With that in mind, consumer finance business AFB recently launched a contemporary Business Cash Advance product for SMEs in Kenya with advances ranging from 50,000 Kenyan shillings to 5 million Kenyan shillings.
"We have done a research and it shows that, there is constraint of how much working capital they have [SMEs] and certainly our experience has been where we have given working capital, we see fantastic results in the businesses," Karl Westvig, the chief executive at AFB told CNBC Africa.
The Business Cash Advance will be offered based on a business's turnover with no fixed monthly repayments and qualified business owners will be able to access the unsecured cash advances as no security is required and the full application process takes about a day for businesses to access the cash. AFB is looking to help SMEs with working capital for their business growth and expansion.
"We see the track record and lend against known cash flows, so retail is accepting either debit cards, credit cards or prepaid cards. In Kenya which is unique is that they take mobile pins and through that digital footprint and understanding the cash flows, we lend against that," Westvig said.
Despite cash-related constraints hampering expansion of SMEs, they generate jobs by employing up to 80 per cent and contribute to the growth of Gross Domestic Product (GDP) in the East African region. Research indicates that SMEs contribute about 45 per cent to Kenya's GDP.
According to Westvig, AFB is looking to give advances of about 3.5 billion Kenyans shillings by 2015. "We have been operating in Kenya for about 8 months and we have given about 200 SMEs finances of about 110 million Kenyan shillings," Westvig noted.