This is why SACCO loans are more preferable than bank loans

If you’re keen enough you must have noticed that today more and more banks are pledging to lend cheaply to borrowers. This has seen Ugandans turn to SACCOs, with the proportion of debt from commercial banks. SACCOs are arguably more accommodating in their debt collection than banks making them a good option during harsh economic times. Here are some advantages of taking loans from SACCOs over banks in Uganda.

Easy to get loans

It’s no lie, SACCO loans are easily accessible compared to bank loans. Banks will require a host of documents that not all might provide before your loan is approved. SACCOS will only require your contribution record or pay-slip to get your loan approved. The great thing about SACCOS is that you can get a loan even if you’re not employed.

Low interest rates

Banks rates are ever high compared to SACCOS. Banks have loan interest rates and again they’re never the same, this is where most people won’t imagine how costly it can be to find a bank with low loan interest to get a loan from. What if it’s an emergency loan? They’d run to SACCOS. At any given time, interest rates for SACCOS are lower than those of banks. The most interesting thing is that they don’t change more often.

Additional benefits

The good thing about SACCOs is that they go ahead and buy real assets for members. These are benefits you can’t get from a bank. SACCOs can purchase land, subdivide it, and sell to members at a cheaper price.

Flexible payment terms

SACCOs are sometimes lenient on payment terms because the management has a strong attachment and knowledge of the loanees. Banks are only interested in getting their money back in a limited time.


Straight up! Banks don’t appreciate its members, their main aim is to maximize profits and grow their business. On the other hand, SACCO members benefit from annual dividends, which can even be used when applying for a loan.

Savings and Loans

Keep in mind that once your cash goes into the Sacco, the only way to get access to it is either through a loan or if you exit the Sacco all together.

 Share Capital

One thing you need to be aware of in SACCO’s is something called share capital. Share capital, in the simplest terms, means the amount you put in to buy shares in the SACCO. It’s like a non-redeemable ticket into a club. Most Sacco’s have a standard amount of share capital for all members, no member has more shares than the next. Share capital also means that, should you decide to exit the Sacco, they’ll give you back your contributions but they’ll retain your share capital. Remember share capital amounts vary from Sacco to Sacco.  For instance, the share capital for SACCO A is Shs 10,000. The one for SACCO B is Shs 20,000.

It’s important you understand that the value of the share capital doesn’t directly translate to the financial health of the SACCO. SACCO A may have a stronger balance sheet and more members than Sacco B. SACCO A may lend four times your contributions whilst SACCO Blends three times your contributions.