Getting a loan / capital to start a business in Kenya – should you?

What do new entrepreneurs think about when they want to start a new business in Kenya? Capital, capital, capital.

Every entrepreneur thinks of that. There are numerous other things often considered by different entrepreneurs but startup money is always at the top of their list of priorities.

In one article, I remember highlighting that most businesses can be started with as little as Kenya shillings 5000.

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Of course, with such little money, one needs to invest a lot of time in their new venture before their business reaches a certain desired level of profitability.

When one realizes that the obstacle between them and implementing their business idea is money, one solution considered by many budding entrepreneurs, though with a tinge of fear, is borrowing money from banks, microfinance institutions, SACCOs, youth fund etc.

There are many people who think that their new idea cannot take root unless they get money from a lending institution or something of that sort.

Borrowing money to start a business is not bad – in most cases

Borrowing money is not bad. What is bad is thinking that one must get a loan in order to start a successful business – even when they know deep down that they can do without one.

That’s why I decided to write this post, to help those who feel (or think) they can do without a loan, especially when they are just starting out, to avoid running to lenders.


  • There are some businesses that don’t need a lot of money. Instead, more time, true dedication and management during the early months can do your new venture more good than any loan money could.
  • There are so many people out there who keep postponing starting their venture simply because they feel they need thousands upon thousands of shillings to get started. And so they keep running from one financial institution to the next in the hope that their business plan would attract a yes from the lending institutions they visit.

Many don’t succeed. Of course, it should be remembered that some do succeed. I am not trying to give Kenyan (or foreign) lending institutions a negative image.

It should be realized that the banks cannot simply lend to every person who shows up in their premises. That I know, and you know it too.

So if you are waiting for that day when you’ll finally get a loan, I think it is time you just started on your own, however, small your operations would be.

There is always room for growth, and I am sure banks would listen keenly to someone who has already taken some steps towards turning their superb idea into reality – it would be nice flashing a business plan that is already alive.

So, how can one actually avoid rushing to the lenders?

By simply asking this question: Do I really need the loan?

Now, when trying to answer this question, you have to take your time.

You have to ask yourself a few questions related to this one to come up with specific answers that will eventually help you in making the right decision.

Here are some examples:

  • Can I raise the money from my own savings?
  • Can I borrow from friends or family, and why would I do that in the first place?
  • Are there a few things I can sell to raise the money?
  • If I saved more, would I be able to raise the capital I need a few months from now?
  • When do I expect my business to start making a profit?
  • Am I going for a loan just because someone (could be an ad guy or lady, friend, member of your family) thinks it is a good idea?
  • Is this all out of excitement?
  • Can I do some freelance work on the side to raise the capital needed to start my business?

I mean the loans are somewhat attractive given the fact that we are bombarded with ads, left and right, promising easy, quick access and low-interest rates.

And there are many stories of entrepreneurs actually doing a pretty good job after getting a lending hand from financial institutions.

So, if you are genuinely in need of a loan, go for it.

If you are still wondering how do I know if I should go for a loan when just starting, consider scrolling up and answering the questions above.

Let me know how it goes in the comments. Share your thoughts on this in the comments.

Download this PDF guide: Ten Things to Look At if You Are Thinking of Starting a Business in Kenya. Click here to get it.

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  4. Master Your Emotions: A Practical Guide to Overcome Negativity and Better Manage Your Feelings (Mastery Series Book 1) by Thibaut Meurisse, Kerry J Donovan
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  7. Loving Your Spouse When You Feel Like Walking Away: Real Help for Desperate Hearts in Difficult Marriages by Gary Chapman
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  9. The Billionaire Who Wasn’t: How Chuck Feeney Secretly Made and Gave Away a Fortune by Conor O’Clery
  10. Here’s The Deal: Everything You Wish a Lawyer Would Tell You About Buying a Small Business by Joel Ankney
  11. Buy Then Build: How Acquisition Entrepreneurs Outsmart the Startup Game by Walker Deibel
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  22. Who Moved My Cheese: An Amazing Way to Deal with Change in Your Work and in Your Life by Spencer Johnson
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  32. You Can’t Teach a Kid to Ride a Bike at a Seminar, 2nd Edition: Sandler Training’s 7-Step System for Successful Selling by David H. Sandler
  33. The Fault in Our Stars by John Green
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  35. The Greenhouse Approach: Cultivating Intrapreneurship in Companies and Organizations by Chitra Anand
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10 thoughts on “Getting a loan / capital to start a business in Kenya – should you?

  1. I have a bussiness,i started it with capital of kshs 10,000 currently it ha grown to kshs 30,000 how can i get funding coz the bussiness has picked up got so many clients what do to acquire loan?

    1. Hello Phanice. If you really need a loan, have you figured out how much yet?

      After doing this, can you convince some of your clients (suppose they do return to do business with you) to pay for future services or products in advance – this gives you more capital to grow the business in the meantime.

      Also, you could seek funds from friends, chama and family; or if you want to go the bank-MFI-sacco route, visit some of them, ask questions and see if they can get you the funds you need.

      What do you think?

  2. I need a loan of 30,000 to start a business. I am employed but it would take me three months to save enough capital. I have confidence in my plan and believe I should start immediately. Should I go for a loan?

    1. If, according to your plan, you think you can execute it well and you are okay with quickly paying the interests that will come with the loan, go for it.

      However, you can do this before you take the loan: Scale down your idea and test it out first. Can customers part with their money in exchange for what your product or service?

      This can really help to determine if the confidence in the said plan is solid or not. More on this here.

      Let me know how things go Duncan (via email or here in the comments).

  3. am a 4 yr business & i want 2 self employed immediately i graduate,it wse 2 go 4r alone as my start up capital?

    1. Is it wise? The answer to this question lies on the following:

      1. Will you be able to access an amount that makes it possible for you to do what you want to do once you graduate – even if you have to start on a smaller scale.

      2. Once you put the money to use, will you be able to repay it in time?

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