Compare the best options on the market and choose the one which best adapts to your day to day needs.
Further Below: Our Guide To Business Loans in Botswana, Everything you need to know.
Standard Chartered Botswana
- Get up to BWP 1 Million
- Repayment period of up to 72 months.
- Low interest rates
- Easy to apply-no security, deposit, or guarantees
- Flexible Financing
- A wide range of tenures
- Flexible Financing
- Borrow up to P 650,000
- Flexible repayment periods of up to 84 months
- Competitive interest rates
- Quick approval process
- Insurance cover
- Credit life insurance
First Capital Bank
- Maximum loan amount of P500,000
- Maximum repayment term of 84 months
- Friendly interest rates
- Deductible through payroll or scheme arrangements
- Funds received within 2 working days
- Loan consolidation
- Favorable terms
Business Loans in Botswana, All You Need To Know:
We conduct an in-depth analysis of the current market conditions affecting consumer credits and equip you with all the useful information you need before contacting a business credit including the types of credit or grants, which documents to submit, to how to get the best business loans at the moment:
What economic measures has the Government implemented for companies through covid-19?
During the heat of the pandemic, the Botswana government rose to the occasion to cushion SME entrepreneurs, large companies, and self-employed workers from the adverse effects of the pandemic. On March 17, 2020, the government established some economic measures to ensure that every sector of the economy survives the crisis.
- The government introduced Overhead Compensation SMEs where SME entrepreneurs in sectors that were hardly hit by Covid-19 would be exempted from tax. Companies or entrepreneurs would also be compensated GSH 50,000 (maximum) for four months.
- SMEs would also be protected by a credit guarantee scheme that sees an increase in credit guarantee (up to 90%) and a decrease in the percentage attached to the premium due.
- The government put in place a 6-months delay in consumer microloan repayment for small businesses and firms. The interest rates were also reduced to a more affordable rate.
- The government also initiated the post-Corona Stimulus Package which helped the most affected entities.
- The government extended the Growth Facility Scheme to July 2021. The scheme made it easier for SMEs to raise capital.
- The government also had the export credit insurance running until the end of 2020.
- The government also introduced the Corona Bridging Loan for start-ups where eligible applicants would enjoy low interest rates and longer repayment periods.
Distinguishing types of company profiles
Getting finance for your company or business depends on a few factors including your business profile. The characteristics of your business profile are a great determinant of the type of financing you get and the processes involved. There are different types of business profiles:
- Entrepreneurs: This type of company has yet to materialize. Instead, it’s only imagined, probably planned for, and awaiting financing to materialize.
- Start-ups: This type of business may not always qualify for funding as there are many parameters attached to business loans that might hinder that. Start-ups are physical businesses that are yet to gain ground. They may still have sustainability problems.
- Consolidated companies: These companies will easily get business loans because they have a stable system of operation, stable income, and have been running for some time. This gives lenders some sort of confidence in financing them.
- Large companies: Their level of operation is either national or international. The financing needs are also huge, mostly in millions of Euros if not billions. For instance Derek Brink Holdings, Daewoo Corporations, and The Central Bank of Botswana.
- As legal entities: These are owned by professionals who work independently and may require some financing for their companies. Their entities may either be classified as start-ups or consolidated companies depending on their level of operation. However, the loans their business receives will be characterized as that of a single person.
- As natural persons: This group of professionals receive personal loans to fund their projects, say buying a car, a home, or making other purchases. They draw their income from other sources besides employment.
Characteristics of business loans
As aforementioned, your business profile will determine the type of financing your business qualifies for. Despite the uniqueness of the loan option you settle for, below are some of the characteristics to look out for as they cut across every loan option.
- Cost: The cost of a loan will vary with an entity. That calls upon you to think out of the box and compare as many options as possible so you can get the friendliest option of them all. The banking and financial systems in Botswana are somewhat stable, making it a good place to get a business loan. According to Statista, the lending rate as of November 2022 is at 6.76%.
- Loan amount: Get to know the amount of loan you need for your business. However, your type of business profile will also determine the number of funds you receive. Big companies tend to receive more funds than SMEs.
- Purpose: Why do you want the loan? It could be to expand your business, make purchases, consolidate other business loans, clear arrears with your distributor, or finalize major projects among other reasons.
- Linkage: Your lender may want all the loanees to hold a business account with them, a savings account, insurance, or any other related products for you to qualify for a loan.
- Term: The time you take to repay a loan will vary with an entity. Generally, big loans tend to have longer repayment periods, running up to 10 years while small loan amounts may have shorter repayment terms.
- Grace period: This is a period when you can stay without paying back the loan and without any penalties. It’s mostly granted in the initial stages of the loan repayment process.
- Guarantee: Most lenders will require some form of security for the loans they offer (especially with big loans). Hence, the lender will require “payment insurance” mostly if the loan amount is big.
