Ngao Credit Offers Up To Ksh4 Million In 90-day Financing To Help Businesses Meet Tender And Supply Deadlines

Small and medium-sized enterprises (SMEs) are facing a shrinking pool of formal credit even as demand for working capital grows, with Ngao Credit offering loans of up to Ksh4 million to businesses seeking to fulfil confirmed tenders and supply orders.

The development comes as the number of MSME loan accounts in Kenya’s banking sector declined from 1.18 million in 2022 to 890,000 in 2024, according to the Central Bank of Kenya (CBK).

The share of MSME loan accounts as a proportion of total banking sector loan accounts also dropped from 8 per cent to 6 per cent during the period, highlighting the financing challenges facing smaller businesses.

Ngao Credit says its Jijenge 90-Day Supplier Loan is designed to address one of the key problems businesses face after winning tenders — having enough cash to purchase goods, pay suppliers and deliver orders before receiving payment from their customers.

The facility provides between Ksh100,000 and Ksh4 million, depending on the value of the vehicle offered as security and the applicant’s ability to repay.

Approved customers can access the funds on the same day after their documentation, security and repayment capacity have been assessed.

“Securing a tender or supply order is an important opportunity for a business, but the ability to deliver depends on having working capital available at the right time. Jijenge helps businesses bridge that gap so they can purchase supplies, fulfil orders and meet their contractual obligations,” said Gilbert Tochi, Acting Chief Commercial Officer at Ngao Credit.

Credit squeeze hits small businesses

The decline in MSME borrowing comes as smaller firms continue to encounter barriers when seeking financing, including lengthy processing periods, extensive documentation and collateral requirements.

For businesses operating under tight tender deadlines, delays in securing financing can mean losing orders or failing to meet contractual delivery timelines.

Ngao Credit says the Jijenge facility targets businesses that already have confirmed orders and a defined payment cycle, allowing them to borrow against an identifiable short-term financing need.

The loan runs for 90 days, with borrowers paying interest during the first two months before settling the principal alongside the final month’s interest in the third month.

For example, a business borrowing Ksh1 million at an interest rate of 7.5 per cent would pay Ksh75,000 in interest in each of the first two months.

In the third month, it would pay the Ksh1 million principal and another Ksh75,000 in interest.

The repayment structure is intended to give businesses time to execute their orders and receive payment before the principal falls due.

Vehicle logbook required

Businesses seeking the facility must provide a vehicle logbook, National ID, KRA PIN and 12 months of bank or M-Pesa statements for assessment.

The vehicle offered as security must have comprehensive insurance, with the insurance cost eligible for financing as part of the loan.

Ngao Credit also assigns borrowers a relationship officer to guide them through the facility and repayment period.

Where a customer encounters a delay in receiving payment from their client, the lender says the circumstances can be reviewed and an alternative repayment arrangement considered where appropriate.

Tochi said the lender was seeking to balance access to working capital with responsible borrowing.

“We want customers to understand the facility and borrow within their repayment ability. Our relationship officers remain available throughout the repayment period to help customers manage their facility,” he said.

Tender financing market

The financing product highlights the growing importance of short-term credit for SMEs that win contracts but lack sufficient cash to execute them.

Unlike businesses seeking financing for long-term expansion, suppliers working on tenders often need funds for a specific transaction and for a limited period before their invoices are paid.

Ngao Credit, which began operations in 2009, specialises in logbook-backed lending alongside other credit solutions.

The company says the Jijenge facility is aimed at helping businesses convert secured orders into actual revenue by addressing the working-capital gap between winning a contract, fulfilling it and getting paid.

Read: Lower Borrowing Costs Emerge as Kenyan Banks Cut Loan Rates

>>> CoB Raises Alarm Over Ksh20B Paid on Undrawn Loans