South Africa has over 2.5 million small and medium-sized enterprises (SMEs) in South Africa but not many of them have access to funding. A business idea without funding is as good as nothing. Access to funding in South Africa has however been made easier because of a growing alternative lending sector that is focused on providing funding for this market.
Below is a list of the different types of alternative financing available to South African SMEs
Fundrr
- Fundrr uses technological innovation and automated algorithms to provide quick and efficient loans to small businesses. By the use of a simple, free and paperless application process, they are able to take the hassle away and allow you to focus more on your business. Fundrr allows small businesses to get an answer the same day and access to capital in 24 hours.
- They serve businesses with at least a 12-month track record, with a minimum of R1 million turnover or asset value.
- Applying is free of charge and there is no commitment or obligations to take the funds.
- They provide loans from R20 000 to R500 000 ranging in duration from 3 to 12 months and repayments are made either on a daily, weekly, bi-monthly or monthly basis, depending on your cash flow.
Merchant Capital
Retail businesses interested in loans can contact Merchant Capital for their offers. The loan merchant offers cash on flexible repayment terms.
Who may obtain their offer?
Retail business owners who have been in business for more than one year and who have an average of over R30,000 in credit and debit card sales may obtain their loan.
We understand that you are the one who built this business. So we respect the fact that no one understands its ‘ins and outs’ quite the way you do. With this in mind, we don’t prescribe what you use your funds for. That said, having funded millions of Rands to thousands of South African businesses, we know a thing or two. So we highly recommend that the cash injection be used for business growth opportunities, the company noted on its website
The maximum amount of loan:
Retail business owners may obtain as much as 100% of the business’ average monthly credit and debit card turnover.
It’s a good idea to have this amount handy to better understand what you can expect. Then, as soon as we have analyzed your statements, you will be contacted with a more accurate qualification amount, the company stated.
iKhoka
You can use iKhoka’s card machines for as many times as you desire. However, using it for more than three months will qualify you for a custom cash advance offer.
Who May Obtain Loan From iKhoka?
The iKhoka application works on a reward system.
The iKhokha Cash Advance definitely helps take your business to the next level. Here’s how you can qualify for a custom Cash Advance offer:
- Be an active iKhokha merchant
- Must have traded for the past 3 months consecutively
- Must trade at least 3 times a month
- Must complete a minimum of 10 card transactions a month
- Must have completed a card transaction in the last 15 days
- Your turnover should be at least R2 500 per month
- Your average monthly turnover for the last 3 months must be higher than R3 125
Check your offer in the iKhokha app and decide how much of it you need. The more you process through iKhokha, the bigger the amount you qualify for!
Maximum Amount of Loan:
The amount you get from iKhoka depends on the turnover of your business over a period of three months.
Zande Africa
- Zande Africa can order favorite brands in bulk from manufacturers at a lower cost.
- The goods are delivered to one of its warehouses around South Africa.
- Spaza shops owners order their stock through its driver/ sales agents.
- Delivery is made within 24 hours to a Spaza Shops’ doorstep.
With Zande Africa, you can access funds to finance your trade and spaza shops.
Who May Obtain The Fund:
The target of the fund includes those who are looking to procure goods and stock for their spaza shops. In simple terms, Spaza credit supports businesses that are looking to procure inventory for their shops. Businesses desiring to go through this means can start by applying.
Maximum Amount:
Zande Africa provides finance depending on the turnover of the spaza.
Bright on Capital
- Bright On Capital is an online peer-to-peer enterprise-lending platform, that serves as an online market place and allows SMEs to simply and quickly raise working capital funding from a wide range of traditional and non-traditional lenders.
- These lenders include developmental funding institutions (“DFIs”), pension funds, corporate enterprise development funds, and other institutional investors.
Who May Obtain Funding From It?
Bright on Capital targets small businesses that have been trading for at least 12 months. These businesses must be supplying one or more corporates or credit-worthy public entities. They must also be expected to generate at least R1 million in annual revenues.
Basic criteria for your business to become a Bright On Capital client include
- The person applying on behalf of the business needs to be a director, member or partner of the business.
- The business needs to be a South African registered company, closed corporation or partnership.
- The business must have an annual turnover of no less than R1 million and no more than R50 million.
When you apply online with Bright On Capital, all you need is to
- Complete the simple and easy application form, and submit the following documents on the website or via email or fax:
- Your business’ registration documents.
- Your business’ 6-month bank statement.
- Your business’ tax clearance certificate.
- Your business’ BEE certificate (For a business with a turnover of less than R10 million that doesn’t currently have a BEE certificate, you can complete an Affidavit and have it stamped signed by a Commissioner of Oaths. Once the Affidavit has been stamped and signed by a Commissioner of Oaths, it serves as a BEE certificate. Please click here to download the Affidavit.)
- Your business’ latest audited financial statements and its most recent management accounts (optional for businesses generating less than R5 million revenue per annum).
- Your business’ proof of business address.
- ID copies for each director, member or partner; and
- Proof of residential address for each director, member or partner.
Maximum Amount That May Be Obtained:
Currently, your business can raise up to R400,000 of working capital funding through Bright On Capital. For small businesses, they may access working capital facilities of up to R1 million to enable them to execute on procurement opportunities sourced from these qualifying large entities and corporates.
ProfitShare Partners
What ProfitShare Does
ProfitShare Partners provides disruptive short-term capital solutions and transactional support to SMEs with valid contracts or purchase orders from reputable large organizations.
Who May Obtain Funding From It?
The fund targets SMEs with no track record, financial history or security with low performance, short-term contracts (up to 365 days) or purchasers with reputable large organizations.
Maximum Amount:
Small businesses may obtain loan from ProfitShare Partners from a minimum of R250,000 up to R5 million per transaction.
Fincheck
Who They Are:
What Fincheck basically does is that it partners with South African banks, lenders and insurers to offer a live and independent means of comparing and applying for finance across 30 lenders.
Who May Obtain Loan Under It?
Generally, all business owners seeking finance in South Africa may apply for funding from the credit firm.
Fincheck Business compares business finance options for you. As the business owner — you simply need to complete the application form, which includes what you are looking for. From there, we have an algorithm that will work through your answers and match it to partner criteria* Based on these results, our engine will present you with business finance and partners that could best suit your needs. This whole process only takes a couple of minutes.
*Please note these results are not suggestions or advice from Fincheck Business or the FINCHECK group but are results based on your needs and partner criteria.
However, you may need to provide collateral.
Maximum Amount of Loan Obtainable:
R20,000 — R72 million
Lulalend
Lulelend has a strong history of lending to small businesses. The firm delivers business funding using proprietary scoring technology, which offers an instant funding decision on applications.
Who May Obtain From Luleland?
All South African businesses, no matter the industry or sector involved in trading for more than one year with annual revenue of R500,000+ can obtain funding from Luleland.
- Amount: N/A
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.