8 Things You Must Know Before Getting a Small Business Loan in Kenya

If you’re running a business, you know how important it is to have enough cash on hand to keep your operations running smoothly. You may have even started out with just a little bit of money from friends and family, but now that you’ve grown, you need more than that.

A business loan can help you get the capital you need to expand and grow. Business loans are especially helpful for new businesses that need to build up their capital reserves so they can hire employees, secure equipment and supplies, and rent space for their business.

You can even use a small business loan for payroll expenses during the early days of your startup when cash flow may be tight. A lot of businesses need capital in order to get off the ground—and if you’re one of them, then getting approved for a small business loan could be exactly what you need. But before you thing of applying for a business loan, here are some things you should know.

8 Things You Must Know Before Getting a Small Business Loan in Kenya

1. Understand Your Financing Needs

You must understand your financing needs before getting a business loan. You need to know the amount of money you need, the time period over which you will repay the loan, and any other requirements that may be necessary.

You should also have an idea of what type of business loan would be best for your company. There are many different types of loans available, so it is important that you choose one that fits best with your business.

If you’re looking for working capital, then most likely a line of credit will be more appropriate than a traditional loan. If you’re looking for growth opportunities or if you need capital for an unexpected expense, then a term loan might be right up your alley. And if you’re just looking to pay off some bills and get back on track financially, then maybe an invoice financing company is right up your alley instead!

2. Don’t get a loan to start a business

It’s tempting to get a business loan when you’re just starting out. You have an idea, and you know that it’s going to be amazing. You just need the money to make it happen! But before you go ahead and apply for that loan, there are some things you need to know.

First of all, don’t get a loan to start a business. It’s not worth it: you’ll spend more money on interest than you’ll ever make from your business, which means that your business will fail and then you won’t have anything left.

Even worse: if the business does succeed, the bank will own part of it, which means that they can tell YOU what to do with your company! So instead of borrowing money from someone else so they can tell YOU what to do with YOUR company (and get all the profits), why not just start off small? Save up some money yourself, or take out a small personal loan (which won’t cost as much).

Then once you’ve got enough capital saved up or borrowed from friends/family members/loan sharks (whatever), THEN apply for a business loan!

3. Organize Your Financial Information

Before you apply for a business loan, you should gather all of your financial information. This includes things like tax returns, bank statements, and credit card statements. You should also collect any other paperwork that might be related to your business, such as invoices or contracts.

Once you have this information organized, it will be much easier to prepare a loan application and determine what kind of funding you qualify for.

4. Know What You Need to Qualify

If you’re considering getting a business loan, it’s important to know what you need to qualify.

The first thing to consider is the size of your business. Most banks require that you have at least one year of experience in your field and good amount in revenue. If you don’t have those things yet, that doesn’t mean you can’t get a business loan—it just means it will take more time and effort on your part.

It also helps if you have collateral for the loan, such as real estate or equipment. A bank will be more likely to lend money to someone who owns their own home than someone who rents an apartment.

The truth is, lenders want to make sure that you’re using the money wisely and won’t be overextended. They also want to make sure that your business plan makes sense and that you have enough time to pay back the loan without putting yourself at risk.

5. Shop Around for Loan Options

You’ll want to research several different banks and lenders before choosing one. This will give you an idea of how competitive their rates are, as well as what types of terms they offer. Look for lenders who offer competitive rates and flexible terms—these will help save money in the long term.

Ask friends and family members if they know anyone who might be able to recommend a good lender. They may also have some ideas on which lenders offer better rates than others! Let you options be open from banks, Micro finance to Mobile loans. If you have been saving with a Sacco, they might be of great help to you.

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6. Have a detailed business plan

Before you decide to apply for a small business loan, you should have a detailed business plan in place. Your business plan should include information about your business, what you want to do with the money, how much you need and why you need it.

A business plan is a document that describes your business, how it works, and what you want to achieve with the money you’re borrowing. You can use this document to convince an investor or lender that your company has a strong future and that they should help you grow.

