The Best Business Loans in Tanzania

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 Tanzania, Everything you need to know.

Standard Chartered Bank

  • Flexible repayment period 
  • Competitive interest rates
  • Scheduled equal monthly installments 
  • One can borrow or even top up a loan
  • Friendly terms and conditions
  • Credit life insurance Favorable loan conditions 
  • Quick application process
  • Loan insurance cover disability, death, or retrenchment
  • Allows debt settlement through the Balance Transfer option 

Tanzania Commercial Bank

  • Affordable interest rates
  • Repayment period of up to 96 months.
  • Mentorship programs for retirees
  • Pensioner’s loan does not require collateral
  • Loan insurance cover against death
  • Top-up loans are allowed
  • Doesn’t have an age limit
  • Interest rate is on reducing balance
  • Fast approval process 

Exim Bank 

  • Loan amount of up to 15 million
  • Repayment period of up to 24 months
  • Competitive interest rates
  • Fixed monthly installments
  • Minimum arrangement fees
  • Available to non-Exim Bank clients
  • Creditworthiness considered
  • Stable income is required 
  • Installments under 40% of the monthly net salary

Business Loans in Tanzania, All You Need To Know:

It’s our job to let the reader know everything about financing your business in Tanzania. Take a quick read to get a hang of the types of credits available, the latest news about financing, and all the requirements and documentation required to hire this type of consumer loan in Tanzania.

[UPDATE] What economic measures has the Government implemented for companies through covid-19?

Just like many countries across the world, Tanzania was greatly affected by the Covid-19 pandemic. Nonetheless, the government stepped in right from the onset to cushion companies from the harsh effects of the lockdown both directly and indirectly. The government, therefore, issued orders and set in place some legislative acts, and policies that would help companies survive the pandemic.

  • The government announced on March 18, 2020, that it was setting aside some funds, which would be channeled to credit guarantees, granting of soft loans and SMEs, fiscal stimulus (which covered more than half of the funds), and tax payment deferrals.
  • To support liquidity and temporary layoff the state channeled funds to loans for small businesses and startups that were adversely affected by the pandemic.
  • Bank loan repayment for small businesses was deferred for 6 months during which companies went without paying either the capital or the interest. Companies in the tourism sector also enjoyed deferral of tax payments and social security contributions.
  • The government established liquidity measures that involved moratoriums for businesses affected by the pandemic which lasted till September 2021. The policy introduced new loan maturity periods and grace periods. 

Distinguishing types of company profiles

Financing for your business greatly depends on the type of business it is. The features of your company will be great determinants of the type of financing your business qualifies for. Below are the different forms of businesses:

  1. Companies
  • Entrepreneurs: entrepreneurs come up with ideas and plans of what they wish their business to be. They identify the economic need of a particular area and come up with a business plan to address it. However, their plans only materialize when they get financing.
  • Start-ups: this type of business is a step ahead of entrepreneurs. The business already exists but is not solvent enough to qualify for big business loans. Hence, it requires some time and consistency in its operations to gain ground.
  • Consolidated companies: as the name suggests, these companies are long-standing, make big profits, and are stable in their operations. The companies qualify for big loans because of their high solvency.
  • Large companies: these companies have the largest scale of operation (national or international). They have big turnovers and their needs are in millions of euros. 
  1. Self-employed
  • As legal entities: these are individuals who own a business. The business is run individually and qualifies for financing depending on its scale of operation. However, these loans are adapted to a single person.
  • As natural persons: this refers to people who are not employees and have ways of getting income. 

Characteristics of business loans

Different business loans have different characteristics which also depend on the lender. However, the measures to use in comparing these loans are the same and are listed below:

  1. Cost: This is the first feature you’re supposed to look out for every time you think of financing your business. A loan is considered good debt if the interest rates are friendly because it will allow you to improve your business, meet all the business needs and reimburse the credit without straining.
  1. Amount. A business will qualify for a certain amount of credit depending on its scale of operation and its turnover. The smaller the business the smaller the amount of loan it’s likely to get.
  1. Purpose. Depending on your lender, different purposes have different loan conditions. Hence, consult with your lender to find out their conditions for whichever purpose you have, e.g. expanding your business, buying machinery, clearing arrears with your suppliers, etc.
  1. Linkage. Especially in banks, financing always comes with related products such as insurance, business accounts, or other products of mandatory recruitment.
  1. Term. This is determined by the purpose, amount, and conditions set by the lender. Your business profile will also determine the type of financing and your repayment period.
  1. Grace period. This is a period during which the loanee is legally allowed to go without making the loan repayments.
  1. Guarantee. This applies to big loans where the lender requires “payment insurance” with a guarantee or collateral.
  1. Speed. Be sure to know when you’ll receive the funds after your loan application is approved because some loans tend to grant loans months after application.
  1. Repayment. Before signing up for a loan, it’s essential to know how you’re required to be making repayments. While others have a monthly installment repayment criterion, others will have you pay the principal amount, the accrued interests, and commissions at the end of the loan term.

