Funding is a long-standing issue for small businesses in South Africa, as most entrepreneurs will know. For the estimated 2.5 million small to medium enterprises in South Africa, plus all the newcomers to the market, traditional business finance is one of the most difficult sources of funding to secure. From long waiting periods, to pages of admin, startups don’t necessarily have the time to wait in the hopes of getting, or not getting funding.
The struggle to get formal funding for startups also has no near end in sight. In a recent SME Landscape Report, only 6% of all SMEs reported that they had received funding from the government, including the Department of Trade and Industry and the National Youth Development Agency.
Luckily for startups, there are a growing number of funding alternatives available if you’re trying to figure out how to get small business funding, that isn’t directly from a bank.
Top five alternative funding sources in South Africa:
1. Profitshare Partners
Profitshare Partners offers funding particularly to SMEs who haven’t been able to prove a credit history yet, and are therefore rejected by traditional funding resources. They provide 100% of the capital you require to meet your needs with short-term capital and transactional support.
SMEs are offered between R250,000 and R5 million.
Fincheck offers an online platform for SMEs to compare and choose from trusted lenders. Once your application has been filled out all the hard work is done by the platform to match you with the right bank or lender.
SMEs are known to receive betten R20,000 and R72 million.
Lulalend offers immediate funding to SMEs upon successful online application. The platform doesn’t require as extensive qualifiers as banks do, making it both easier and quicker to apply for funding.
Funding ranges between R20,000 and R1 million.
Fundrr offers easy access to affordable business loans via an online application process. Their algorithm works to give your business the best funding offer for your needs and you will get an answer about your application the same as you apply. If successful you will get access to your funds within 24 hours.
Funding amounts range between R20,000 and R500,000.
5. Merchant Capital
Merchant Capital provides capital to startups and growing businesses, mainly retail. Applications can be made online and if successful flexible repayment terms are available.
Applicants can qualify for up to 100% of monthly credit and debit turnover.
How to apply for small business funding
While knowing you need funding for your small business is one thing, applying for it is another. Not all funding sources will require the same documents from you, but you will generally need to get the following in order to start the process:
- Be prepared to state your business needs and why the funding is necessary
- Ensure you have your business registration document available. If your business is not yet registered it is important to get your company registration with the CIPC sorted.
- Have your credit score available
- Have your financial records in order and available to share if required
Read more: Guide to company registration with the CIPC
Modern businesses need a modern solution for funding opportunities in South Africa, and these platforms offer simple ways to help SMEs get where they need to be.