Susu Loans vs. Bank Loans: Which Is Right for You?

Susu Loans or Bank Loans. In Ghana, there are two common options available to you when you need a loan:

• Bank loans, offered by commercial banks and financial institutions

• Susu loans, offered by informal savings groups or microfinance cooperatives

Both have advantages and disadvantages. However, how can you determine which is best for your circumstances?

This article clarifies whether you’re a government employee, trader, small business owner, or student:

• The key differences between susu loans and bank loans

• The advantages and disadvantages of each

• How to choose the right option for your financial need in 2025

Let’s break it down clearly and simply.

What Is a Susu Loan?

Susu is a traditional savings and credit system widely used in Ghana and West Africa.

A susu loan is a small loan provided by:

• Informal groups (e.g., market women associations)

• Microfinance cooperatives

• Credit unions

These loans are usually funded by the collective savings of members.

Key Features:

What Is a Bank Loan?

Bank loans are formal credit products offered by commercial banks, rural banks, or licensed financial institutions.

These include:

• Personal loans

• Business loans

• Salary loans

• Overdrafts

Key Features:

Susu Loans vs. Bank Loans – Detailed Comparison

Example Scenarios: Which One Fits You Best?

Use a Susu Loan if:

• You are a rural trader or market woman needing quick cash to restock

• You don’t have land or formal employment

• You are part of a savings group or credit union

• You prefer dealing with people you know

• You need a small loan under ₵5,000
  
  Example: Akua, a tomato seller in Mankessim, gets ₵800 from her susu group to buy crates of tomatoes. No collateral. She repays weekly.

 Use a Bank Loan if:

• You need a larger amount (₵10,000 or more) for business expansion or school fees

• You have property, salary slip, or a good credit score

• You are a government worker or private employee with stable income

• You want longer repayment terms (6–24 months)

Example: Kojo, a civil servant in Kumasi, gets a ₵25,000 bank loan to pay for his master’s degree. His salary is used as collateral.

Susu Loan Risks

While susu loans are more accessible, they come with risks:

• Lack of formal regulation — no legal protection if the group collapses

• Mismanagement — if the treasurer or leader is dishonest

• Peer pressure — defaulting may affect your community reputation

Tips to stay safe:

• Join only well-established groups or credit unions

• Get a written agreement when borrowing

• Make sure there’s transparency in contributions and withdrawals

Bank Loan Challenges

While formal, bank loans aren’t always perfect:

• Strict requirements may exclude self-employed or informal workers

• Processing delays and lots of paperwork

• Hidden fees (processing fees, insurance, VAT)

• Credit history needed in some cases

Tips to improve approval chances:

• Maintain a savings or current account

• Build a small credit history with mobile loans or salary advances

• Consider loan guarantors if you lack collateral

Middle Ground: Credit Unions

Credit unions (under CUA Ghana) offer the best of both worlds:

• Trust-based like susu

• Licensed and regulated like banks

• Lower interest and easier access

• Loans between ₵1,000 and ₵20,000

Good examples:

• Teachers Fund

• GNAT Credit Union

• Pentecost Credit Union

Which Loan Should You Choose?

There’s no one-size-fits-all answer. It depends on your need, income level, urgency, and resources.

Choose a Susu Loan if:

• You’re unbanked or in a rural area

• You need fast cash with no paperwork

• You’re part of a cooperative or savings group

Choose a Bank Loan if:

• You have a job, collateral, or business plan

• You need a large loan with longer terms

• You want formal protection and lower interest rates

Know Your Capacity Before Borrowing

Always ask:

• Can I repay this loan without defaulting?

• What’s the total interest and fees?

• Do I trust the people or institution I’m borrowing from?

• What will I use the money for? (investment vs. consumption)

Borrowing can build you or break you. Choose wisely.