[Guide] How To Start A Lending Business In Kenya

In this article, you are going to learn how to start a lending business in Kenya.

In fact, these are the same steps used by the likes of Tala to operate their business within the country.

Why would you want this?

It is estimated that there are over 50 mobile-based lending platforms in Kenya. How?

Well, the industry has been ballooning ever since MPESA came into the picture back in 2007. 

This was followed by the first-ever mobile loan in 2012 through the M-PESA platform.

From here, things skyrocket, and now we have personal lenders sprouting up left to right.

Why personal lending?

Question is:

Why would you lend out your money?

To make more money of course!

Mobile lending in Kenya has proved to be so profitable.

How profitable?

Take Fuliza for example;

Kenyans borrowed over Sh245 billion in the 2020 Financial Year, compared to Sh29 billion borrowed the previous year.

And the numbers are increasing!

What does this tell you?

There exist an appetite for loans in Kenya, and that is why you are here to learn how to start a lending business in Kenya.

Later on, I will introduce you to a system you can use to seamlessly manage all your loan payouts.

It is a tool that removes the guesswork and paperwork from this lucrative business in Kenya.

How to start a lending business in Kenya

Starting a personal lending service in Kenya is just like any other business.

You first have the idea (in this case, lending money to friends). And with the idea, you start surveying the market.

By doing so, you are trying to get an understanding of the market. You know, things like the age, income sources and size, and of course, their occupations.


We are going to cover that in a minute.

Before that, you also need to take care of the legal part.

There are two things here;

First, you need to make sure that your business is operating within the law. 

And secondly, make sure your money is safe. 

Lending business in Kenya requirements

Here are the things you need to start a personal lending business in Kenya;

  • The market gap – like any other business, you need to solve a need. And no, the need is not for the loans. Almost everyone has trouble with money. You, therefore, need to identify the exact target market you’d wish to service.
  • Capital – you need at least KSH 100K to start a profitable lending business in Kenya. 
  • Have an existing business – anything less than a micro-finance institution in Kenya is no recognized under the law. For this reason, you need an existing business like an electronics shop or a mini-mart. The goal here is to run your lending business undercover for a while.
  • Contract forms – while anything less than a micro-finance company is not recognized by the law, a signed contract is enforceable. As such, get contract forms where your clients should append their signatures. And that should protect your assets in case of defaulters. 
  • The interest rates and loan limit – typically, the personal lending businesses in Kenya charge between 10% and 15% daily interest rates. Also, based on your risk tolerance, determine how much you are willing to give out.
  • Collateral – what will you take as the security for the loans? Make sure you and your clients understand that you take an asset with a higher value than the loan they took. This can be easy to determine especially if you are operating under an existing business. For example, you can secure cooking gas if you are selling cooking gas cylinders, you get the idea?

Now, with these things in place, let’s see the steps you can take now to start a lending business in Kenya.

Steps you need to take now

Have a business plan

It doesn’t matter whether you are starting a micro-finance institution or operating a personal lending service under another business, you need a plan.

A plan helps you identify opportunities and get a clear picture of where you are going and what you need to do to get there.

Without a plan, you are planning to fail.

Legal registrations

If you will be moving things upscale, you will need to be on the right side of the law.

Take any licenses and registrations necessary to start and operate a money lending business in Kenya.

Besides, having a legal entity shields your personal assets against lawsuits that may come your way.

Register for taxes

You need to register with the tax man. 

Head over to the KRA portal and start the process.

Open business bank accounts

This isn’t necessary if you are operating undercover.

But when things get serious, you need a separate business bank account. This separates personal assets from the business

Lending system

You need a system to keep things seamless.

Remember, you will be dealing with hundreds of clients and other business needs.

When that happens, you need a system dedicated to simplifying these operations.

Luckily for you, such a system exists in Kenya.

Yes, Jisort is a lending management platform, helping you remove all the complex tasks out of the way. We will talk about it later.

Get business insurance

What happens when you have to write off loans?

You need insurance to operate both legally and with peace of mind.


Branding puts you out there and helps you attract the right target clients.

Get things like logos, websites, and social media presence sorted.

Have a website 

Again, you need a website in Kenya to build trust.

Also, a website enables you to generate leads on autopilot.

For example;

If your target market is fashion boutiques, you can publish an article targeting them. Include a lead-magnet where they need to provide their email and names to download it.

From there, you can start nurturing these leads.

For hosting in Kenya, check this out.

Who is Jisort and why you should care

We’ve brushed about Jisort somewhere within this guide.

It is a lending platform in Kenya you can use to operate your entire business.

how to start a lending business in Kenya

From the screenshot above, you can see you’ve got everything you need to run the lending business under one dashboard.

Who can use Jisort?

  • SACCOs
  • Microfinance Institutions
  • MFIs
  • Welfare Groups
  • Banks
  • Community Banks
  • Credit Unions
  • Lending Companies
  • and Chamas

Why Jisort?

Jisort gives lenders like you the following features:

  • Rich Client Registration module for the best KYC
  • Loan Origination and appraisal and disbursement system linked to the marketplace
  • Easy payment modules – integrated with mobile money, banks, cards
  • CRM system to manage your clients and leads.
  • Full fledge accounting system and financial reporting
  • Rich reporting and business analytic tools
  • Full Human Resource and Payroll System to manage your human capital
  • Fixed Deposit Management system to offer fixed deposit products
  • Savings and Interest Accruing Savings product management system to offer saving accounts
  • Shares Management System – to offer shares, transfer shares, and manage issued shares to the public
  • Open API to readily extend system functionality or customize to fit your custom need.

What to do next

Try Jisort now for free.


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