SenteGuide Symbol
UGAFODE Microfinance Logo

Business Loan

UGAFODE Microfinance (MDI)

Interest Rate

51.4% p.a.

Declining balance

Loan Amount

Up to 30M

UGX

Tenure

Varies

By loan cycle

Processing Fee

3%

+ insurance & other fees

UGAFODE Business Loan Overview

UGAFODE Microfinance's Business Loan is designed for micro and small enterprises looking to expand their operations, purchase inventory, or invest in business assets. With loan amounts of up to UGX 30 million and flexible repayment modes, this loan product caters to the diverse needs of small business owners across Uganda.

The loan features a declining balance interest rate structure of 51.4% per annum, which means interest is calculated on the outstanding balance rather than the initial loan amount. While this interest rate may seem high compared to traditional banks, it reflects the higher risk and operational costs associated with serving micro-entrepreneurs who may lack formal credit histories or traditional collateral.

UGAFODE Microfinance (MDI) is a regulated microfinance deposit-taking institution that has been operating in Uganda since 1994. It focuses on providing financial services to underserved communities, with a particular emphasis on supporting small businesses and agricultural enterprises.

Loan Calculator

Use our calculator to estimate your monthly repayments for a UGAFODE Business Loan. Adjust the loan amount, interest rate, and tenure to see how they affect your repayment schedule.

Loan Calculator
Calculate your monthly loan repayments
USh 5,000,000
51.4%
12 months

Monthly Payment

USh 0

Total Interest

USh 0

Total Payment

USh 0

This calculator provides estimates only. Actual loan terms may vary based on credit history, additional fees, and lender policies.

Important Considerations

High Interest Rate

While UGAFODE uses a declining balance method (which is more favorable than flat rates), the 51.4% p.a. interest rate is still relatively high. Ensure your business generates sufficient returns to cover this cost.

Additional Fees

Beyond the 3% arrangement fee, be aware of additional costs including insurance (0.25-0.8%), CRB fee, and stamp duty. These can significantly increase the total cost of the loan.

Collateral Risk

Be aware that collateral can be seized if you default on loan repayments. Ensure your business cash flow can reliably support the repayment schedule.

Apply for This Loan
Start your UGAFODE Business Loan application

Visit your nearest UGAFODE branch to speak with a loan officer about your business needs and start the application process.

Flexible repayment options
Business development support
Multiple loan cycles available
Branch Locations
Find your nearest UGAFODE branch

Head Office

Plot 62, Silva Arcade, Bombo Road, Kampala

Tel: +256 414 257181

Kampala Branch

Plot 20, William Street, Kampala

Mbale Branch

Plot 26, Republic Street, Mbale

Mbarara Branch

Plot 10, Mbaguta Street, Mbarara

Alternative Loan Options
Compare with similar business loans
FI

FINCA Enterprise Loan

15-30% p.a. flat rate

Compare
PM

Pride Microfinance Business Loan

20-30% p.a. flat rate

Compare
DF

DFCU SME Loan

17-22% p.a. reducing balance

Compare

Frequently Asked Questions

What is the maximum loan amount I can get?

UGAFODE offers Business Loans of up to UGX 30 million. However, the actual amount you qualify for depends on your business size, cash flow, collateral value, credit history, and repayment capacity. First-time borrowers typically start with smaller amounts, with the potential to access larger loans after establishing a good repayment history.

Why is the interest rate so high?

The 51.4% p.a. interest rate reflects the higher operational costs and risks associated with serving micro and small enterprises that often lack formal credit histories or traditional collateral. Microfinance institutions like UGAFODE incur higher costs in assessing, monitoring, and collecting loans from small businesses. Additionally, the declining balance method used by UGAFODE is more favorable than flat interest rates used by some other microfinance institutions.

What types of collateral does UGAFODE accept?

UGAFODE accepts various forms of collateral including land titles, sales agreements, bibanja interests, vehicle logbooks, business equipment, and household items of value. For smaller loans, guarantors may be accepted in place of physical collateral. The collateral value typically needs to cover at least 120-150% of the loan amount, depending on the type of asset.

Can I repay my loan early?

Yes, UGAFODE allows early loan repayment. Since they use a declining balance interest rate calculation method, you can save on interest costs by repaying early. However, there may be an early repayment fee, typically around 2-5% of the outstanding principal. Discuss the specific terms with your loan officer before making an early repayment.

Customer Reviews & Experiences

James K.
Kampala Hardware Shop Owner
Positive

"UGAFODE's Business Loan helped me expand my hardware shop inventory. The loan officer visited my shop and understood my business needs. While the interest rate is high, the flexible repayment schedule aligned with my business cash flow. I've since taken a second loan to open another branch."

Mary N.
Jinja Market Vendor
Mixed

"I appreciate that UGAFODE gave me a chance when banks wouldn't, but the total cost was higher than I expected. The weekly repayment option worked well for my market business, but I had to be very disciplined with my cash flow management. The business training they provided was very helpful."

Peter M.
Mbarara Retail Shop Owner
Positive

"What I valued most was how UGAFODE's loan officers took time to understand my business before recommending a loan structure. The application process was straightforward, and I received the funds within a week. The loan helped me purchase stock in bulk at better prices, improving my profit margins."

These reviews represent actual customer experiences but individual results may vary. Your experience will depend on your specific business circumstances and loan terms.