Institutions Offering Business Funding in South Africa
Businesses funding is a key constraint for most small South African business . It’s very unfortunate because businesses are the backbone of any economy and that is true to South Africa and every country serious about addressing unemployment . Here is a list of South African institutions offering business funding in South Africa.
NYDA Grant Programme
The NYDA Grant Programme is designed to offer Business Funding in South Africa and to provide young entrepreneurs with an opportunity to access both financial and non- financial business development support in order to enable them to establish or grow their businesses. The programme focuses on youth entrepreneurs who are at intentional, promising and new stages of enterprise development. Young people whose business ideas qualify for the Grant Programme, depending on their individual needs, will also undergo some of the NYDA’s non- financial support services, including:
• Mentorship
• Business Consultancy Services
• Market Linkages
• Business Management Training Programme
• Youth Co-operative Development Programme
• Individuals or Enterprises which require funding less than a R1000 or more than R200 000 (for agriculture and technology related projects the maximum funding value is R250,000.00).
The Small Enterprise Finance Agency (SEFA)
The Small Enterprise Finance Agency (SOC) Limited (sefa) that offers Business Funding in South Africa and provides financial products and services to qualifying SMMEs and Co-operatives, as defined in the National Small Business Act of 1996 and amended in 2004, through a hybrid of wholesale and direct lending channels within the following sectors:
- Services (including retail & wholesale trades and tourism);
- Manufacturing (including agro-processing);
- Agriculture (specifically land reform beneficiaries and contract-farming activities);
- Construction (small construction contractors);
- Mining (specifically small scale miners); and
- Green industries (renewable energy, waste and recycling management).
The agency is a wholly owned subsidiary of the Industrial Development Corporation Limited (IDC) and was founded on 1 April 2012 – in terms of Section 3 (d) of the Industrial Development Corporation Act, No. 22 of 1940 (IDC Act) – following a cabinet decision and the 2011 State of the Nation Address to merge the three agencies: Khula, the South African Micro-Finance Apex Fund and the IDC’s small business funding into a single entity.
The Department of Small Business Development is sefa‘s executive authority.
National Empowerment Fund
Established by the National Empowerment Fund Act No 105 of 1998 (NEF Act), the National Empowerment Fund (the NEF) is a driver and thought-leader in promoting and facilitating black economic participation by providing financial and non-financial support to black-owned and managed businesses, and by promoting a culture of savings and investment among black people. The operations of the NEF are governed by the Public Finance Management Act No 1 of 1991 (PFMA), including the National Treasury Regulations, the King III Report on Governance for South Africa and the Protocol on Corporate Governance in the Public Sector, 2002.
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
Commercial Banks offering Business Funding in South Africa
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: First National Bank , Nedbank and Standard Bank
SEDA
The Small Enterprise Development Agency – an initiative of the Department of Trade and Industry – is available to give guidelines and training to entrepreneurs and assist with the processes needed to access funds, such as the drawing up of business plans.
E-mail: [email protected]
Call centre: 0860 103 703
Website: www.seda.org.za
How to access services
Eligibility for assistance is based on:
- A completed application form and business plan by owner or manager
- Ability to repay loan
- Business must be registered
- The business must operate in South Africa
- Assessment of application will be done at a regional office closest to the business.
After due diligence is done, a committee decides on approval.
Upon approval, before funds are transferred, applicants will be required to sign a contract acknowledging debt.
Identity Development Fund (IDF)
This non sector – specific fund is a partnership between Khula and Identity Development Fund (Pty) Ltd (IDF) that offers Business Funding in South Africa . 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
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.
Anglo-Khula Mining Fund
Anglo-Khula Mining Fund is a joint venture between Anglo American plc and Khula Enterprise Finance that offers Business Funding in South Africa 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.
Khula Credit Indemnity Scheme offer Business Funding in South Africa
Khula Credit Indemnity Scheme offer Business Funding in South Africa by being a 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.
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
Communities Fund and Small Business Hub Programme and Small Business Hub network
The programme supports small and medium enterprises, facilitating entrepreneurial opportunities and the subsequent creation of jobs in communities located in the vicinity of Anglo American Mines. Purpose The fund assists entrepreneurs with seed and working capital through loan finance of up to R1 million per project at preferential interest rates. Beneficiaries must operate in Anglo’s business unit areas and comply with the black economic empowerment (BEE) criteria set by the Mining Charter. The Communities Fund works hand in glove with a network of 13 Small Business Hubs which are staffed and financed by Anglo’s platinum, coal, iron ore and diamond businesses and are located in their respective areas of operation. While the fund assists micro enterprises with seed and working capital, the hubs extend a guiding hand to entrepreneurs at walk-in centres. These hubs offer practical support to emerging business owners and aspiring entrepreneurs in the form of business plan assistance and management training and coaching. The hubs also offer telecommunications, internet, printing and meeting facilities while giving entrepreneurs advice on the day-to-day running of their businesses. The Communities Fund provides loan funding of up to R1 million per project. Businesses applying for finance must operate within 50 kilometres or within the labour sending area of an Anglo American mining operation serviced by a hub. The entrepreneur must be a member of the local community. Contact: SBH Team Lizette Moll Fax: 086 656 4713 National representative: Henry Snyman Tel: 083 527 2123 www.smallbusinesshub.co.za
Industrial Development Corporation – (IDC)
The Industrial Development Corporation of South Africa Ltd (IDC) offers Business Funding in South Africa by being a self-financing, national Development Finance Institution that promotes economic growth and industrial development in South Africa.
