI is one of the top private banks in the country. The lender is known for providing a wide range of loan products, including personal loans.

Benefits

  • Loan disbursal within just 3 seconds for pre-approved customers
  • Flexible loan repayment tenure up to 60 months
  • Minimal documentation and hassle-free application process
  • HDFC Bank

HDFC is one of the biggest private lenders in the country. The transparent process in offering loans helps customers with easy access to unsecured and other forms of loans.

Benefits

  • Loan disbursal within just 10 seconds for pre-approved customers
  • Loan disbursal within 4 hours for other customers
  • Optional insurance coverage for customers
  • Hassle-free application process

Yes Bank

Yes Bank is also one of the top-notch credit providers with a top-notch collection of loan products in its line-up. The personal loan offered by the bank comes with flexible terms for the benefit of applicants. They include;

Benefits

  • Repayment tenure ranging from 12 months to 60 months
  • Speed and hassle-free application process
  • Option for transferring existing loans (with high interest) from other banks to Yes Bank

IDFC First

Capital First is one of the major financial institutions that offers loans to small and medium enterprises in Kenya. The personal loan offered by the company comes with the following terms:

Benefits

  • Flexible repayment tenure ranging from 1 year to 5 years
  • Online approval in just 2 minutes
  • Hassle-free loan application process

How can I ensure my Unsecured loan application is approved?

Applicants can follow the steps mentioned below to ensure that their unsecured loan applications do not get rejected:

  • Bills and existing loans should be paid on time to maintain a high credit score.
  • In case a customer has a low credit score or has never applied for any credit before, he or she can build his/her credit score or enhance it over time.
  • Ensure your earnings match or exceed the minimum income criteria of the concerned lender before applying for an unsecured loan.
  • Having a stable and regular source of income also increases the chances of an unsecured loan application getting approved.

Pros and Cons of Unsecured Loans

From the borrower’s perspective, the main advantage of an unsecured loan is the fact that it is risk free. If you receive an unsecured loan and can’t make payments, you don’t risk losing your assets. You just put your credit score at risk.

For people and businesses with unsecured loans, there is a high chance that your debt will be discharged if you file for bankruptcy.

Additionally, since unsecured loans don’t require any collateral, the lender takes on more risk. This generally translates to higher interest rates and less favorable terms.

While unsecured loans may be less risky for the borrower, it’s important to know how much more it could cost you over its duration. You may find that putting an asset down as collateral is more beneficial than the extra money you’ll pay in interest.

Conclusion

An unsecured loan can be one of the best loan options for blacklisted people. The fact that you don’t have to provide any form of collateral is definitely an advantage to the borrower. Especially in a situation the borrower has little or nothing to offer at all.

Private Money Lenders In Nairobi – Everything You Should Know

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Private money lenders in Nairobi believe that in tough times and in need of financial help, the last thing to do is worry about where to get a loan. Mobile banking is rampant in Kenya.

Some of these private lenders operating mobile banking systems have their primary offices in Nairobi. Nairobi is in the heart of Kenya.

Private money lenders give out online, business and secured loans to the people in the city. Their priority is to give you money when you need it.

We will take you through private money lenders in Nairobi.

Who is a private money lender

A private money lender is an independent person or organization rendering financial services to the people. They give out loans to investors and customers to solve distinct problems. They also give out different loans.

In addition, they provide platforms both online and offline where you submit application loans. At the end of the month, you pay back the loan with a stipulated interest. They are almost an opposite to getting commercial loans.

