Find Capital to Start Hair Store in Kenya

On Friday the 13th, Joy from Kenya contacted me by WhatsApp. Joy wanted to start supplying Braids in her county in Kenya. She wanted to know how to find capital to start a hair store. Joy had great ideas to start selling, but very often the prices from the suppliers were too high. It was difficult to make a profit, unless she could buy a larger volume of wholesale hair.

Last Friday, Joy contacted me again. I made the promise to myself and now to you, to do some research on how to find capital to start a hair store in Kenya. In the various chats I have with women in Kenya, many times I hear to find the money to start a business is very difficult. Too bad so many great ideas will never see the market, because the lack of capital. Many women, like Joy, have a side business or day time job. But this does not always generate enough money to start a hair business venture.

Where to find money to start a hair store

There are at least several ways to find the money for your hair store in Kenya, think of:
-You can borrow from your family,
-use your savings,
-organize hair extensions parties,
-start a crowdfunding event or
-apply for micro credit.

Today I want to zoom in on micro credit as source of capital for your business. This type of financing is set up in many countries especially for women who want to start a business. This morning I watched a documentary about the Bill and Melinda Gates Foundation. Melinda mentioned the best way to improve the quality of life is to invest in the women of that country. This vision helped to start fund raising initiatives for women all over the world.

What is micro credit

It’s only about 30 years, micro finance as a source as capital, is available for women in Kenya. The Government understood small scale enterprises are important to make people of Kenya more prosperous . For example to generate more jobs and to reduce poverty.

The idea was to offer loans and deposits, plus support to the entrepreneurs who borrow the money. Later the focus of the institutions was on lending the capital to start a business. Less support was given as training or coaching on the business side. Some institutions are active in micro enterprise business and do provide training. For free or paid.

There are two types of institutions active in the micro credit business in Kenya. Those you can become a member and share in the revenues. Plus you have something to say and those who only see you as their client. Less influence and no revenue share for you.

Compared to loans from commercial banks, the average amount you can borrow is most often smaller. The pay back time is shorter. But the conditions to borrow the money are more soft. For example if you need a larger loan, a commercial bank could be more appropriate to finance your hair store.

How to lend money for your hair business in Kenya

To lend the money as a capital for your business, in general there are 3 approaches:

Group-lending approach.
Organization of clients into groups or use of informal groups for purposes of attaining economies of scale from the small sized transactions and instituting group guarantee mechanisms;

Character-based credit appraisal.
Credit appraisal is based on character assessment, rather than traditional collateral (ownership of land or other assets) and viability of projects to be financed;

Focus on micro-enterprises.
A special focus on financing very small businesses and the poor.

You might not feel comfortable with the group lending approach, because you depend on the behaviour of others. And if one member of the group fails to meet his obligations (pretty sure it will be the only guy in the group). You are all in the soup! At the other hand, it is a community where you can support others too and you can learn from each other.

With a character-based loan, you do not need to have a collateral, but the bank will rely on good faith and your story. If you have a good story to tell about how you will perform the business the chance to get the loan will increase.

One out of every three women with a micro finance loan in Kenya also have more than one business. Thus the micro credit allows you to open a fashion store next to you salon for example. This is a smart way to spread the risk. And to ensure you will still be able to pay your bills, even when one of the businesses suffers from disappointing sales.

Micro finance organisation to contact for your hair business in Kenya

There are nearly 30 institutions in Kenya active with micro credits. These institutions are ready to finance the capital you need to start or grow your hair business.

Below you will find my selection of the most important institutions. I encourage you to visit their websites. Your clients like to compare the hair they buy from you. So you should definitely compare where you can find the money you need to form the capital of your hair business.

KWFT Banking on women

With “To Partner with Women in their Creation of Wealth” as their mission statement, KWFT is my favorite micro credit institution of choice in Kenya. They even have a Mother Room, to change and breast feed the baby, in their branches!

They have developed several products based upon the group lending approach. These loans are granted with no collateral and the members can guarantee each other loans, named Biashara and Mwangaza loans. But there is also a group loan without group co guarantees (Mwamba loans). This opens more ways to access financing.

Before you uptake a loan, you undergo eight weeks training to learn various business skills such as book keeping and how to save.

You then will participate in monthly meetings with the KWFT officers where they walk the financial journey. This approach has provided financial services at your doorstep to provide convenience and save time and money.

I also recommend to read the success storiesthey share. No matter how enthusiastic you are about your own idea to start a hair business, you can always learn from the success of others.

Jitegemea Ready to give a hand

Jitegemea promotes and empowers micro and small enterprises by providing requisite services which include:
-credit,
-savings mobilization and
-technical assistance.

They offer several loans. Like Biashara Loans, a product for their clients who have operated a business for at least six months, you can get amounts of Ksh: 5,000 to Ksh: 3,000,000. Or Asset Loans, this is a product that helps you to purchase business assets.

Their mission should be read as an invitation to walk into one their branches. Jitegemea wants: “To empower our clients by availing financial and social programs that will enable them realize their potential.”

It is also good to mention Queen Maxima from The Netherlands visited the head office in 2005. That gives a special bond with this institution for me!

Equity Bank Your Listening Caring Partner

This large financial institution only survived a major crisis thanks to their micro finance activities. They offer six products in their women’s loans portfolio. Most of them are combined with access to business improvement trainings. Keep in mind you need to pay for this service at Equity Bank.

The Fanikisha group Loan. For 15-30 members, to be repaid within 12 months. Or the Fanikisha Fedha loan for a group to ten members, and a repayment period of 18 months. For individuals they offer the Fanikisha Imara loan. They also offer individual loans with a longer period to repay. For all loans you need to have additional income that could be used for loan payment.

Faulu To enable Kenyans to realize their dreams

The vision of Faulu is to enable all Kenyans to realize their dreams, by listening and empowering the community with relevant loans and services. Faulu was declared the overall Best Microfinance Bank in Kenya in 2019.

Faulu offers a group business loan with flexible collateral options and a tenure, months to repay of maximum 24) for Self help groups. A Micro Loan for small businesses and entrepreneurs with a maximum of 36 months repayment. For individual loans the Chama Loan could be an option.

What to do if you want to apply for a micro credit?

The providers of the micro finance have a special focus on women and micro businesses. This will help you to get access to these loans, sometimes with a group and sometimes for yourself.

This possibility to find capital to Start a Hair Store in Kenya will work in your advantage if you first take the time to write your business plan. The Business Plan is a checklist that will help you to tackle in advance any failure for your hair and beauty store. It will help you to talk with the loan officer and to convince him or her about the bright future of your venture.

You want to get a loan?

Prepare yourself the best way for a talk with the loan officer. Get your copy of all-in-one business package and find yourself the capital you need to start selling hair!