Top 7 Alternative Sources of Funding for Startup and Small Businesses in South Africa

clothing store, shop, boutique

Funding or financing a small business in South Africa is, and probably always will be a problem, depending on who you ask. 

We’re creating this short list of Funding Sources so that you have a few more options to choose from. 

NB: In the name of transparency, some links in this post may direct you to a partner site for which we are affiliates.  We may make a small commission if you make a purchase or sign up for a paid service. (At no extra cost to you.)

We’ve sourced these Businesses because they’re closely related to what our partners do.  It makes sense for us to help other Businesses given the current economic climate.

There are estimated to be approximately 2.5 million small to medium enterprises in South Africa.  (Excluding any recent startups)

It can be very difficult to get a Business started without adequate startup capital, no matter where you go in the world.  The most difficult finance to get is traditional business financing.

The reason why it’s so difficult to secure is because of:

  • Long waiting periods
  • Business registration processes
  • Legal documentation
  • Pages and pages of required documentation
  • Lots of red tape

A startup doesn’t have the luxury of being able to hope and pray for funding, that’s why the vast majority of small businesses bootstrap in the initial phase of the business.

There are many applications that go through the regular/formal channels such as the government. 

But, statistics show that only 6% or fewer SMB’s ever get any funding from the government.  (This Includes the Department of Trade and Industry & National Youth Development Agency.)

Fortunately for SMB’s , SME’s and startup ventures, there’s a growing number of alternative funding sources becoming  available.

These new funding sources are independent Businesses whose sole Business model is providing line of credit to Businesses.  They handle the banks and all the application processes on your behalf.

Seven Alternative Startup and Small Business Funding Sources in South Africa:

1. Profitshare Partners

Profitshare Partners is a business that helps SMEs to get funding, even if they don’t have a credit history yet.

This happens to be one of the biggest problems facing many startups, just like with new employees requiring experience.

How can you get experience if you haven’t been given a chance to work?   The same applies here, how can you prove you’re a loyal payer if you’ve never had credit?

Lack of credit history is responsible for the vast majority of loan applications being rejected.

Profitshare Partners offer 100% startup loans for short-term capital and transactional support.

SMEs Loans range from R250,000 to R5 million.

2. Fincheck

Fincheck is an online platform where a variety of lenders are listed. 

A prospective SME, SMB or Startup owner just enters the platform, fills out the application and is almost immediately matched with the most relevant financier.

Loans range between R20,000 to R72 million.

3. Lulalend

Lulalend has a simple application process that almost always guarantees immediate funding to SMEs.  (Provided the application is successful.)

Lulalend doesn’t require a lot of information and excludes a lot of red tape that similar organizations like banks and other organizations seem to love.

This makes it both easier and quicker to apply for finances.

Typical Loans/Funding ranges between R20,000 and R1 million.

4. Fundrr

Fundrr is a business that offers easy access to affordable business loans. 

The platform works to match you with the best financier to provide the type of loan you need.

Just follow the easy online application process that should take you no more than 15 minutes to complete.

Once you’ve completed your application, you should have an immediate indication if your application is successful and funds are deposited into your bank account within 24 hours.

Loan/Funding amounts vary from R20,000 to R500,000.

5. Merchant Capital

Merchant Capital is a financier that supplies funding for startups and growing businesses, more specifically in the retail sector.

Applicants apply online and if they are successful, can enjoy flexible repayment terms.

Successful Applicants may qualify for up to 100% of monthly credit and debit turnover.

6. Retail Capital is a business that offers an online application process. 

Applicants need to have a small monthly turnover of R30K, show trading history for the past 3 months and prove business ownership for at least 6 months.

They provide two types of funding

  • Asset Finance
  • Cash Advance

The simplest way to get started is to fill out the online application and one of their consultants will get in touch to discuss your requirements.

7. Pollen Finance is a business that can help existing small businesses get access to more funding.

NB:  They unfortunately don’t cater to startups, but at least we gave you quite  few options already.

Qualifying Businesses can get loans within hours.  Flexible payment schedules with no up-front deposits required.

The criteria to get a loan/funding from Pollen Finance are the following:

  • You have been trading as a Registered Business for at least 12 months
  • Turnover at least R85KP/ Month or R1Million Annually

Successful applicants may qualify for up to R3 Million in funding.

How to apply for (SMB) Small Business Funding

Knowing you need funding for your business is just a starting point. 

Getting the loan/funding on the other hand will require careful planning and some up front work.

Each Business that you approach for Funding/financing will require different sets of documents.  We’ve taken the time to give you a general idea of what to expect when you apply.

You will generally need to supply the following:

  • Funding amount required
  • Reasons for your business requiring funding
  • Your business credit score
  • Financial records
  • Business registration documents

 If your business is not yet registered it is important to get this done before you apply for financing.

Conclusion

Every Business needs financing from time to time.  Often the solutions you seek are hidden and barricaded from access due to “red tape”.

These days, businesses need simple solutions that don’t hinder their access to the necessary funds.

That’s why we’ve compiled this list – to give you a list of platforms that make it much easier to access financing than it would be if you followed formal channels like governments or banks.

If your business is in the business of offering funding for SME’s, SMB’s and startups, be sure to reach out to us and let us know so that we can add your business to this list.

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

en_USEnglish