Home Student & Career Tips 11 Alternative Business Loan Providers for SMEs in South Africa

11 Alternative Business Loan Providers for SMEs in South Africa

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This article contains information on the 11 Alternative Business Loan Providers for SMEs in South Africa.

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Start-Ups

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South Africa is one of the African countries with an enviable economy. Sometimes, one is left to wonder if this economic growth is due to the mix of formal and informal businesses being operated in the country, out of which SMEs are more common.

Having SMEs dominating the economy only brings one thing in mind: “business funding.” Going by the name, these are small businesses that are still trying to gain grounds and to achieve maximum growth, capital is required. It is one vital thing in every business irrespective of the phase.

Where and how to get this fund is always the worry of many business owners.

In South Africa, access to capital for small businesses is almost a mission impossible. As a result of this, many of these businesses fizzle off even before becoming known due to inability to meet the requirements for traditional finance Institutions.

Of course, traditional banks in South Africa pay less attention to SMEs but instead focus more on consumers. This issue has caused a lot of panic considering that a large number of SMEs have liquidated.

In the bid to fill the funding gaps left by traditional banks, numerous private/fintech companies have been established to meet the financial demands of SMEs.

Therefore, if you’re a small business owner who is in need of fund to boost your business, below are very accessible loan providers to consider in South Africa:

LIST OF TOP 11 BUSINESS LOAN PROVIDERS FOR SMES IN SOUTH AFRICA

1. LULALEND

This is one of the very popular loan platforms for SMEs in South Africa. They offer a variety of fund to businesses across specific industries including Manufacturing, Retail, Construction, Professional Services, Hospitality and Restaurants, who have been trading for more than one year with annual revenue of  over R500,000.

This business funding ranges from R20, 000 to R2 000,000. The funds are disbursed within 48 hours of submitting your application.

To qualify for loan as an SME, your business must record a minimum monthly turnover of R40,000. They will require your latest three months bank transaction history.

Repayment Terms

You can pay back in standard installments over a six – or 12 months period.

Application process

Applying for fund is very easy. You can easily apply online by entering personal and business information and uploading your recent bank statements.

The amazing thing about lulalend is that no interest charged.

2. FUNDRR

They provide funds between R20,000 and R500,000 to small businesses that are registered and have been in operation for six months. This fund gets approved within 24 hours.

Asides being in operation for at least six months, you need to present a minimum of three months trading history and a monthly turnover of R30, 000.

In other words, a review of your business’s cash flow will be carried out and your bank statement presented. The documentation you are required to produce are CIPC documents.

The repayment options are very flexible, and you are able to pay off the business loan between three and 12 months.

You can choose whether you want to make payments daily, weekly or on a monthly basis.

Application process

The fund is applied for online. All you need to do is register and create an online profile with your email address and login to the Fundrr portal. You will have to provide the following info, average monthly turnover and main source of your turnover.

All applications, processing and support is online so you need to be comfortable and conversant with transacting online.

3. MERCHANT CAPITAL

They offer flexible alternative business financing to businesses that operate in retail, wholesale, manufacturing industries as well as services-based businesses.

The beneficiaries must have an average of over R80, 000 in sales and has been in operation for more than one year.

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Application process

There are two ways in which you can apply for funding. One of the ways is to apply online. Upon completing your application, an email is sent detailing next steps and what documentation is needed. Online applications can take up to 48 hours to be approved.

The second method is the Face-to-face/telephonic method. Here, you have the option of talking directly to a sales executive.

Repayment Terms

There are two customized repayment options, each of which are based on your monthly transactions. They are the split processing and the daily debit order.

The Split Processing repayment takes place directly via your debit and credit card terminal. The way it works is that every time a ustomer pays with a card, a percentage of that payment goes straight to Merchant Capital while the remaining is paid into your bank account.

On the other hand, the daily debit order gives room for business owners to pay back a specific amount on a daily basis and this is based on the business’s trading pattern. Their repayment options are mostly determined by trading patterns and turnover of the business, with the option for daily or weekly repayments.

4. PROFITSHARE PARTNERS

They offer short-term capital solutions and transactional support to SMEs with valid contracts or purchase orders from large reputable organizations.

They are quite different from others who look out for the number of years of active business. Here, SMEs without a track record, financial history or security with low performance, and have purchase orders with large reputable organizations.

You can apply a minimum of R250, 000 up to R5 million.

5. ZANDE AFRICA

Zande Africa specializes in providing trade and merchant finance, to spaza shops. The Lines of credit depend on the turnover of the applicant. A spaza, also known as a tuck shop, is an informal convenience shop business in South Africa, usually operated from home.

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6. BRIGHT ON CAPITAL

This is an online peer-to-peer lender that provides affordable working capital funding to startup small supplier businesses with sustainable growth prospects. To qualify for the funding, your small business must  have been in business for at least 12 months, supplying one or more corporations or credit-worthy public organizations, and is expecting to generate at least R1 million in annual revenues.

As a small business, you can access revolving working capital of up to R1 million to execute on procurement opportunities.

7. EXPRESS BUSINESS CAPITAL

If you’re an SME that has a reliable income stream, you’re open to apply for funding in express business capital from R50, 000 up to R2 million.

SMEs with a history of 6 months of trading or more and have regular transactions and a monthly turnover of R150 000.

8. RETAIL CAPITAL

Retail Capital has been in existence since 2011. Their goal is to partner with South African SMEs through innovative funding solutions, where flexible repayment options are determined by the performance of the businesses.

So, if you’re an SME with a trading history of more than 3 months and a card turnover of R15 000 or more you’re good to go.

9. SEEDSTARS AFRICA

This is an organization that offers SME grants across many countries in the world, South Africa inclusive. To access this business fund, applicants will have to apply for the business grant competition for young business owners, annually.

10. BETTER BANC

This is one of the fastest ways to grow your small business. They give access to fast and flexible funding to grow your business from R20 000 – R1, 000,000.

It’s completely free to apply online. All you need to provide is your banking and accounting data to determine the amount you qualify for. So, it requires no paperwork.

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They have different funding options. However, the performance of your business  will determine the option best suits your business.

CONCLUSION

Over the years, SMEs relied solely on government and banks to be able to access business funding. In most cases, some of these small businesses get frustrated along the line as a result of many paperwork processes. In most cases these businesses are denied access to funding.

Besides these common business funding options like government funding and traditional financial institutions like banks, there are also alternative funders who provide small businesses with a variety of financing, usually over a short period.

As an SME in South Africa, growing your business has been made very easy as there is a rise in the number of alternative business financing. These sources do not just offer business funding; the payment terms are flexible too.

So, if you need business funding, there are many options to consider in the article.

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