This is according to a new survey by SME Consultancy Viffa Consult surveyed small businesses across Counties including Nairobi, Kajiado, Machakos, Kiambu, Mombasa, Nakuru and Kisumu.
The survey lists business losses as the major factor for the credit defaults ahead of the diversion of borrowed funds for emergency use and personal consumption and non-payment by customers for goods and services.
Banking-sector-linked mobile loan platforms have continued to dominate mobile loans to small businesses with the survey respondents linking NCBA backed M-Shwari as the top mobile credit provider.
Other top mobile loan dealers listed are Tala, KCB M-Pesa, Branch, Eazzy Banking (Equity), Timiza and Fuliza.
“There is a high preference for financial institutions backed mobile credit providers due to perceived fairness and decorum in debt collection and the need to build financial history to enable qualification to big ticket size loans from main banks,” states the survey.
The key usages for mobile credit meanwhile covers utilities, fulfilling customer orders, purchasing stocks, paying salaries & wages and marketing.
Eight in 10 SMEs access mobile credit on a monthly basis while 21 per cent of respondents access the credit lines on a daily basis.
The average loan size per mobile credit application meanwhile ranges between Ksh.10,000 and Ksh.50,000.
Fast credit processing time, favourable credit terms and service convenience have been listed as factors encouraging the adoption of mobile credit.
Nevertheless, the surveyed SMEs have listed short repayment periods, high-interest rates, credit reference bureau (CRB) listing, insufficient credit limits and data privacy as factors that discourage or negatively affect the usage of mobile credit.
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