List of Some Private Loan Lenders in Nairobi

This is the list of some private money lenders in Nairobi. They are:

  1.  Izwe loans – Kabarsiran Avenue, Nairobi Kenya
  2. Rudisha instant loans- Gikomba market road, Nairobi Kenya 
  3. Instant loans on items – Jevanjee Garden shopping Mall along Moktar Daddah Street, Nairobi 
  4. Eclof Kenya- 73 ground floor, Kubrick, spine road, Nairobi Kenya.
  5. GetBucks Kenya- 300 Tom Mboya St, Nairobi.
  6. Samchi Credit Limited- Parklands/Highridge Parklands Parklands Plaza, Nairobi, Kenya.
  7. Mombo app -13th Floor Argwings Kodhek Rd, in Landmark Plaza, Nairobi.
  8. Kenya Ecumenical church loan fund – P. O. Box 34889, Nairobi, Kenya.
  9. Mwananchi credit limited– Ecobank Towers’ 10th Floor, Kenya.
  10. Loan millennium Place Shop 11 opposite Quick Mart Supermarket along Mumias South Road, Kenya.
  11. Housing finance- 03 Koinange St, Nairobi, Kenya.

How to Become a Private Money Lender in Nairobi

To Become a Private Money Lender in nairobi, these are the things you need to do:

  1. Start and establish your business and obtain the required insurance cover.
  2. Meet and discuss with a talented lawyer about the lending structure 
  3. Look out for your preferred lending attention.
  4. Join a peer-to-peer lending group to find possible borrowers.
  5. Test any potential customers by calculating returns and risk.
  6. Then begin your private lending business. 

Functions of Private Money Lenders 

Different functions of private money lenders in Nairobi are:

  1. They provide quick, personal and unsecured loans
  2. Render advice on how to pay back your loans.
  3. They also render other products aside from loans. Products that range from savings, airtime, etc.
  4. They help upload your credit scores to CRBs, where you can quickly access them.

Types of Loans by Private Money Lenders

There are different types of loans provided by different private lenders in Nairobi. They are:

  1. Personal loans
  2. Unsecured loans
  3. Business loans
  4. Online loans
  5. Civil servant loans
  6. Car logbook loans

Documents Required by Private Money Lenders

The list of documents required by private money lenders in Nairobi are:

  1. National ID
  2. Letter of undertaking and Recent passport by some lenders.
  3. Employment card for civil servant loans
  4. Logbook documents for car logbook loans

 Elements in Private Money Lending 

There are three basic elements in private money lending. They are:

  1. The lender: The is the private individual lending to investors and the public
  2. The borrower: The borrower is the person who applies for loans from the lender.
  3. Paperworks: This the platform that holds the agreement between the lender and the borrower.

How Private Money Lenders Get Paid

Private Money lenders get paid through the following ways:

  1. Interest rate and
  2. Application and extra fees.

Tips to Becoming a Private Money Lender in Nairobi

Simply put or state that private money lenders acts as a bank for other investors and the general citizens. It is beneficial, but there are certain tips to note. The tips are:

  1. Start out small
  2. Know what you are going into/subject matter
  3. Be transparent
  4. Find an excellent attorney
  5. Be familiar with changes in the system.

Conclusion

Given the points above, private lending system in Nairobi has several benefits. If done properly, customers will know you and you explore from there.

With this in mind, they lend their own money to other citizens because they look forward to getting interest. Coincidentally, private money lending serves as an alternative to traditional lending institutions.

In conclusion, there are a lot of private money lenders in Nairobi that are transparent, find them out and secure a quick loan when you need one.

Home Loan In Kenya- How To Qualify For A Home Loan

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When you are looking to buy a house or own a home and you don’t have enough to fund it. You can take up a home loan in Kenya.

Home loan enables you to buy lands or build your dream house. Get your documents ready and be honest with every single detail. Have a consistent income. Then you are ready to take up a home loan.

We will take you through a home loan application and all you need to know.

What is a Home Loan?

Home loan is a loan designed to help individuals own a house or purchase and develop commercial properties.

It is a loan taken to purchase plots of land to rent out for commercial usage or private usage. With a home loan, you can become a landlord in a few years after repayments. 

General Features of a Home Loan

  1. Home loan is only for construction of a new house or purchase of a ready-to-move-in property
  2. Interest rate is low compared to mortgage 
  3. Typically, between 0.8% to 1.2% of the loan value
  4. Up to 30 years

Difference between home loan and mortgage loan

Home loan is a loan for buying or constructing of houses while,

Mortgage loans are loans taken against a property that the borrower already owns.

