Small and medium enterprises play a vital role in economic development in Kenya. An important element in the development of the SME is quick access to loans and funds. It is pertinent to ask where and how to access SME loans in Kenya? This topic is clear with the fact that there are comprehensive lists of where to get SME loans in Kenya.
This article will give you full knowledge on what you need to know about SME loans in Kenya.
What are small and medium enterprises in Kenya
SMEs are most of the businesses that are independently operating in Kenya. They are small businesses standing on their own with a stipulated less number of employees. However, the maximum number of employees is uncertain in Kenya. But for most businesses forming a company, the upper range sits around 250 or less (This is an estimate).
What are SME loans
SME loans are basically unsecured business loans given to customers who are into different businesses without a tangible security. It could also come as secured loans depending on the lender and what the borrower needs.
How do I get an SME loans
To get an SME loan, follow the procedures:
- Visit the lender’s website and fill the online application form
- Gather all necessary documents and submit all
- Wait for loan approval and afterwards get your loan
Modes/channels to access SME loans in Kenya
The different modes to get SME loans in Kenya are:
- Online mobile private lenders
- Peer-to-peer lending
List of banks for SME loans in Kenya
- Equity Group Holdings
- Housing Finance Company (HFC) Ltd.
- Family Bank
- Chase Bank
- Kenya Commercial Bank (KCB) – Young entrepreneur sort to KCB for business loans.
- Standard Chartered bank- They lend to SMEs in different sectors
List of online mobile based SME loans in Kenya
The list of online mobile based SME loans in Kenya includes:
- M-Co-op Cash
- KCB M-Pesa
- Kopa Chapaa
- Saida — loans up to Ksh. 25,000
List of peer-to-peer lending SME loans in Kenya
- Bitbond — This is a Peer-to-peer bitcoin cryptocurrency lending to online businesses. You can borrow up to $25,000 (which is Ksh.2,751.25) starting at 1% monthly.
- Zidisha — This online platform owns a peer-to-peer lending, which is from a maximum of Ksh. 1,018,220 per loan. Their loan limit is high that it can go a long way in your business.
- Kiva — A peer-to-peer online lending platform for people in the same group. They give out business loans to their group members.
Types of SME loans
The two types of SME loans on Kenya include:
- Secured SME loans
- Unsecured SME loans
Secured SME loans
This type of SME loans require collateral before the loan is disbursed.
Requirements of secured SME loans
- Collateral like deeds, Log book, listed Stocks at NSE, Life insurance policies, cash
- Evidence of working capital loans for a maximum stipulated period for some banks.
Securities used for secured SME loans are:
- Title deeds
- A percentage of OMV
- Shares from listed companies discounted
Unsecured SME Loans
They give this type of loan to customers in performing businesses without collateral or tangible security.
- National ID and KRA pin
- Passport photograph
- Business records
- Registration certificate
- Business licence
- 6 months bank statements
How to repay SME loans
Repaying SME loans depends on lender to lender. Online private lenders would prefer from launching your M-Pesa account, inputting the paybill number, entering your phone number and then the amount you wish to repay and submit. However, some banks might prefer that method too if they have an online app. Or the amount taken automatically from your bank account.
In addition, some peer-to-peer lenders like Kiva would prefer you return it in their next group meeting.
Small and medium enterprises account for most businesses in Kenya and are important contributors to job creation and Kenya development. The significant drive for the growth and development of SME is quick and steady access to loans. Small businesses can take out loans through different platforms. Platforms ranging from banks, online private lenders and peer-to-peer lenders like Kiva loans. These platforms are also efficient in aligning and making loans to reach different businesses in Kenya. For businesses going through this article, I believe you are now ready and financially literate in everything about SME loans in Kenya.