It’s no secret that raising capital for a small business in South Africa is an adventure in itself. The journey is filled with thrills, scares, and a plethora of ups and downs. None of that should dishearten you, though, because however difficult the path to finding funding may be, the reward of having a business to call your own is oh so sweet and worth every headache.
However, to prevent minor headaches from becoming major migraines in your life, we have decided to show you exactly how to get funding for your small business; where to look, who to speak to, and everything else you’ll need to know to take your Kasi business from a dream into reality.
What is a Kasi Business?
Kasi refers to the outlying neighbourhoods that were once racially demarcated during the apartheid regime. Most Kasis consist of non-white residents and lay on the outskirts of the city. Some Kasis, like Alexandra in Johannesburg, can be found sandwiched between more affluent suburbs, with the structural differences serving as a modern reminder of the dark times that once plagued South Africa.
More South Africans are choosing to stay and empower their current neighbourhoods by starting new businesses and raising buildings to bolster local financial systems. These Kasi businesses are driving their local economies, keeping the money circulating within and laying the foundations for their very own community of affluence, one worthy of being built rather than abandoned.
Small Business Funding in South Africa
Once you’ve solidified your small business idea, the next thing is to raise the capital needed to bring that plan to fruition. Especially considering that 43% of the struggles of starting a business are about finding the money that you need.
Now, if you have a rich family member or friend who is just bursting to help you in any way that they can, stop reading this article and go to them right now!
But many of us are not blessed with a rich uncle or an unexpected inheritance, so we need to find other ways of financing our small business ventures. Luckily, in South Africa, you do have options for attaining the funds required to become a business owner's success story.
Government Affiliated Enterprises
Small businesses are the lifeblood of South Africa’s economy. No matter how many big corporations choose to invest in the country, without small businesses, the country’s financial sector would crumble.
The South African government is well aware of this fact and has thus created programmes and campaigns aimed at putting money directly in the pockets of small to medium-sized enterprise (SME) owners.
The Small Enterprise Finance Agency (SEFA) has the sole task of helping start-ups and small businesses find the funds required to launch their operations. Through a series of loan options, SEFA will either offer you a direct financial solution or source one for you from external vendors.
SEFAs loans start from as little as R500 and go as high as R3 million. The loans are repaid directly to the lender, an important factor for a business sector that is often not part of the traditional banking system.
The great thing about SEFA is that they have built many key partnerships and relationships in the financial sector so that you don’t have to go through that arduous task. Visit their website to find out how they can help you, or email them at firstname.lastname@example.org.
The Small Enterprise Development Agency (SEDA) was initiated by South Africa’s Department of Trade and Industry. They coach budding entrepreneurs through the process of starting a business as well as providing assistance in obtaining start-up capital.
There are a number of guidelines and regulations that must be passed for the prospective business owner to receive help from SEDA, to ensure that you are as serious about your business as they are about helping you grow it.
In an effort to rebalance the scale and aid those who were previously disadvantaged, the National Empowerment Fund (NEF) provides financial assistance to businesses that are primarily black-owned.
The NEF strives to build rural communities, and they have a heavy stake in new industry development. Guided by the Industrial Policy Action Plan, the NEF offers loans and funding to startups up to the value of R10 million.
The Isivande Women’s Fund (IWF) is backed by investors to provide South African women with funding that was previously unavailable to them. They source loans for SA women who are business owners, making funding women-owned SMEs much less worrisome.
If you haven’t already, click here to register on the South African Small Business Economic Development portal.
Private and Other Business Funding Solutions
South Africa is a colourful nation filled with a vast array of ethnic groups, each with its own extraordinary history. Through the rainbow, however, one can still see the destruction caused by the storm, mostly felt by those suffering from racial and gender inequalities.
Many institutions have taken it upon themselves to help bridge the gap, by providing solutions to those who find themselves in low financial brackets due to racial and gender inequalities.
Serv.co.za is a website aimed at connecting everyday South Africans to a variety of professional business services. One such offering is connecting you with a business lender to raise funds for your small business.
SERV only works with reputable, reliable sources. The small fee they charge you for their service is worth it, as you mitigate the chances of working with an untrustworthy lender.
Lulalend is a private firm aimed at growing South African SMEs. They have flexible repayment options and with a loan range of R10 00 - R5 million, they are a smart choice for any new business owner.
7. iK Cash Advance
If you are already using an iKhokha card machine and have been trading with it for at least three months, then this one is for you.
iKhokha offers business cash advances at a flat repayment rate, with no compound interest! After going through the application process and agreeing to the terms, your business cash advance will be in your bank account in just 24 hours.
Repaying an iK Cash Advance is easy, as you would simply be paying a percentage of your future card sales.
Don’t have an iKhokha Card Machine yet? Get one now!
Many companies are expanding their portfolios to keep up with the increasing demands of a growing society. Vodacom has introduced a business funding programme to assist small business owners in realising their dreams. VodaLend is available to all who meet the qualifying criteria.
9. KZN Growth Fund
If you are in KZN then this one is for you. A team of experts have banded together in the interest of growing the KZN logistics, manufacturing, and telecommunications markets. If you are in the province and your business falls into one of the aforementioned categories, then check out their website to see how they can help you.
10. Angel Investment Network
The Angel Investment Network connects South African entrepreneurs with a pool of willing and able ‘angel’ investors. The investors on the platform are actively seeking to invest in emerging businesses and their owners. A few minutes on the site and you could find the angel you’ve always been waiting for.
Sasfin is one of the most commendable financial institutions in the country. They provide revolving credit for new and small businesses, a feat many other credit institutions cannot boast of. Furthermore, Sasfin’s wealth management options make it so that money is a thing that you and your business need not worry about again.
The Big 4: South African Commercial Banks
Finally, all of these South African banks offer loans to businesses or new business owners. Find the one that works best for you.
The idea of raising funds for your business may be enough for you to give up altogether, but you shouldn’t. There are many practical options that are available to you, as long as your business model is secure and you’re willing to put in the work of growing it. So, if your gogo in the UK is holding back those Pounds, have a read through our list above and get those Rands flowing on your own terms.
If you are new to ecommerce and need to know about starting a business, then check out these Online Business Courses for South African Small Businesses. After that, be sure to read the Hitchhiker's Guide to Making Money Online.