How do you qualify for a home loan?

To qualify for a home loan, you need:

  1. Credit score of at least 620 points and above 
  2. APR and DTI ratio should be less than or equal to 50% to qualify for a home loan.
  3. Have a consistent income flow
  4. Be ready and willing to reveal everything single truth and present all documents required. 

Credit score for a home loan

You need a credit score of 620 and above. It involves enormous sums and lenders are not ready to lose or give out their fund just like that. You need to have a good credit score to qualify. 

How to improve your home loan eligibility 

To improve your home loan eligibility:

  1. Check out for errors on your credit report 
  2. Ever ready to respond to your lender

How to get your home loan approved

Because of the enormous sum involved in home loans, lenders conduct strict observation and scrutiny before disbursements. To get your home loans approved, you need to;

  1. Be aware of your financial situations
  2. Make a higher down payment
  3. Have a good credit score
  4. You can use a co-applicant like your parents
  5. Keen details to application forms and documents.

Some home loan lenders in Kenya 

Some home loan providers in Kenya include:

  1. HF groups
  2. KCB
  3. NCBA Bank
  4. Stanbic Bank of Kenya

The HF groups 

They are private lenders that give out home loans in Kenya. 

Features

  1. Up to 90% financing of the selling price or value
  2. Maximum loan term of up to 20 years for employed individuals and 10 years for SMEs and groups
  3. Product is for outright purchase of a home

Benefits

  1. Our Home Loan provides you with an affordable way to buy a home with
  2. Loan repayment duration of up to 20 years for occupied homes there is tax relief for customers
  3. Mortgage protection cover in case of death or disability
  4. Includes insurance cover for fire

Requirements for Employed Persons

  1. National ID 
  2. Passport copies
  3. KRA PIN Copy
  4. 3 months payslips
  5. 6 month’s salary bank account statements
  6. Letter from employer

Requirements For Self-Employed Customers

  1. National ID
  2. Recent Passport photograph
  3. KRA PIN Certificate
  4. 3 years audited books of account
  5. 1 year bank statements
  6. Certified copy of partnership deeds (for partnerships) and Rental schedules (for landlords)

Fees & Rates

  1. Commitment Fee of 1.5%
  2. Valuation fee of approximately 0.5%
  3. Legal Fees of approximately 1-2%
  4. Stamp duty of 4%

KCB bank

The KCB is one of the biggest banks in Kenya, with a strong capital and assets base that provides a home loan.

KCB home loans features:

  1. Appraisal fees at 2.5% of loan amount
  2. Ledger fees of Kes 350 per month
  3. External Application Fees
  4. Mortgage Plus Fees
  5. Negotiation Fee of 2.5% of loan amount
  6. Ledger Fee of Kes 350 per month.
  7. Legal and valuation Fees
  8. Stamp duty at 4% of cost of property or value on the open market
  9. Stamp duty on charge at 0.1% of loan amount
  10. KCB can finance insurance premium
  11. Charges are not inclusive of tax

Visit their website to find out more about KCB KCB loans 

NCBA bank 

NCBA home loans features

  1. Competitive Mortgage interest rates
  2. Friendly loan terms
  3. Loan repayment periods of up to 25 years.

Features

  1. Mortgage loan facilities of the loan amount in local currency, 1.5% of the loan amount in foreign currency.
  2. They offer NCBA mortgage loans in Kenya Shillings, Dollars, Pounds, and Euros.
  3. 105% Financing of property value or market price, whichever is lower.
  4. Maximum term of up to 25 years.
  5. They calculate home loan Interest on a reducing balance basis.

Stanbic Bank home loans

Stanbic Bank home loan features:

  1. Up to 105% finance of properties below Kes. 20M
  2. Up to 100% of finance for construction of single residential houses below Kes. 20M
  3. Loan tenure–up to 20 years (240 months)
  4. Debt to income ratio–should not exceed 50% of net salary
  5. Minimum loan amount–Kes. 1M
  6. Minimum property value–Kes. 3M
  7. Free cover limit for loan amount Les. 30M and below
  8. Only available to salaried customers in local currency

Visit their website to read up more 

General requirements for a home loan

  1. A completed and signed mortgage application form.
  2. Your Original ID/Passport (plus copies)
  3. 6 months certified bank statement.
  4. 3 months’ pay slips.
  5. Sale agreement or letter of offer(for purchase mortgage only)
  6. Letter of introduction from an employer.

