9 Steps to Get Small Business Loans in Africa

Securing a business loan in Africa can be a vital step towards realizing your entrepreneurial dreams. Having a business idea is easy. The hard part is funding. It’s even harder for African entrepreneurs. We have fewer venture capitalists in Africa than there are in other climes.

You always need money to start a business or expand an existing one. In many cases, when you can find an investor, your best bet is a small business loan.

Getting a loan in Africa is not easy, but it’s possible. This article will explain how. So buckle up as we discuss nine easy steps to help you advance your business plans.

Read Also: How to Secure a Business Loan

9 Simple Steps to Get Small Business Loans in Africa

  1. Understand Your Business Needs

First of all, be clear on what’s lacking. You would only set out on a road trip if you knew where you were going. So, take stock of your business carefully and decide what you need.

Are you opening a bakery and needing new equipment? Or is your business a tech startup that needs money for research and development? Whatever the case, write it down and be clear about how a business loan will help you meet the gap.

  1. Research Available Financing Options

In Africa, you have many choices, such as traditional banks, microfinance institutions, government schemes, and even alternative lenders. Yet each has merits and demerits. Traditional banks may have relatively lower interest rates but usually have strict lending criteria.

On the other hand, alternative lenders may be slightly more flexible than regular banks, but you may need to pay a high-interest rate. Make sure you have done your homework, evaluated your choices, and selected the best option.

  1. Develop a Solid Business Plan

Every great business is only as good as its plan. The business plan can also help when seeking funding. Consider your business plan as your sales pitch to lenders—you will have to convince them about your vision and make them believe that it needs the funding you require.

  1. Within your business plan, put all the necessary details for potential investors: your target market, competition, financial projections, and the rest of it. Let them know you know your onions, and they’ll be more likely to part with some of their money.

Read Also: How to Write A Business Plan in Nigeria (Template for Nigerian Businesses)

  1. Gather Necessary Documentation

Creditors won’t give their money away unless they have solid evidence that it’s a gamble worth taking. They’ll look at your financial statements, tax returns, and business licenses, just to name a few.

So ensure your documents are in order and that everything is well-articulated. The last thing you need is to get declined and let your efforts go to waste because you didn’t cross a ‘t’ or dot an ‘i’.

The required documentation may vary from country to country, but insurance, licenses, and tax returns are usually sacrosanct. So check with the authorities in your country to be sure.

  1. Maintain a Good Credit Score

Credit scores are the last thing a borrower wants to think about. The fate of your credit report won’t be set in stone, but it’s something you can fix overnight.

A good credit score is crucial to getting a business loan. Timely repayment of smaller debts is a good starting point. All you need to do is keep your credit card balances under control. Check your credit report regularly to be sure you’re in line.

  1. Expand the Network and Build Relationships

You may know a lot, but it is equally important to have the right contacts. And when the time comes to secure a loan, that could not be truer. Attend industry events, get connected to networking groups, and always be open to asking for help.

Sometimes, you must be aware that this particular chance encounter may turn into a golden opportunity. Plus, having a mentor or two in your area of expertise can come in handy when it is time to seal the deal for your business loan.

  1. Approach Lenders

Now that you have your perfect business plan and you’ve sorted out your credit score, it’s time to start knocking on doors.

Here’s the catch – you may not go too far unless you know who’s behind the doors. So please do your due diligence: research and find lenders who serve your industry and mold your pitch to correspond with their interests and expectations.

That said, self-promotion is the name of the game. So, never be bashful about tooting your own horn—confidence is all you need. Simply put, blow your trumpet and be your cheerleader.

Read Also: How to Write a Loan Application Letter in Nigeria

  1. Negotiate Terms and Conditions

So, you’re an interested lender. Congratulations. But you need to talk turkey first. Negotiating the terms of your business loan is like bargaining at the market.

Check out the interest rate, repayment schedules, and any hidden fees in the fine print. Also, remember that it’s good to leave if the terms don’t look good to you.

  1. Plan Repayment

Alright, you’ve got the money! However, slow down and think before you go on a shopping spree. A business loan is not a gift. It’s a responsibility.

Therefore, plan how to spend that money, stick to your budget like glue, and, most importantly, make the payments on time. In the future, you will be grateful when you enjoy a high credit score and a booming business.

Tips on Where to Source Small Business Loans in Africa

So, you’re searching for cash to kickstart your business dreams or need more investment to expand your business. But where do you even begin? Here are some ideas for sourcing a small business loan in Africa.

  1. Traditional Banks

First, let’s talk about the old guard, the traditional banks. These guys have been providing loans for time immemorial, and they’re still among the first choices for many people.

Banks frequently provide competitive interest rates and a wide array of loan products from which you can select. However, be ready to jump a few hoops to get it. They can be strict about who to give money to.

  1. Microfinance Institutions

Next are the microfinance institutions. These lenders have been setting up to serve the grassroots – think the little guys like the small businesses, farmers, and artisans.

In terms of their size, they are on a smaller scale, but that does not stop them from being flexible. Microfinance institutions are well-known for their personalized loan arrangements, providing smaller amounts of cash with less strict criteria.

  1. Government Programs

Many governments in the continent have an entourage of programs intended solely to help small businesses. Such programs can come in different packages, from low-interest credits to grants to technical aid.

While the maze of bureaucracy may be too much for you to take, the reward will likely be worth every step. So, start your research, find out what’s available in your region, and remember not to hesitate to take those chances.

  1. Alternative Lenders

Then, you have the “underdogs”—alternative creditors. These guys don’t work like conventional banks. They offer various services, such as peer-to-peer lending, crowdfunding, and invoice financing.

Alternative lenders are not subjected to the same regulatory control as regular banks. However, they can be lifesavers for those who don’t fit into the mold. However, you must be careful when reading the fine print. Alternative lending can come with hefty fees and high-interest rates.


Funding is the life of every business whether it takes off or sustains it. Getting a small business loan in Africa may be difficult, but a couple of ideas which we have discussed in this article can make it easier for you. Having a solid business plan, maintaining a good credit score, doing some research, and ensuring all necessary documents will put you in a more favorable position to access funding. When you finally get it, plan on repayment. It’s as important as getting the loan in the first place.

Chizi Amadi
Chizi Amadi
Chizi Amadi is a freelance writer with five years of experience in the tech and science niche. With a keen interest in smart technology, Chizi delivers well-researched and engaging content.

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