Top South African Institutions Providing Funding For Entrepreneurs
The following is a short list of institutions that offer funding for entrepreneurs. It is not comprehensive. Government is in the process of restructuring and streamlining its funding programmes and is moving them from the Departments in which they are lodged to the Department of Economic Development. It is hoped that the process will result in easier, simpler and speedier access to funds from Government.
1. Business Partners Limited
Business Partners is an investment company for small and medium enterprises. The company invests between R250 000 and R15 million in SMEs across all sectors, with the exception of farming, on-lending and non-profit organisations.
Investment financing is offered for businesses at all stages of development, including start-ups, expansions, outright purchases, management buy-outs, management buy-ins, franchises, tenders and contracts. The company also manages a number of specialist funds, which provide investment financing for defined-profile entrepreneurs.
Business Partners also has a range of support services for the entrepreneur. This includes property management consultants, mentors who are allocated according to the company’s needs and access to other expertise need to ensure the success of a business.
Contact:
E-mail: [email protected]
Web: www.businesspartners.co.za
Tel: Cape Town: 021 464 3600
Durban: 031 240 7700
Johannesburg: 011 470 3111
2. Commercial Banks
The commercial banks have specialist SME divisions, providing finance for qualifying entrepreneurs. Visit the banks’ websites to find out about their products and services, and their criteria to obtain finance.
ABSA Bank: www.absa.co.za
First National Bank: www.fnb.co.za
Nedbank: www.nedbank.co.za
Standard Bank: www.standardbank.co.za
3. Khula Enterprise Finance
Khula Enterprise Finance Limited is an agency of the Department of Trade and Industry (DTI) established in 1996 to facilitate access to finance for SMMEs. It is one of the funds being transferred to the Department of Economic Development. Khula provides assistance through various delivery channels. These include commercial banks, retail financial intermediaries (RFIs) and micro credit outlets (MCOs).
Contact details for some of the Khula products are not available. Where this is the case, the following contact details can be used:
Contact:
E-Mail: [email protected]
Web: www.khula.org.za
Tel: (012) 394 5560/5900
Toll free: 0800 118815
3.1 Small Business Growth Trust Fund
This non-sector specific fund is a partnership between Khula and Fabvest Investment Holdings (FABCOS). It provides:
• Finance start-ups, expansions, bridging finance and asset based finance to qualifying SMEs
• Qualifying SMEs with the necessary infrastructural support and resources
• Fosters entrepreneurship within the SME sector and
• Reaches out to SMEs in priority provinces of South Africa
• Migrates Black businesses from the informal sector to formal sector
Loans range between R10 000 and R3million per portfolio entity with a repayment period not exceeding 5 years.
Contact Details
Tel: (011) 421 2939
Cell: 082 901 2813
Email: [email protected]
3.2 Izibulo SME Fund
The Izibulo SME Fund is a partnership between Khula and Metropolitan Life Limited and The Median Fund (Pty) Ltd. Its purpose is to:
• Provide early-stage funding to SMEs (improve access to finance);
• Provide SMEs with necessary infrastructural support and resources;
• Foster entrepreneurship for men and women in the SME sector;
• Reach out to SMEs in far-flung areas of South Africa;
• Encourage meaningful economic participation of historically disadvantaged South Africans;
• Invest in equity and debt, loans, loans convertible into shares (ordinary or preference shares);
• Purchase shares (ordinary or preference shares);
• Purchase debentures or convertible debentures (convertible into ordinary or preference shares);
• Purchase warrants, options and other securities of, or relating to portfolio companies;
• Provide consulting services, skills facilitation and development to portfolio companies;
• Provide working capital, expansion capital, the purchase of capital assets, refinancing of existing debt obligations;
Excluded investments include buy-back/purchase of shares from a third party in the portfolio company.
3.3 Identity Development Fund (IDF)
This non sector – specific fund is a partnership between Khula and Identity Development Fund (Pty) Ltd (IDF). Its objectives are to:
• Create long-term growth from profitable portfolio investments in SMEs
• Promote BEE (black women and youth)
• Provide both debt and or equity funding (50%/50%)
Repayment periods range between 3-5 years for start-up/early stage companies of R250 000 to R3million, emerging /MBO and expansion of R3million to R7.5million and R7.5million to R30million for community projects.
Contact Details
Tel: (011) 351 2900
Fax: (011) 351 8900
3.4 Enablis Acceleration Fund
The Enablis Acceleration Fund is a partnership between Enablis Financial Corporation SA (Pty) Ltd and Khula Enterprise Finance Limited. It is currently capitalised at R50m. Its purpose is to:
• Improve access to early-stage funding to SMEs
• Reach out to SMEs in remote/rural provinces
• Create new sustainable jobs.
It offers equity and or debt instruments over loan periods that do not exceed 60 months.
Eligibility:
• South African SMEs that are accredited by Enablis Entrepreneurial Network
• Black owned and women entrepreneurs for start-ups and/or expansion of the business.
• SMEs involved in all sectors – ICT, transport, tourism, agriculture and services industry.
• SMEs that need working capital and or asset finance.
