Maybe you must have found yourself in a situation where you urgently needed money in the form of a loan.

At that moment, you could not go to your bank because maybe you have an existing loan, had defaulted on a loan, and on an extreme case, had been listed on CRB.

Having been listed on CRB meant that you could also not contact any other financial institution, leave alone your bank, for any loan.

Mobile lenders and Apps could also not assist because you are still listed on CRB.

That is a situation most Kenyans find themselves in when they need loans.

Interestingly, the only way you can overcome this financial need is to have someone willing to lend you money without considering your credit history.

Because let’s face it, if no financial institution is willing to lend you money in Kenya, who can?

Of course a shylock!

You will however need collateral like maybe your TV, fridge, or microwave… anything that has monetary value to get these loans.

This is what is called Private Lending Business.

This business has thrived in Kenya that it is now among the most profitable businesses in Kenya.

If you have a large sum of money lying in your bank as deposits, you can start a Private Lending Business and gain interest from it.

*How to Start a Private Lending Business in Kenya (Location).*

The most pressing financial needs which may require the intervention of Private Lenders are not back at the rural areas but in urban areas. Your Private Lending Business will thrive better in the city or an urban setting than the rural areas.

*Private Lending Business (Requirements).*

Here comes things that are mandatory for success in the Private Lending Business:-

*Identify the need for private lending*

Don’t just go ahead lending money to people who might as well not have needed your intervention. This is business and you need to first identify an exploitable gap. People will always have financial needs anyway.

*Register your Business*

You will need to register your micro-lending company with the appropriate agency. You will also need to obtain all the necessary licenses and permits. And most importantly, you must fulfil legal obligations required by your county government to avoid falling into problems.

*Draft contract forms*

Signed contracts are very recognizable by the law. You only need the person you are lending money to sign a contract form and you can sue them in a court of law incase of anything (which rarely happens if you have collateral) and you will still be safe, not unless it is found out that you forged a document for fraud.

Do not forge signatures – let your clients sign the contract forms themselves. Contract forms are the only thing that makes the agreement between you and the borrower binding and legal.

*Determine interest rates and the maximum amount you can lend*

You need to determine how much you will charge on your borrowed money in terms of what duration. Most people doing private lending offer loans at 10% to 15% daily.

Depending on your unique circumstances and the market conditions also, determine the rate at which you will charge interest. You also need to determine how much your limit is, depending on how much you have to offer.

*Determine valid collaterals*

Any client you lend money is a potential defaulter, no matter how much you trust them. You will need collateral when they borrow money, which you will retain or sell if they default, or return to them after they pay back the loan and interest.

You need to determine which collaterals you will take, which may as well be in line with your existing business like electronics if you are running an electronics shop. The collateral you take must be of much more worth than the amount the client is seeking to borrow, to ensure you are protected in case they default.

*Market your private lending business*

You had already identified a market gap and known that most people would need your private lending services. By word of mouth, social media, or any other local means, spread the word that you are offering such services. Let potential clients know that they can come to you when they need the service.


Let clients know that they will need collateral of much more worth than the amount they are seeking.

Ensure clients sign the contract forms themselves.

Ensure clients understand the terms of your service.

Test all collaterals to ensure they are in good working condition and not faulty before handing in the cash to the client.

Let all clients prove ownership of the item they bring as collateral (can provide receipts) to avoid the possibility of having been stolen.

As you start, remain local to avoid much drama.

*How much capital do you need to start a private lending business in Kenya?*

If you have about Ksh.250,000 to Ksh.500,000 or more lying in your bank deposit accounts, you have enough to venture into private lending.

*How profitable is a private lending business in Kenya?*

If you lend out your Ksh.250,000 to Ksh.500,000, that is in small quantities to various people for 30 days with 15% daily interest, then at the end of the month you expect Ksh.1,125,000 to Ksh.2,250,000. Your money grew by a whole 450%.

Even if you don’t lend out the whole amount, whatever amount you lend will grow by 450% at the end of the month. Where else do you earn 450% on your money, if not in private lending?

If you feel the interest rate is high, you can lower it and still make money.

*Final Word.*

Private lending is one of the most lucrative ventures in Kenya today.

If you do it right, you will smile all the way to the bank. If you got extra money to spare, join the club, pay the price, and make your millions..


Justine Nyachieo
Business Man & Mentor

Timothy Angwenyi
Business Consultant

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