5 Ways you can Finance your Business in Kenya

8 Ways you can Finance your Business in Kenya

Spread the love

When starting up a business in Kenya, one of the biggest challenges you will encounter is financing. At any point, a business may require funds to sustain it. Whether it is at inception or you just need to grow, financing is very instrumental. So how can finance your business in Kenya?

This article will explore different options that an entrepreneur can explore to access business finance in Kenya. However, before you even think about exploring this business financing options, you need to ensure that you have your business model in order. Ensure that you have systems ready that will guarantee a return on the investment you make.

How to Finance your Business in Kenya

Your business plan should outlay the financial aspect of the business and therefore you should know exactly how much is required to get you going. After you have an idea of how much your business requires, you can explore any of the business financing options listed below.

#1 Your Own Savings

This is the best option you can have. If you can fully fund your business idea, there will be less risk involved. However, this is still an investment and you should always make sure that you get a return on your investment. This is still a loan that you are giving to your business and it should always come back with an interest.

#2 Get a Loan from your Family and Friends

Getting a loan from your family or friends is one of the most common options entrepreneurs take. Especially if you have a friend or relative that is in a position to finance you, don’t be afraid to sell the idea to them.

However, most people take this option and end up abusing the trust. If a friend or relative lends you money to start your business, you should always make sure that you work towards refunding the money, even if they never expected the money back. You will build trust and they will be comfortable to finance you in any future ideas you may have.

You should always approach them as you would approach a financial institution. Make sure that you have your business plan in place. Show them the expected projections and agree on a common repayment plan that you can stick to.

As an alternative to getting a loan, you can offer them equity.

#3 Acquire a Bank Loan

This always seems like one of the best solutions, but there is always a risk factor that comes in. There are very many banks in Kenya that can offer you a loan at a particular interest rate that may vary from one bank to another.

Some of the banks in Kenya offering SME Loans include:

  • NIC Bank
  • Equity Bank
  • KCB
  • CBA
  • Stanchart
  • Family Bank
  • Dubai Bank

The interest rates and terms will vary with these institutions. Therefore, you need to explore the different options starting with your bank of choice. Compare the terms with the other banks and find one that will best suit your business.

Business Financing in Kenya

#4 Microfinance Institutions in Kenya

Most people do not have bank accounts and even the ones that have accounts, they do not have enough money in their accounts to guarantee them a bank loan. Microfinance institutions in Kenya offer a solution for the class.

Some of the popular microfinance institutions in Kenya include:

  • Faulu Kenya
  • SMEP Microfinance Bank
  • Kenya Women Microfinance Bank
  • Uwezo Microfinance Bank
  • Rafiki Microfinance Bank
  • Musoni Microfinance Institution

Microfinance institutions work the same as banks. There are many other microfinance institutions and in Kenya and your choice will depend on the nature of your business and their terms and conditions.

#5 Invest in SACCOs

Savings and Credit Cooperative Societies are a great source for business financing in Kenya. Members of Saccos in Kenya usually get access to very affordable credit. There are financial saccos and other non-financial saccos which focus on marketing products and services offered by the members.

Below is a list of stable SACCOs in Kenya that you can consider investing with:

  • Stima Sacco
  • Unaitas Sacco
  • Kenya Police Sacco
  • Waumini Sacco Society
  • Harambee Sacco
  • Mwalimu Sacco
  • United Nations Sacco Society
  • Ufanisi Sacco
  • Kenya Medical Association Sacco
  • Kenya Bankers Sacco
  • Maisha Bora Sacco

There are very many more Saccos in Kenya that are worth checking into.


#6 Consider Finding and Angel Investor

You can try and attract an angel investor if you have a very good business idea. Angel investors are basically individuals that are willing to back a great business idea. Most angel investors will want equity in the business.

To go down this line, you really need to have a great business idea backed by an equally awesome business plan. You should really show the investor that you know what you are up to. Having an experienced team in place is also an added advantage.

#7 Consider Mobile Lending Apps

If your business idea does not need much capital, you can consider the mobile lending apps that are available. You can secure short term loans but you should have a good plan on how you are going to pay the money back because the payment period is normally short term.

You do not want to mess your credit record. It will be difficult to access any more funding in the future. Some of the lending apps available include:

  • Branch
  • KCB MPesa
  • Timiza
  • Tala
  • Mshwari
  • Saida Loans
  • Haraka Loans

You have to be a Safaricom Subscriber to access MShwari and KCB-Mpesa loans.

How to Finance your Business in Kenya

#8 Kenya Government Loans and Grants

There are different programs that the national government and other county governments have implemented to ensure citizens have access to business financing. Most government programs target Youth, Women and persons with disabilities.

Some of the Kenya government business finance programs include:

The Main Challenge with Business Finance

Acquiring financing may not be much of a problem, especially if you have a good business idea. However, the main challenge will come in how you use the funds, how you document your spending and all the discipline involved.

If your business processes are well documented and you spend every coin wisely, repayment will not be much of a challenge. Strive as much as you can to follow all the terms stipulated by the financier. If things are not working out according to plan, communicate early enough with the financier and explore possibilities of extensions.

There are also other business finance options that have not been explored in this article such as crowdfunding or using your credit card. Let us keep the conversation going in the comment section about all ways you can finance your business in Kenya.

Spread the love

Leave a Reply

Your email address will not be published. Required fields are marked *