3.5 Khula-Akwandze Fund
The Khula-Akwandze Fund (KAF) is a joint venture between Khula Enterprise Finance Ltd (Khula) and Akwandze Agricultural Finance (Pty) Ltd (Akwandze). Its purpose is to provide agricultural development loans to small and medium scale sugarcane growers and contractors within the sugarcane production value chain in the Nkomazi region of the Mpumalanga Province. The Fund is managed by Akwandze.
The following loan instruments are offered to meet financing requirements:
• Crop establishment/re-establishment
• Ratoon management (crop maintenance)
• Purchase and installation of above ground irrigation equipment
• Installation of fixed irrigation infrastructure
• Electricity supply
• Contractor bridging loans and
• Right-to-occupy (RTO) rental bridging loans.
Eligibility
The beneficiary must be a registered Mpumalanga sugarcane grower with the South African Sugar Association;
• Have a Cane Delivery Agreement (CDA) with Tsb Sugar
• Have authority to occupy the land they are farming (freehold, leasehold, right-to-occupy)
• Be a citizen of the Republic of South Africa
• Be black owned (>50% black owned) or black empowered (>25% black owned)
• Be viable and creditworthy, or
• A registered contractor with Tsb Sugar that provides services to growers (e.g. cane cutting and cane haulage).
In addition, the beneficiary must be:
• A citizen of the Republic of South Africa
• Black owned (>50% black owned) or black empowered (>25% black owned) and
• Viable and creditworthy.
Loan Size
Depending on the type of agricultural activity being financed, the maximum loan limits for the different loan instruments range from R1,300 to R15,500 per hectare.
Contact Details:
Akwandze Agricultural Finance (Pty) Ltd Tsb Sugar Mill, Mhlati Farm Malelane, 1320
Tel: Malelane – 013 791 1396 / Komatipoort – 013 723 4247
Fax:Malelane – 013 791 1175
3.6 Anglo-Khula Mining Fund
Anglo-Khula Mining Fund is a joint venture between Anglo American plc and Khula Enterprise Finance to provide financial assistance to junior mining projects.
Product
• Equity and or debt instrument with individual investments between R1m and R20m per project
• Equity stake will not exceed 49% of the issued share capital of the investee company.
Who qualifies?
• The owners of the investee company must be involved on a permanent basis, in the day-to-day management and operations of the investee company
• The owners of the investee company must contribute to the investee company from their own resources to ensure commitment and risk sharing
• The investee company shall comply with all necessary legal requirements as well as Anglo American’s standards and procedures regarding environmental and safety policies
• Deal flow of the investee company should emanate primarily from contracts between the investee company and Anglo and its subsidiaries.
3.7 Khula Credit Indemnity Scheme
The scheme provides access to finance to people who wish to start or expand small to medium sized businesses but do not have sufficient collateral / security to support facilities provided by participating banks. The scheme covers facilities from R10 000 to R3 million.
Who qualifies?
• Owner-managed businesses – the owner should be involved in the day-to-day running of the business on a full-time basis
• Business activity must be situated in the Republic of South Africa
• Business must be conducted with a profit motive and be economically viable
• The borrower must be able to repay the bank facility
• Individual or person holding a controlling interest must be a citizen of the Republic of South Africa
• Borrower with proven and sufficient entrepreneurship, knowledge, skills and experience directly related to the nature of the business
• The entrepreneur must provide own contribution towards a start-up or expansion of the business
Access is via any of the following retail financial intermediaries:
• Nedbank Ltd
• ABSA Bank Ltd
• First National Bank Ltd
• Standard Bank of South Africa Ltd
• Khula Regional Offices for assistance with a business plan development and/or advice on which institution supports the scheme. The financial institution will assess the business plan and facilities application in terms of its lending criteria.
3.8 Non-Bank Retail Financial Intermediaries
Non-bank Retail Financial Intermediaries are independent organisations or companies, which are lent money by Khula on a wholesale basis to on-lend to SMEs. Since RFIs are obligated to repay Khula, they use their own lending criteria to on-lend Khula`s funding. However, each RFI has to contribute towards the achievement of Khula`s developmental impact objectives, such as providing funding to SMEs which are black owned, women owned and from rural areas. Khula restricts its RFIs to on-lending a minimum of R10 000 and a maximum of R3 million per SME.
Purpose of RFIs
• To provide a funding alternative to SMEs, who would otherwise not be able to obtain funding from the commercial banks;
• To provide financing solutions to SMEs operating in niche markets, where traditional financial products would otherwise not be able to meet the financial requirements; and
• To provide Khula with a vehicle to facilitate access to finance to previously non-bankable SMEs operating in rural areas.
Geographic Spread of Existing RFIs
Khula currently has a network of non-bank RFIs represented in Gauteng, Kwa Zulu-Natal, Eastern Cape, Western Cape, Free State, Limpopo and Mpumalanga. Although there are RFI branches in Gauteng, Kwa Zulu-Natal and the Western Cape, priority is given to provinces other than the three latter provinces.
Contact:
E-Mail: [email protected]
Web: www.khula.org.za
Tel: (012) 394 5560/5900
Toll free: 0800 118815
