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 Burkina Faso, Everything you need to know.
General loan provider in Burkina Faso
- According to world bank statistics, Burkina Faso banks have not been approved to offer personal loans since 2005. The World Bank works with The Central bank of Burkina Faso to offer credits to all types of borrowers.
- These loans are offered on basis of the amount of income a borrower earns every month.
- All loan disbursements are approved by the Central Bank of Burkina Faso which has sanctioned and is monitoring major lending entries in Burkina Faso.
- The current bank lending rate in Burkina Faso is at 6.25% and has been at that rate since 2021, according to the World Bank’s collection of officially recognized indicators for development. This data on the lending rate in Burkina Faso was provided on December 2022, by the World Bank.
Business Loans in Burkina Faso, All You Need To Know:
We feature everything you need to know about financing your business in Burkina Faso. This includes the available types of credits or grants which factors to consider as you contract these loans, which requirements to meet and documentation, and how to hire an offer that best suits your needs.
[UPDATE] What economic measures has the Government implemented for companies through covid-19?
While Covid-19 came with adverse effects on Burkina Faso’s economy, the effects were not so much of a threat because of the measures taken by the government to help companies and businesses to remain resilient down the valley. The Government of Burkina Faso came in with the largest financial injection in history, providing a range of financial support for different sectors of the economy.
- The Burkina Faso government rose on every occasion to announce tax relief and other support schemes to companies and small businesses affected by the Covid-19 crisis.
- The government stepped in to support many start-ups that were crippled by the pandemic by initiating subsidies that would help them pay their employees. The government allowed for tax-free wages per week for Covid-19 patients.
- The Credit Guarantee Scheme provided loans to start-ups. These loans had excellent borrowing conditions that would help grow the business and maintain liquidity for a long time.
- Business owners that saw the need to overhaul their businesses would get support from the rescue and restructuring scheme spearheaded by Enterprises in Burkina Faso.
- Start-ups would also receive bridging financing from organizations like Competitive Start Fund or Innovative High Potential Startup Fund.
Distinguishing types of company profiles
The type of a company profile is one great determinant of the type of financing you’re able to get. Lenders have placed different conditions for different types of companies, based on a few factors.
- Entrepreneurs: this is different from all other companies as it is yet to exist. The entrepreneur takes time to scan the market, establishes the market needs, and comes up with a palpable solution. This solution requires financing to materialize.
- Start-ups: this is a type of business that’s already existing but for a very short period. Hence, it does not have seniority, its operations are not stable, and makes fewer profits than losses.
- Consolidated companies: these companies have been running for a while and often qualify for big loans. They are stable enough and may remain resilient even during harsh economic seasons. They have high solvency and generate higher profits than losses.
- Large companies: they have a large scale of operation, mostly nationally or beyond. They qualify for big loans worth millions of Euros which can sufficiently meet their needs.
- As legal entities: these refer to professionals who are looking for loans to finance their businesses. They are ranked according to their level of income. Regardless of their business profile, they receive loans adapted to a single person.
- As natural persons: these are unemployed people who have their way of generating income. They mostly qualify for personal loans as their purposes are mostly personal projects like buying a car or buying appliances.
Characteristics of business loans
As you look for financing for your business, you want to hire the best possible option that will change your financial situation and that won’t be hard to reimburse. This is why you want to know what features make a good loan:
- Cost. This is always the first aspect of consideration before taking a loan as the cost of a loan varies with different lenders. Always way out different options before selecting the best alternative.
- Amount. This factor is determined by various factors such as the type of company profile where big businesses receive big loans, the purpose, growth prospects, and the requirements of the banks among others.
- Purpose. Different purposes attract different types of financing. If your purpose requires a big loan, the lender will evaluate your solvency before they can approve your application.
- Linkage. Especially in banks, financing always comes with related products such as insurance, business accounts, or other products of mandatory recruitment.
- Repayment period. A lender will try as much to set a repayment period that’s consistent with the type of financing you get. Big loans have long repayment periods of probably 10 years or so, while small loans may be reimbursed in months.
- Grace period. This refers to a time when the lender allows the borrower to go without making the monthly payments without attracting any fines or additional charges. The length of the grace period varies with entities.
- Guarantee. A few factors determine this requirement such as the amount of loan or the type of our company profile.
- Speed. The time taken by an entity to release the money to our account may vary. While some take a few days, others may take weeks or months. Hence, consider consulting about this so you can know when you’ll get started.
- Terms of repayment. A lender may prefer having his clients repay the loan in monthly installments while another may love getting all the loan amount plus the interest and commissions at the end of the loan term.
Where to get business loans
The growth of the Burkina Faso lending market has been steady since the 2008 financial crisis that birthed different lending institutions. This broke the monopoly of banks that had reserved a lion’s share and brought about other financial institutions with competitive financing conditions.
