Use this business loan calculator Kenya to see your monthly repayment, total interest and total cost on a reducing-balance loan. The default values mimic a typical SME working-capital loan.
Standard reducing-balance amortisation. Real bank pricing may include arrangement fees and insurance.
Kenyan banks lend on reducing balance: interest accrues on the outstanding amount, so each payment is part interest and part principal. Most SACCO loans also use reducing balance.
Some informal lenders quote a flat rate (e.g. "2% per month flat"). On flat rates the interest is calculated on the original amount each period, making the effective rate roughly double.
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