IDC Gro-E Scheme:
The IDC is investing R10-billion over the next five years through its Gro-E Scheme. It offers financial support to start-up businesses, including funding for buildings, equipment and working capital. It also funds companies wanting to expand provided that they show an ability to create jobs and operate in sectors supported by the IDC which include: • Green industries, which include renewable energy, energy efficiency, pollution mitigation, waste management and recycling, and biofuels • Agricultural value chain, including agro-processing • Manufacturing, focusing on advanced manufacturing; automotive, components, medium and heavy commercial vehicles manufacturing; clothing textiles, footwear and leather, forestry, paper and pulp, and furniture; metals fabrication, capital and transport equipment; pharmaceuticals; plastics and chemicals • Mining value chain, including downstream mineral beneficiation, mining and mining technologies • Tourism and high-level services, which includes business process services and tourism • Media and motion pictures, which has to do with media pictures production, the media value chain of broadcasting (radio and television), media expansion including new media, music value chain, and film production and animation and • The knowledge economy, to do with health care, information and communications technology and biotechnology. Criteria: • Start-up businesses, including funding for buildings, machinery and working capital; • Existing businesses for expansionary purposes; • Businesses that demonstrate economic merit and have prospects of acceptable profitability to be able to service their obligation; • For the duration of the funding period, businesses whose maximum cost per job does not exceed R500 000 relative to the total funding required; • Broad-based Black Economic Empowerment certification from an accredited verification agency, where applicable; and • Businesses operating or expanding in South Africa. Loans are given at prime less 3% with a minimum of R1-million and a maximum of R1-billion per project. Contact: Email: [email protected]. Website: www.idc.co.za. Call Centre: 0860 693 888
South African Investment Network
This is an online platform that connects entrepreneurs seeking business funding with “angel” investors looking for investment. They maintain that they have access to R83 billion to invest. They connect global and local investors and entrepreneurs. Contact: Website: www.investmentnetwork.co.za.
The International Tourism Marketing Assistance Scheme (ITMAS)
ITMAS provides partial compensation to businesses for certain costs incurred for activities aimed at promoting tourism to South Africa. It assists South African companies to market their tourism products in foreign countries by way of brochures, manuals, multimedia presentations, computer-based marketing information or any other international marketing materials. Reimbursement is provided for the design, compilation, production, printing, reprinting and distribution of material to market the products internationally. Assistance will only be provided for materials that were specifically produced to market tourism products in foreign countries. Contact: Department of Tourism to register as participants in the scheme. Email: [email protected] Switch Board Number: 012 444 6000 Switch Board Fax: 012 444 7000 Physical Address: 17 Trevena Road Tourism House Sunnyside Pretoria 0001 Postal Address Private Bag X424 Pretoria 0001 9.
African Contractors Finance Corporation (Pty) Ltd
A Miscellaneous Business Credit Institution 42 Bath Avenue Johannesburg, Gauteng 2196 South Africa Tel: 011 256 9400 10. Business Finance Promotion Agency (BFPA) The BFPA has several products. 10.1
Impact Bridging Financing
Funding is provided for emerging and established contractors in the form of bridging finance and performance guarantees for businesses in the construction industry. 10.2
Khula Emerging Contractors Fund.
Financnce is aimed at departrmetn of Public works and other government contracts associated with infrastrucuture development.
Smart Choice Order financing
This scheme does not require collateral and payments are ceded to the Business Finance Promotion Agency
BFPA Classic Loan
Term loans up to R150 000 over a maximum period of 3 years offered
Flexi Payroll Based Loan
Personal loans based on payroll deductions and salary advances up to R5 000 Contact: Comsec Complex, Grahamstown Road, Sydenham Port Elizabeth , Eastern Cape Phone : 041 487 0190 Fax : 041 487 0192 www.bfpa.co.za
National Youth Development Agency: National Youth Fund
The fund aims to mainstream and integrate youth development for sustainable livelihoods by initiating, facilitating, implementing, coordinating and monitoring youth development interventions aimed at reducing youth unemployment and promoting social cohesion Requirements: • Youth (35 and younger) must hold greater than 50% of the shares in the company; • Must be a previously disadvantaged South African youth • The youth must be operationally involved in the business; • Must demonstrate commitment to the venture; • The venture must be economically viable. • The following types of ventures are excluded from funding: Gambling, Tobacco Property development and illegal practices. Contact: Call Centre: Tel: 08600 96884 Fax: 086 606 6563