Below are the current lending institutions in Burkina Faso:
- Banks: they still hold a grip on the lending market. While they mostly avail financing to companies with high solvency, they have introduced some financial products tailored to businesses that qualify for small loans.
- Companies and private capital lenders: have worked their way up to the top. They provide excellent financing conditions which either compete with banks or are better than them. Most of all, they have a very fast and easy application process that is conducted online.
- Alternative financing platforms for crowdlending: just like private capital lenders, these platforms have top loan conditions with fast applications and concessions. Through the platform, a borrower is connected to an investor who has the liberty to either contribute to our working capital or not. The borrower can obtain an answer in about two days.
The decision to choose one lender over another is reserved for the borrower. Hence, you want to make an in-depth analysis of your financial situation, needs, and abilities before you sign up for a particular financial product.
Business loan conditions
The Central Bank of the West African State regulates lending in the country, spelling out all the basic requirements that businesses need to meet. However, some entities may add some unique requirements based on their financing.
Here are some of the most common conditions:
- National registration: lenders will shy away from providing financing to a company that’s out of Burkina Faso, where the regulations of the Central Bank of the West African State have no reach. (BCEAO)
- Annual income: you’ll be required to provide the latest annual income records and in some cases, records of previous years. The lender will use this information to assess your financial situation and level of solvency.
- The seniority of the company: your company needs to have gone through the stagnation phase and attained stability. This will give the lender confidence that you can afford the loan you’re applying for. Most lenders require at least 12 months of consistent operation to provide financing. However, some loans are tailored for start-ups.
- Creditworthiness: the lender will look into your credit history and debt to income ratio to establish your eligibility for this financial product. Hence, work to ensure you maintain a positive credit score.
The above are the most basic requirements you’ll have to meet. However, beware that some lenders place laxer or more strict requirements.
Documents needed to get funding
To prove to the lender that you meet all their spelled-out requirements, you’ll need to provide supporting documents. This is why you want to ensure you submit all the needed information.
- Documents showing your tax status
- Documents showing your financial position as the business owner
- Documents showing the company’s turnover
- Corporate tax payments
The requirements are not limited to the above, and different entities may require different means of their submission (either online, sending via mail, or a courier).
Other forms of financing for companies
- Business credit lines
This financial product allows the borrower to access a pool of funds. Contrary to loans, the borrower has the liberty to withdraw the funds as the need arises up to a certain limit. However, the borrower will only be required to repay the principal amount they will have taken out at the time of repayment instead of the whole amount they borrowed.
This works best for small businesses with small needs such as repaying loans and the like. The lender pays invoices of our supplier(s) directly. We are then left to clear the loan amount with the lender on their set terms and conditions.
- P2B or crowdlending loans
These are online platforms that connect a borrower to a private investor. It’s upon the investor to choose whether to invest in our business or not. The conditions of the loan (amount, cost, term) depend on the crowdlending platform we settle for.
- Loans with mortgage guarantee
These loans greatly depend on our ability to provide enough guarantee of payment. Once the guarantee is provided, the lender takes time to analyze it and then grants the loan. This is longer than the previous forms of financing owing to the appraisal processes involved.
Products to invest in our company
- Equity crowdfunding
The evolution of financial systems has spurred the growth of new technologies. Through these platforms, a private investor invests in our business project and gets a share of our company depending on the benefits of the business. In this way, we obtain financing or liquidity without going into debt.
- Business Angels
Through Business Angels, a borrower can get financing especially if they have large business projects. The Business Angels managers work as a group to decide which borrower to finance, unlike in equity crowdfunding where an individual investor makes the decision alone.
- 3F (Friends, Family, Fools)
This refers to a source of financing where the conditions are not fixed. Instead, they are agreed upon by both parties.
Aid for the financing of companies
- Capitalization of unemployment
A self-employed person can turn to this option if they are looking for money to start a business. They may want to collect all the unemployment benefits they are entitled to and use the capital to start up the business.
Through these online platforms, a borrower can connect to a sponsor that’s interested in their project. The borrower is, therefore, required to publish the project so that any interested investor can know what they are signing up for.
About this page, our methodology
What this page is for: The essential target of this page is to guarantee that we give you precise data concerning the various personal credit facilities that work to solve your problems. We go to the different parts of the financial markets to gather all reliable information about the various types of individual credit that are available, the requirements for applying and repaying them, and their current trends. This aids in the development of exposure skills for selecting the best option.
Source: The information outlined here about personal loans in Burkina Faso and their features has been gotten from statistics of the World Bank, and the Central Bank of Burkina Faso among other referential sites.
Methodology: The data relating to the conditions of these products (amount, term, interest, etc.) have been obtained through online research and consultation of the official statistics of the aforementioned reference sources
About FUNDGECKO: FUDGECKO is a comparison site for personal financial products and home economics products. We compare the terms of available offers to provide quality information to help you find the offer that best suits your wishes and needs.Note: the services we offer are totally free for the user, as FUNDGECKO obtains its income from advertising and its featured products