In Kenya, securing loans involves more than just the usual collateral ama security like property or cash.

Here are other types of security commonly accepted in the country, reflecting its diverse lending practices:

1. Chattel Mortgage (Movable Assets)

• Borrowers can use movable assets like vehicles, machinery, or even household electronics as security for loans.

• Lenders will typically place a lien on the asset, meaning it can't be sold until the loan is repaid.

2. Livestock

• In rural areas, livestock such as cows, goats, or sheep is a traditional form of collateral.

• This type of security is particularly common in agricultural loans or community-based lending schemes.

3. Shares and Dividends

• Members of SACCOs or companies can use their shares or accumulated dividends as security.

• The value of shares determines the amount of loan one can borrow.

4.Future Income (Salary Loans)

• For salaried employees, lenders often use salary assignments as security.

• Borrowers agree to have their employer remit a portion of their salary directly to the lender each month.

5. Guarantors

• Some loans require guarantors—individuals who pledge to repay the loan if the borrower defaults.
• This is especially common with SACCO loans or loans for individuals with limited collateral.

6. Title Deeds (Land or Real Estate)

   • Land ownership documents (title deeds) are a common form of security for high-value loans.
   • Lenders often hold onto the title deed until the loan is fully repaid.

7. Invoices (Invoice Discounting)

   • Businesses can use unpaid invoices from customers as security to get loans.
   • The lender provides funds upfront, using the invoice payments as collateral.

8. Stocks and Inventory

• Retailers and wholesalers often use their stock or inventory as security for business loans.
• The lender assesses the value of the goods to determine the loan amount.

9. Contracts and Purchase Orders

   • Businesses can secure loans using contract financing, where a signed purchase order or contract guarantees future income to repay the loan.

10. Group Guarantees (Table Banking or Group Lending)

• Common in community groups, members collectively guarantee each other's loans.
• If one member defaults, others in the group are responsible for covering the debt.

11. Crop Harvests

• Farmers often use future crop yields as security for agricultural loans.

• This works for high-demand crops like tea, coffee, maize, or horticultural produce.

12. Gold and Precious Items

• Pawnshops and some informal lenders accept gold, jewelry, or other precious items as security.

• The value is appraised, and the loan amount depends on the item's worth.

13. Intellectual Property (IP)

• Though rare, some lenders accept intellectual property such as patents, trademarks, or copyrights as security for creative entrepreneurs.

14. Warehouse Receipts

• Farmers and traders can store produce in certified warehouses and use warehouse receipts as collateral for loans.

• This is particularly common for commodities like grains and coffee.

15. Savings (Fixed Deposits)

• Banks and SACCOs allow borrowers to pledge their fixed deposits or savings as collateral.
• This is a low-risk form of security since the funds are already held by the lender.

16. Personal Guarantees

• For entrepreneurs, lenders may accept a personal guarantee, where the borrower’s personal assets become liable if the business cannot repay the loan.

17. Pension or Retirement Funds

• Borrowers nearing retirement can use their pension funds as security for loans, especially for short-term borrowing.

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