Benefits of home loans

Benefits of home loans include:

  1. Easy repayment 
  2. Mortgage cover
  3. Fire insurance cover from some lenders 
  4. Longer repayment duration 
  5. Tax relief from some financial lenders.

Simple ways to make easy repayment 

Ways to make easy repayment of home loans:

  1. Pay a down payment of over 20%
  2. Make a part payment
  3. Go for short tenor repayment duration 
  4. Choose a lender with low interest rate
  5. Never miss your monthly repayment 
  6. Take advantage of home tax exemption

How to repay home loans

There are general ways of repaying home loans. Different lenders have different ways of collecting their loan repayment. They include:

  1. Login or locate your M-Pesa account 
  2. Select paybill 
  3. Enter the business number
  4. Enter your phone number as your account number 
  5. Type in the amount you want to repay
  6. Enter M-Pesa pin
  7. Confirm details and press ok
  8. Repay your home loan

Note: you can also repay through your bank account. By writing a standing order to your bank or transferring directly to the lender’s account. 

Conclusion

During the home loan application process, it is pertinent that you reveal all information which applies to your personality. Be true with it. Know what you are going for and every single detail. If not, they might reject your Home Loan application. If you are not sure about your eligibility, you can use Home Loan Eligibility Calculator to avoid Home Loan rejections.

Loans and Advances Explained – Meaning and All You Should Know

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The need to make a sound financial decision when borrowing funds for your personal or organisational need cannot be over emphasized. Basically, when individuals choose to go for funds to expand a business, personal need and purchase of land, the best option is a loan.

But when institutions seek to raise a short-term find to cover salary, purchase of materials and other office expenses, an advance is the best.

Stay tuned. We will discuss the differences between the two terms and in this article. 

loans-and-advances-in-kenya

What is a Loan?

A loan is a sum of cash or fund that you borrow and expected to pay with an interest on a specific due date. A loan is also an act of lending of money by individuals, financial institutions, and other entities. Some even borrow airtime.

The borrower incurs a debt which 8sbmwant to be repaid. The lender and borrower agree on the interest rate and repayment terms.

Moreso, loans are often secured with a collateral, credit score and other required entries which helps to reduce the risk of the loan.

Objects of Loan Contracts 

Contracts of loans includes objects like:

  1. The principal amount
  2. The repayment amount
  3. Number of repayment duration 
  4. The repayment terms and
  5. Collateral, if there is any.

Types of Loans

Types of loans include:

  1. Secured loans
  2. Unsecured loans
  3. Personal loans
  4. Fixed-rate loans 
  5. And variable rate loans

What is an advance 

An advance is a means of finding rendered by the bank to other institutions or entities to meet up a short-term need (often less than a year). 

Facilitation in advances 

The key facilitation of advances includes:

  1. Primary security: This includes the promissory notes, and here the bank stands as a priority to repay the loan before any other parties involved. 
  2. Collateral loan: This is more like a mortgage of property like land, buildings and other fixed assets.
  3. Guarantees: It is given by the partners, promoters, chief executive officers and so many others.

Types of Bank Advances 

Types of bank advance we have are:

  1. Short-term loans 
  2. Overdraft 
  3. Bill purchase
  4. Cash credit 

Conclusion 

Normally “Loans” and “Advances” are seen as “Loans”. But technically, and for all things balanced, the two terms are distinct.

As it stands, a company or an individual who needs funds for personal use or capital projects shall get a loan.

The agreement is between the borrower and the lender and the latter agreeing to pay the sum with an interest. But a company needs to solve a short-term financial need shall go for an advance. So loans and advances have been explained properly in this article.