Purpose – The purpose of this article is to examine the effects that dynamic incentives and the borrowing histories of clients of informal lending institutions have on loan repayment performance, in particular, the extenttowhichmultipleborrowingandprogressivelendingaffecttherepaymentofloans. Design/methodology/approach – The paper uses a data setof 835 borrowers drawn from an informal lending institution in Tanzania. Descriptive analysis and econometric models are used to test the developed hypotheses. Findings – Whereas clients with multiple loans are associated with poor loan repayment, progressive lending contributes to positive repayment outcomes. Multiple borrowers face increased debt levels and thereby an increased inability to meet their repayment obligations; in contrast, progressive lending by building up a lender–client relationship helps clients to obtain higher loans with a minimum amount of screening. Researchlimitations/implications – Thiswasacross-sectionalstudybasedonasampleofindividual clients drawn from a single institution. However, since the majority of clients had also taken out loans with otherfinancialinstitutions,thesampleisconsideredtoberepresentative. Practical implications – A client’s past repayment performance and multiple loan history must be assessed so that multiple borrowing can be prevented and credit absorption capacity can be gauged more accurately.Therepeatednatureoftheinteractionsandthethreattocutoffanyfuturelending(ifloansarenot repaid)canbeexploitedtoovercomeanyinformationdeficit. Originality/value – This study was conducted in a context in which the degree of information sharing was low and institutional access to clients’ credit histories was limited. It contributes knowledge on how lenders minimise the risk flowing from the ex ante information gap and moral hazards arising from the ex postinformationgap.