How to apply for a loan in Uganda.
A loan according to Investopedia is when money is given to another party in exchange for repayment of the loan principal amount plus interest.
A loan is so useful to an entrepreneur because it provides you with more financial power in the form of cash which you can use to invest in your businesses.
Loans, however, are like a double-edged sword. If used recklessly, loans can turn your life into a living hell because you have to pay off the loan plus all the interest that the loan has accumulated.
But if the loan money is used carefully and properly, a loan is a shortcut for you to raise startup capital to fund your business startup or maintenance and progress.
Related: How to Raise Startup Capital For Your Business in Uganda
Done with the talking, let us look at how to apply for a loan in Uganda. But before we go for the steps on how to apply for a loan in Uganda, let us look at what you need in order to apply for a loan.
A source of money (Income)
Banks like lending their money to a person or company they are sure will pay back their money plus the interest accumulated by the money.
One of the questions a loan officer is likely to ask you is “How much money are you currently earning?”.
This is because financial bodies want to make sure their money will be paid back.
To be on the safe side it is good to ask for a loan that is below or within your income-earning capacity.
This will please your loan officer and you too will be less stressed about your ability to clear the loan and the added interest.
Security or Collateral
The security I am talking about is not the bodyguards to guard you and your loaned money, though you may need that too.
The security we are talking about is that piece of land, building, car, or any other item or property that is equivalent to the amount of money you are asking in the form of a loan that you offer to the bank to consolidate their money they loaned to you in case you don’t manage to pay it back.
Security is the only way the bank can guarantee that they will not lose their money.
If in any case, you fault your loan payment, the bank that gave you the loan has a right to sell your property or item handed over to the bank in order to raise back their money and the estimated interest.
If you want let’s say a loan of 3,000,000 Ugx, you should be having a security equivalent to 3,500,000 Ugx and above.
That is the only way your loan officer will depart with his 3,000,000 Ugx.
18 Years and above
To qualify for a loan in Uganda, you need to be 18 years of age and above. If you are below that, you need the consent of your parents or guardians.
A bank loan is meant to be offered to old people, so if you are still young you may not qualify. Check your age and see if you are above 18 years of age.
If you are still under 18, then you need the guidance of your parents or guardians to qualify for a loan.
What type of loan do you need?
There are many different types of loans offered by different financial bodies in Uganda.
Identifying the perfect type of loan that suits your priorities is so crucial before going for a loan.
Different types of loans offered in Uganda commercial banks include;
- Salary loans
- School fees loans
- Business loans
- Personal development loans
- And many others
If you find a hard time getting the perfect loan for your needs, don’t worry, there are loan officers in almost all financial bodies that give loans in Uganda.
Visit your nearest bank or any other financial body and talk to a loan officer who will help you find the loan that is perfect for you.
How Much amount do you want?
Before going to apply for a loan, you need to determine how much amount of money you need to apply for.
Remember you still have to pay back the loan money and the interest generated by that money loaned to you as well.
So it is good to determine the actual amount of money you have to avoid taking excess money which results in excess interest.
To determine how much you need to acquire from the bank, you need to look at the reason for applying for that loan and also the interest rate that is on the loan.
If the loan has a low-interest rate, you can ask for more money compared to one with a very high-interest rate.
Enough of the talking!
How to apply for a loan in Uganda.
Let us now look at how to apply for a loan in Uganda. There are a few steps needed to apply for a loan in Uganda.
Most banks require you first to open an account with them before you can get a loan from them.
You can apply for a loan online like here at Absa or you can visit any bank branch near you and feel the loan form. The form generally has the following.
- Full names
- Address details
- Age
- Your phone contacts
- Your current form of employment (Employment status)
- Marital status
- Your Salary and income
- Your costs of living (rent, travel, food)
You are required to provide actual information, so it is good to go with your National ID and all other relevant documents in order to successfully apply for a loan.
It may take time to process your loan according to your creditworthiness and also according to the amount of money you are asking for.
But if all is well, it may take a period of 2 weeks to 1 month.
Your Turn…
So that is it. That is how you can apply for a loan in Uganda. What is your view on what it takes to get a loan in Uganda?