- Concession: You might require urgent money, hence knowing beforehand how fast the funds will be released will help you decide on whether to take the loan or not. Some lenders may take days or hours to deliver the cash while others may take weeks or months.
- Repayment: Your loan type may require you to make payments in monthly installments, quarterly, or yearly while in other cases, you may have the option of repaying the whole loan amount plus the interest and commissions accrued at the end of the term.
Where to get business loans
With the advent of internet loans, mobile banking, and lending apps, Botswana’s strong banking sector has experienced enormous expansion. More than 70 established banks exist in the nation, and their combined assets account for a sizeable portion of the GDP. Consequently, company loans are easily accessible through banks.
- Banks: In Botswana, there are more than 70 banks, each of which offers a range of services according to its distinct criteria. Your company will need to be highly solvent to be approved for a business loan because most banks prefer to fund consolidated enterprises.
- Companies and private capital lenders: As loans are processed online, getting money from companies in this category has become simpler and more comfortable. People seeking loans in Botswana favor these lenders because of their quick concessions. Their financial offers and products are frequently less expensive than those of banks as well.
- Alternative financing platforms for crowdlending: These are online platforms where companies connect us with private investors. Once we request a business loan, it’s upon these investors to decide whether to contribute capital to your business or not. The whole process is done through the internet and it might take two days to receive feedback.
Business loan conditions
These conditions will vary with an entity. Here are some of the common conditions you’re likely to meet:
- National registration: Entities will need to draw confidence from the registration of your business and whether you meet all the legal requirements for running a business in Botswana, either as an ex-pat or a native.
- Annual income: Botswana laws require businesses to keep account records, annual financial statements, and annual reports. Your lender might need this information to tell the solvency of your business before approving your loan application.
- The seniority of the company: Your loan application may not be approved if you have been running the business for less than a year. Nonetheless, you might find alternative financing options if you’re just starting up a business or it’s a few months old.
- Credit history: Many lenders will check with the Botswana Credit Review to see if you have a poor credit history. Poor credit history will automatically disqualify you from getting a loan.
You might meet less or more stringent conditions depending on the entity from which you seek financing.
Documents needed to get funding
- VAT return from the previous year and the current year.
- Income tax return.
- Bank statement (if in another bank).
- An updated balance sheet of the company’s turnover.
- Proof of payment of Corporate Tax.
The lender will have you send the documents online via mail, courier, or deliver them in person. Depending on the entity, you might require fewer or more documents.
Other forms of financing for companies
- Business credit lines
With company lines of credit, the borrower can withdraw cash as needed until their credit limit is reached. The borrower will not pay back the entire amount of the loan; rather, they will only pay back the amount they have withdrawn plus any applicable interest. This product is provided by numerous lenders in Botswana.
This is a type of financing for SMEs where the lender pays for our invoices to one or more suppliers. We’re then left to clear the bill with the supplier either in full (the interest included), in part, or installments.
- P2B or crowdlending loans
A private lender may choose to invest in our company through an online platform. You will get varied services as you switch from one crowdlending platform to another regarding the loan amount and terms and conditions due to the introduction of many crowdlending platforms.
- Loans with mortgage guarantee
With these types of loans, we’re only funded if we can present property (mortgage) to be used as a guarantee. The concession of these loans takes longer because of the appraisal processes involved.
Products to invest in your company
- Equity crowdfunding
This is a platform where an investor is linked to a borrower. The private investor invests in our business until it’s stable. It’s important to note that once the investor invests in your business, they’ll get a share of your business and a share in profits.
- Business Angels
Business angels are similar to equity crowdfunding only in that a group of investors come together and select a business in which they want to invest. Just like in crowdfunding, the investors will get a share of your company.
- 3F (Family, Friends, Fools)
The conditions of getting financing from each of these parties are dependent on the agreement between you and the lender. All the terms are conditions are generated by the three parties involved
Aid for the financing of companies
- Capitalization of unemployment
You’ll best benefit from this option if you’re self-employed and want to start a business.
The Covid-19 pandemic brought about a surge in federal subsidies and government grants in Botswana. These made it more attainable to consumers as prices were reduced.
Through these online platforms, you may get a private investor who’s interested in sponsoring your business or project.
About this page, our methodology
What is this page for: We present all you need to know about the best loan for your business that’s currently available in the market, which entities and platforms can solve our business’s financial needs, and what to do to obtain liquidity without overpaying.
Source: Information about business loan interest rates has been drawn from Statista, while information about conditions of business registration has been sourced from Dutch Law.
Methodology: All the information about the financing products has been collected through online research and mystery shopping.
About FUNDGECKO: We’re a team of professionals who are committed to helping you have an easy financial decision process, where you get a chance to compare the best financial products in the market and select the one that best suits your needs and peculiarities.
Note: All our services are free of charge as FUNDGECKO obtains its income from advertising and its featured products.