Not all loans are good for a business. Loans are important in running an enterprise. A business can use a loan to grow and expand when the opportunity arises. Sometimes, a loan offers the business a lifeline.

“But not all loans are good for a business,” says Peter Macharia, the CEO of Jijenge Credit Limited (JCL).

“It is important that businesses evaluate the mission behind the loan before applying for it.”

Macharia says businesses ought to conduct a proper analysis of the enterprise’s ability to service a loan facility while keeping the business afloat.

Business owners need to ask themselves whether they need a loan. They need also to determine whether it will yield profits and make it easy to repay if they procure for it.

“We don’t just give loans haphazardly. As part of our operations, we offer free business consultation to our clients.

We sit down with them and look at their prospects then advise them based on official projections of the economy.

We advise them how to package their loan applications and how to align it to the needs of their businesses,” he says.

He adds, “We want clients to take a facility and be able to grow their business. That is why we don’t just give loans.

We are also interested to know our client will be able to make a profit – from which they would be able to pay back the loan.”

Unique challenges

How does a business know that they are taking the right loan?

“When the business has determined they need the loan to either grow or expand in a manner that will attract more customers; that they would be able to make a profit from the loan, and that they would be able to repay,” he says.

This year has come with unique challenges that have seen many businesses close shop and lose clients. Macharia agrees it has not been the best year for businesses.

“We have advised our clients to only take loans commensurate to the stock they need. Business has been low.

If you buy stock you cannot sell off within a stipulated period, you will make a loss.

The stock might go bad or lose quality. You may also need to pay for storage.

“Buying too much stock in the prevailing economic situation would be a big mistake,” Macharia says.

Macharia, a holder of a bachelor’s degree in Marketing and a Master’s in Business Entrepreneurship, knows exactly how small businesses and start-ups operate.

After close to 25 years in banking, Macharia took early retirement in 2014 to start JCL.

Early retirement

He joined the banking industry in the nineties – just after turning 18 – as a junior employee, and he realized that Not all loans are good for a business.

He rose up the ranks serving in various roles such as bank teller, clerk, credit administration, accounts and other average roles. Eventually, he made it to the managerial level.

A major part of Macharia’s job was to handle corporate and business clients. His role involved listening to them, advising them and processing facilities for them.

“These clients ran or owned businesses and were mostly successful at what they did. I learnt a lot from them.

Many inspired me to start my own business:  this is how JCL came to be,” he says.

When the opportunity to retire early arose, he took it. With business, a founder has to have the energy and vigour to set off and keep it rising. lessons learned made me to confirm that Not all loans are good for a business

Quick credit

“At 44, I still had some energy in me. Had I waited past 50 years, I wouldn’t have been in a position to take more risks and my energy would be fast dissipating,” he adds.

The idea was to offer quick credit facilities to businesses, as most banks do not process them speedily.

Seven years on, Macharia says the business has grown steadily and lends upwards of Sh10 million to its clients.

JCL also developed new products to an emerging clientele: the ones in need of quick money for as short a period of time as one day.

“There are clients who need money to get something done within a day and pay back,” Macharia says.

“So what we have done is made it possible for any potential client to tell us exactly what they want and we are able to work out a facility for them within the period of time they want.”

Macharia hopes that in 20 years, JCL will be operating at the level of a bank. The company, currently operating in Kenya, Tanzania and Sudan with a client portfolio of over 10,000 customers, is expanding into other East African countries.

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