Before launching their loan service meant for businesses dubbed Community Support Loan which is targeting businesses with a 0 percent interest for 6 months, Mobile financial services firm, Tala stopped giving loans to the mass markert as usual.
The message displayed after one pays their loan end of March 2020 is that “due to the Covid-19 crisis, decisions on loan applications will have up to 10 days. We will provide an update as soon as we can. Please stay safe”.
Other clients have compained that after the stipulated 10 days, their loan limits were reduced from Sh30,000 to Sh5,000 pepr month.
This has been shared on social media by various clients of the loan company, leading to others stating that they won’t be paying their loans since they will not be given another.
Most Kenyans have a knack for ‘borrowing from Peter to pay Paul’, as hard econmic times, lack of jobs and failing living standards hit Kenya.
Businesses are making loses during the coronavirus pandemic. National Carrier Kenya Airways has even asked the government for a bailout.
Though the mass market loan apps such as Tala and Branch, that are not affiliated to banks are suffering, banking digital lender such as Timiza for Absa Bank, Mshwari fro NCBA and KCB MPESA are still lending as usual.
Experts argue that though Tala and Branch loans are basing their non-issuance of new loans on Covid-19, the directivre by the government to suspend Credit Reference Bureau (CRB) listing effective 1st April, 2020 must also have been considered.
“We direct the temporary suspension of listing on CRB of any persons, micro, small, medium entities and corporate entities whose loan account fall due or is in arrears effective, April 1, 2020,” said President Uhuru Kenyatta.
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