Where to get business loans

Many entities providing consumer loans have broken into the Tanzania financial market and diluted the monopolization of banks that went on for many decades. The evolution of the financial systems in Tanzania brought about affordable financial products that are adaptable to different loan needs. Hence, regardless of the uniqueness of your financial situation, you can secure a loan that’s consistent with your business and its needs.

Which entities provide business loans in Tanzania?

  1. Banks: these are the oldest and the most popular providers of business loans. The loans are only given to firms that prove to be solvent enough to repay the loan, among other factors. Nevertheless, SME bank loans are now offered under better conditions and have fast concessions.
  1. Companies and private capital lenders: the process of applying for a loan and receiving the funds is faster under this category than in others. The application is completely online. Their financial products are offered in excellent conditions which either compete with banks or are better. 
  1. Alternative financing platforms for crowdlending: these are platforms belonging to companies that help borrowers connect with investors. Once connected, it’s the investor’s prerogative to contribute working capital to the borrower or not. Once the borrower starts repaying the loan, the investor will receive the interest. The whole application process to the processing of the loan happens online and the borrower is attended to in a matter of two days.

Different financial situations will make us qualify for different kinds of financing. Hence, be sure to make a thorough financial audit to establish which loan your company qualifies for and which you’ll be able to reimburse without problems.

Business loan conditions

According to the Tanzanian Law on consumer credits, there are basic requirements that every business owner looking for a loan must meet:

  • National registration: the business or firm seeking financing must be registered and working under the Tanzania Law governing and monitoring businesses within its borders. In this way, lenders won’t be skeptical to offer to finance.
  • Annual income: with these records, lenders will be able to assess the solvency of your company before offering to finance. The lender will compare your profits and business expenses to determine whether or not you’re able to afford the loan you’re signing up for.
  • The seniority of the company: while there are loans tailored for small businesses and startups, big loans will only be available to consolidated companies which will be solvent enough to reimburse the loan.
  • Good credit history: work to ensure that your company maintains a positive credit history with the Tanzania Central Credit Register. A negative credit score will frustrate your ability to obtain financing.

Documents needed to get funding

  • Corporate Tax payment receipt
  • Income tax return
  • Bank statements
  • An annual balance sheet of the company’s turnover
  • VAT return

The submission of these documents may be online or physical, depending on the entity’s preference.

Other forms of financing for companies

  1. Business credit lines

These are a unique form of financial products that grant you a certain amount of money, which you are free to take out bit by bit. If planning to repay the money, you’ll be required to repay the principal amount which you’ve withdrawn plus its interest instead of the whole amount that’s given out.

  1. Factoring

This form of financing majorly suits the self-employed and SMEs, where the borrower chooses to clear invoices with about two or so suppliers later. The lender, hence, transfers the funds directly to the supplier, after which, we will repay the lender the cost of the loan and the interest as well as other charges.

  1. P2B or crowdlending loans

Through these online platforms, the borrower connects with a private investor, who decides whether or not to invest in the business project. The conditions of these credits depend on the crowdlending platform we use and the investor company we choose.

  1. Loans with mortgage guarantee

These are mortgage loans that offer to finance only if the borrower is able to present some form of guarantee. In this case, the borrower must present property that’s more or less equivalent to the amount of loan they get.

Products to invest in our company

  1. Equity crowdfunding

These are online platforms that recently got their way into the Tanzanian financial market. The platforms connect the borrower to private investors and professionals, who invest in our business projects. However, before committing to these loans, it’s important to note that the investors and professionals will get a share of your company and take a percentage of your business’s profits. 

  1. Business Angels

Just like in equity crowdfunding, the borrower connects with the investor through an online platform. However, the company offering these loans will decide whether to have their Business Angel invest in your business or not. The investors will have a share of our company and they mostly invest in big business projects.

  1. 3F (Friends, Family, Fools)

The 3 F’s (Friends, Family & Fools) refer to people who offer financing for our business projects, either family, friends, or fools. The conditions of financing depend on the agreements made by the lender.

Aid for the financing of companies

  1. Capitalization of unemployment

This type of financing is only eligible to the unemployed who wish to start up a business. They, therefore, collect any unemployment benefits that are designed to suit them.

  1. Crowdfunding

Through crowdfunding platforms, borrowers can obtain financing from sponsors who are interested in our projects. Hence, the entrepreneur or business owner publishes their business projects on the platform where the investors will see and reach out to them.

About this page, our methodology

What this page is for: We aim to help you find the best credit facilities for your needs. So, we want to show you what personal loans are, their differences and similarities, the deals offering the best value, and how to choose the best deal. We do this by evaluating and rating loan products. We keep updating the information on our website to ensure you access the most recent information.

 Source: The information herein has been sourced from Tanzania’s Ministry of Finance and Planning portal, Bank of Tanzania data, bank and financial institutions websites, and other reliable sources.

 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: We are an online comparison website. Our goal is to make it easy for users to apply for loans by comparing the best options available and providing them with the information they need in advance.Note: the services we offer are totally free for the user, as FUNDGECKO obtains its income from advertising and its featured products.

You might also like
Tags:

More Similar Posts

Menu