5 Questions to Ask Before Taking a Microloan in 2025

More and more small business owners, market women, students, and people with low incomes in Ghana are using microloan. They are often easy to get, don’t need collateral, and give you quick cash for things you need right away.

Not all microloans are the same, though.

A loan that seems helpful now can turn into a financial burden later if it has high interest rates, hidden fees, and short repayment terms. That’s why you need to ask the right questions before you sign a loan agreement.

This guide lists five important questions to ask before getting a microloan in 2025, whether it’s from a fintech app, a microfinance company, or a susu group.

1. What Is the Total Cost of the Loan?

(Not Just the Interest Rate)

Many borrowers focus on the interest rate alone, but that’s just part of the story. You should always ask:

How much will I pay in total by the end of the loan?

Things to check:

Monthly interest rate
Processing or administration fees
Late payment penalties
Insurance fees (some lenders add this)

Example:

You borrow ₵1,000 at 10% monthly interest for 3 months.

Interest: ₵100 x 3 = ₵300
Total cost: ₵1,300
But if there’s a ₵50 processing fee and ₵20 penalty, you’re now paying ₵1,370!

Tip: Always request a repayment schedule in writing.

2. Can I Afford the Monthly Repayments?

(Do the Maths First)

Microloans often have weekly or monthly repayments. If your income is unstable or seasonal (like many traders or farmers), you may struggle to keep up.

Ask the lender:

What’s the repayment amount and frequency?

Use this formula to check affordability:

If the loan takes more than 30% of your monthly income, think twice. You could fall into debt or default, especially if sales drop or emergencies arise.

3. What Happens If I Miss a Payment?

(Understand the Risks)

This is one of the most important questions. Many microloan providers apply heavy penalties or harass borrowers who default.

Ask:

Will there be a grace period?
What is the late payment penalty?
Will you report to CRB or blacklist me?

Some mobile lenders:

Call your phone nonstop
Send messages to your contacts
Report you to credit bureaus
Add high daily penalties

Defaulting even one microloan can hurt your ability to access future loans.

4. Is the Lender Licensed and Trusted?

(Avoid Loan Scams and Illegal Operators)

In Ghana, only lenders licensed by the Bank of Ghana (BoG) or the Microfinance and Small Loans Centre (MASLOC) are allowed to give microloans.

Ask:

Are you registered with the Bank of Ghana?
Can I see your license or registration number?

Also, search their name online or ask others who’ve borrowed from them before. Read reviews or check their Facebook page.

Avoid:

Lenders that demand upfront fees
Loan offers via WhatsApp with no physical office
Apps that require access to all your phone data

Stick to registered microfinance institutions (MFIs), credit unions, or BoG-approved fintech apps.

5. Is There a Better Alternative?

(Microloans Should Be the Last Resort)

Sometimes, you don’t actually need a loan. Or you may find a cheaper, more flexible way to raise money.

Before taking a microloan, ask:

Can I borrow from a credit union or susu group instead?
Can I delay the purchase, or get a short-term advance from work?
Is there a grant, government support, or savings option I’ve overlooked?

Safer Alternatives:

Option	Benefits
Credit Union Loan	Lower interest, member-friendly terms
Susu Savings Loan	Informal but trusted and flexible
Employer Salary Advance	No interest or low cost
Friends/Family	May not charge interest
Business Grant	No repayment required

Quick Checklist Before You Sign

I understand the total loan cost
I can afford the repayment amount
I know the penalty for missing a payment
The lender is licensed and verified
I’ve compared other options
I’ve received a written agreement or contract