A good plan should include:

-Your personal and financial information

-The amount of money you need and why

-The type of loan (term or revolving) and its details (interest rate, repayment schedule)

7. Assess Your Eligibility and Apply

Before you apply for a business loan, you should assess your eligibility and determine how much money you need. For example, if you are a new business owner trying to fund your first inventory, but you are not eligible for a traditional bank loan because you don’t have any credit history or collateral, then you may want to consider an alternative lender.

However, if you are an established small business owner with good credit history and collateral (such as real estate), then you might be able to get a traditional bank loan. If this is the case, then it is important that you assess your eligibility by calculating your debt-to-income ratio and comparing it with industry standards.

Next, once you’ve determined how much money you need and whether or not your company can qualify for the loan (i.e., based on credit score), it’s time to apply!

8. Loan repayment plan

A loan repayment plan is a schedule for making regular payments to a lender. A loan repayment plan can be based on different factors, including the amount of the loan, the length of the loan, and the borrower’s income.

When you apply for and receive a business loan, your lender will set up an initial payment schedule for you. The initial payment schedule will be based on the amount of your loan, how much money you have available to pay back each month, and how long you will be paying back your business loan.

Once you receive your first payment plan from your lender, it is important that you stick with it as closely as possible. If you miss payments or make late payments too often, this could negatively affect your credit score and make it difficult for you to get financing in the future.

Can Business Loans Help My Small Business Grow?

As you know, starting a business is a big undertaking. You have to take on all kinds of costs and risks, but there are some things that you can’t afford to overlook. One of these is finding the right financing.

The simple answer to the question “Can business loans help my small business grow?” is yes! Business loans can help your business grow in a number of ways:

1) They allow you to invest in equipment or stock that will increase your productivity and efficiency

2) They give you access to money when you need it most

3) They allow you to take on more customers and expand your business

4) They help you cover unexpected expenses like an equipment repair or replacement

Before making any kind of decision about financing your business, it’s important that you consider how much money you need and what kind of loan would be best for your situation.

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How to use a business loan to expand your business

If you’re like most business owners, you probably have some ideas about how to get that cash: maybe you’ll sell some of your stuff and use the money, or maybe you’ll ask your friends and family for help. But if you’re looking for a more permanent solution, it’s time to consider a business loan.

A business loan can help you make sure that your company has the capital it needs to grow. If you have an established business with a good credit history, a bank is likely to approve your application for financing in order for them to make some money off of interest payments on the loan.

And even if you don’t have an established business yet, many lenders will still be willing to take a chance on someone who has shown potential by starting their own company—especially if they see proof of funds being used as collateral against defaulting on payments later down the road.

The best part about getting approved for a loan? Once it gets approved (and many do), there’s no limit on how much money can be borrowed within reason: it could be as little

Expanding your business is a great way to grow, but it’s also a big financial undertaking. With a lot of moving parts and the potential for mistakes, it’s important to plan ahead before you dive in. Here are some steps to help you get started:

1. Get familiar with your options

There are many different types of business loans on the market, and each one has its own pros and cons. Make sure you know what you’re looking for before you start applying!

2. Create a budget and plan out your expenses

Before you commit to a loan, make sure you know how much money it will cost and how long it will take for that money to come back into your account again! Once this information is available, it will be much easier for lenders to figure out whether or not they can offer you a loan based on their risk tolerance levels.

3. Apply for the loan!

Now that everything else has been taken care of, all that’s left is actually submitting an application for funding! It’s important not only to follow up after submitting an application but also to make sure your application is written well so as not to raise any red flags with potential lenders.”

Final Thought

In the end, there are many aspects of small business loans that are important to be aware of. Once you have a better understanding of these facets, it’s likely that you’ll feel more confident in your ability to make the right decision. Small business owners and entrepreneurs must remember that although getting a loan is sometimes necessary, it’s important not to abuse the privilege—taking on bonds that you can’t afford to repay can put your company at risk, not just financially but also with regards to your public image.