Five ways to ensure successful loan application in Kenya

  

Date Posted: 5/3/2017 10:51:34 AM

Posted By: lydiak  Membership Level: Silver  Total Points: 813

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As a small business owner in Kenya, there are times when you require more financing for your business operations. You need to find avenues of getting the much-needed cash to run your business. Most times, the available option is to take out a loan from any Kenyan commercial bank. Then it hits you, how does a person make a successful loan application as a small business owner? It’s not rocket science, this guide will help you prepare before you storm any bank to seek a loan.

Credit is cheaper in Kenya compared to other countries in the East African region. But you need to take note of a few things if you need to be successful with your loan application.
Kenya has a lot of finance institutions including commercial banks and SACCOs which offer credit to business owners each has its own terms and conditions. Some points to consider when selecting a bank for a loan include:
1. Loan repayment schedule
2. Interest rate
3. Nature of collateral required
4. Paperwork required
5. Loan processing period
6. Check through their terms and conditions

Sure Ways to Ensure Successful Loan Application

After selecting your target bank, you need to prepare well before embarking on your loan application process. Here are a few insights on how you should prepare:

#1.Good credit history
To get approved easily for a loan, your credit background has to be good. Have you ever taken a loan from a financial institution and failed to pay?Then this is not going to be a piece of cake for you. Always endeavor, to be honest in your business dealings, whether with creditors or suppliers. Ensure to service your past loans. A good history of properly servicing your loans will make bank managers not hesitate to advance cash to you easily.

#2.Have collateral to stake against loan
Making a decision to ask for

a loan from any commercial bank in Kenya means you have collateral to stake. You need to be with assets that you pledge against the money you are borrowing. Assets which are easily sold to recover borrowed funds make it easy for you to acquire quick funds to manage your emergency money problems in the business.

#3.Possess a solid business plan
Going to a commercial bank to ask for a loan requires you to have a business project on hand. This entails you to possess a strong business plan which will convince the bank manager to give you funds. Successful loan applicants always have solid business plans which articulate what the real deal will be if you are given funds. It has to include some projections on the expected returns to make it viable for funding.

#4.Have strong knowledge of business operation and finance needs
As a business owner, you have to understand what your finance needs are. You also need to have an idea on what the funds you seek will do to move your business forward. A thorough understanding of how you are going to run the business is crucial. You need to be with an idea on how you are going to utilize the funds to develop your business and to pay back the loan.The best way is to have a running business which you seek funds for.

#5.Act in a professional manner
Ensure that when you approach any Kenyan commercial bank for a loan, you act in a professional manner. Dress in a proper manner and be polite at all times. Make sure that all the necessary forms are filled in a proper manner and all necessary documents are presented. Also, you need to be willing to cooperate at any stage in the application process when you are asked for assistance. You might be asked to present guarantors, make sure you talked to a few people who can back you up.
Your conduct during application process stands between getting the much sought after funds or getting an outright refusal of your loan application. Many small businesses in Kenya are in dire need of capitalization but their loan applications are turned down due to improper preparation.
Hope this guide will be useful when time comes to approach a bank for a loan to finance your business.

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