Kenya’s Shield Services Ltd, is a new online small businesses lender that has gone live to support business in Kenya to get loans quick with approvals of less than 24 hours and their loans in less than 5 working days and from as low as Ksh 5000 to Ksh 500,000.
Shield.co.ke says are not loan sharks, but fund business by banking on their future sales and potential growth. They take risks on business that no bank would and add that their clients are those not able to walk into any local bank and get a business or personal loan.
Founded by Kennedy Rohara Mwangi, a Bsc. International Business Administration, United States International University with previous work experience at Rural Asset Ltd, a growing microfinance in Central Kenya, the platform target’s quick service businesses such as Restaurants, Bars, Nightclubs, Ice Cream Shops, Coffee Shops, Bakeries among others, retail businesses such as Gift stores, General Stores, Clothing Stores, Accessory Stores, Auto Parts & Accessories, Hardware Stores, Liquor Stores and service businesses such as Auto Repair & Service, Hair & Nail Salons, Dry Cleaners, Hotels & Motels, Medical Practices, Barber Shops among others.
According to Mwangi 90% of Shield’s processes are automated and they don’t handle cash.The platform works simply. A business has to hand in its applications, file all its documentation and await approval which in for their case, 24 hours. If a business qualifies, funds are disbursed through money transfer. Loan repayments are also though mobile money.
“Venture capital and angel funding are after tech startups in Africa to help grow their businesses. But there are a lot of mom-and-dad shops out there — businesses that are equally important to the success of the economy, whether they be restaurants or small brick-and-mortar retailers — that don’t qualify for venture funding from top firms,” says Mwangi. “Instead, the country’s small businesses typically to turn to negotiating with banks for loans, which can be a headache to secure. We give these SME’s loans and charge a factor rate on all loans we disburse. Good repayments attract loan discounting for future borrowing.”
One of the greatest challenges Shield faces is funding SMEs, as the business is still new in Kenya and people still think there are hidden charges on the loans. They also face competition mainly from commercial banks targeting SMEs and Micro-finance institutions and NGO’s that work with women and the youth and SMEs and Saccos or SME-focused banks.
Mwangi is however opportumistic that he will beat the micro-finance and Saccos as they give loans based on members savings and have long approval process. One has to be a member for at least 6 months to qualify for a loan. His other competition comes from banks. Mwangi says banks have stringent application process, require huge collateral, and take long to process loans, hence his startup has an upper-hand.
Thou loaning looks tricky with all the regulations required in Kenya, Shield is working with the Credit Reference Bureau and mobile money providers to make the system efficient. Shield at the moment has a team of five and aims to launch physical bramches to serve more SME’s.