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Access to capital is one of the top challenges reported by SMEs 

 

A total of 59% SMMEs that survived the lockdown reported that they cannot get access to funding.

 

Of the total funding requests made during the first 5 months of lockdown, 47.9% of the funding requests were made to the government, 27.4% to banks and 13.6% to family and friends, and the balance made to formal lenders.

 

Some of the reasons that small business owners apply for funding include to increase their inventory, recruiting and hiring new employees, to improve the business’s cash flow, and to upgrade business equipment

 

We have seen the rise of alternative solutions to business financing – companies are offering business funding to small businesses over a short period.

 

Application process

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Applying online can be seamless because it does not require paperwork.

 

Many lenders ask that you register on their online platform as part of their application process.

 

The lender will want to get insight into your company’s financial history, so you will be asked to supply documentation such as three months to six months’ bank statements, provide your company registration number or VAT number. You can also expect that a credit check may be done and/ or you might be asked to get your business assessed, including a review of your cash flow.

 

Funding Offered

 

Cash Flow

Expansion

Upgrades

Revamps

Stock Purchases

Bridging Capital

Equipment Purchases

New Ventures

 

Qualifying criteria

 

For the majority lenders, the criteria includes that a business must have been in operation for 12 months; and the turnover must be of around R40,000 per month or the annual revenue of the company must be more than R500,000. 

 

Some lenders cater for specific industries, while some cater for specific needs of a business such as asset finance.

 

Repayment terms

 

Each lender has a principal amount plus the added fee and interest which equals the standard installment. Depending on the options that are offered by the lender, there are flexible payments which can be done frequently as pre arranged.

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