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Tough loan conditions keep traders away from bank loans

Small and middle size entrepreneur’s in Kirigiti location of Kiambu County are finding it difficult to apply for loans due to the tough conditions imposed by the lending institutions.

Speaking to KNA from her retail shop in Kirigiti trading centre on Saturday, Rebecca  Wairimu complained that she was unable to borrow money from the banks to boost her business since she gets very little income therefore cannot spare some money to deposit in her bank account.

She further stated that she had not registered with any group which is eligible to get money from the government like Uwezo Fund or the Women Fund due to work load of her homestead.

The trader said it did not augur well for such institutions to insist on lending to people only registered with groups as some people had a lot of responsibilities within the family set-up which could not allow them to socialize with groups.

Another trader from the same trading centre, Martha Ngoiri who sells utensils which she buys from Kamukunji in Nairobi County shared Wairimu’s sentiments, saying that she made very little that would enable her spare money to deposit in her account.

She suggested that if the financial institutions were serious in helping starters and those with small businesses, they should offer friendly terms that they could afford without straining. “When they talk of an active bank account, do some of us even have them in the first place or we survive from hand to mouth. We even pay fees for our children in instalments,” she said.

Vincent  Kiptoo, the KCB  Kiambu County Micro Finance Officer  told KNA that the bank gives loans to the small entrepreneur’s where a certain requirement is met, including an existing business income.

“One should have an account in the bank and that should be active for at least six months” he said.

Depositing money in their accounts will be an advantage to the person applying for the loan because it shows signs of good record keeping, which is a reflection that the borrower can track the progress of income and loss when the business was not doing well.

“Money deposited should be from the business and not from salary,” he said. Apart from depositing, a business loan should be accompanied by the person in possession of a collateral.

“Small and middles sized businesses use 50 per cent of their household items like televisions sets, sofa sets, as security for the loans that they are requesting for,” Kiptoo added.

Small and middles sized loans according to the bank range from Sh. 5,000 to Sh.5million depending on the collateral of the applicant.

However, Kiptoo said when a small and middle sized entrepreneurs applies for a loan above Sh.50,000, one needs to present tangible assets like a log book, title deed or a fixed bank account.

He  urged residents to apply for loans since interest rates were reduced from 13.5 per cent to 13 per cent and this will make payment easier.

By  Tiffany  Karimi

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