It is one thing to have a viable venture but getting the required fund to start with or expand is another ball game entirely. And unfortunately, one of the challenges that some emerging entrepreneurs have is generating funds to fuel their dreams. Consequently, in this article, we look at some small business funding opportunities that you can explore to get your dream business working. We also explain some tips on how to access loans for your business so that, eventually, you can contribute your quota towards the reduction of unemployment in the country.
South Africa is, without doubt, one of the top ranking economies with a conducive environment for business operation. However, with such an environment, there are enterprising ideas that have been held down because of the lack of funds to start with as there is usually not enough funding. Therefore, as you read on, you will find some ideas that are worth working with in raising capital to launch and expand your company.
Funding for a small business startup
No enterprise can thrive without adequate funding. Whether the enterprise is small, medium or large, having enough money to start or keep the business running is inevitable. This goes to tell you that having a viable business idea is never all there is to start a venture.
However, while you may not necessarily be the sole funder of your business, part of what makes you a proactive entrepreneur is your ability to raise the required capital for your startup. And to make things easier for new startups, various business funding opportunities are available to many people. An entrepreneur, for example, can meet with small enterprise financing agencies or apply for a government funding scheme.
Where can I get funding for my startup business?
There are different channels through which you can access the required capital for your business. The following are the top five that you can consider.
1. DTI funding for small business
There is a range of funding schemes that the Department of Trade and Industry (DTI) make available to those who have new ventures or who have already existing ones. Some of them take the form of loans or grants, while others are in the form of cost-sharing incentives. Among others, these incentives include Agro-Processing Support Scheme (APSS), Automotive Investment Scheme (AIS), Business Process Services (BPS), and Manufacturing Investment Programme (MIP).
2. NYDA business funding
The National Youth Development Agency (NYDA) is another platform that raises funding for small enterprises in the country. Specifically, they work with youth in South Africa to create and promote coordination in matters that relate to their development. The grant programme avails young entrepreneurs the opportunity to get financial and non-financial support for the development of their businesses. Part of the non-financial services that the youth enjoy include mentoring, co-operative development and business management programmes, and consultancy services.
3. Bank loans
Interestingly, there are quite some banks in the country that offer loans to Small and Medium Enterprises. Banks like Nedbank, Standard Bank, and FirstRand bank limited offer capital to entrepreneurs who have worthwhile ideas with a promising future. However, there are criteria that each of these banks have laid down which any prospective borrower must meet before such an opportunity can be accessed. Also, the banks give out the loans at a specified interest rate which must be paid back according to the agreed rate. So, find out the requirements and see how you can benefit from such opportunities.
4. Small Enterprise Finance Agency (SEFA)
This agency is set up towards fostering the establishment and growth of Small and Medium Enterprises, and at the same time, it contributes towards the alleviation of poverty and the creation of job opportunities in the country. One of the ways through which they achieve this is by giving small business loans South Africa. Since their establishment in 2012, SEFA grants business owners access to the capital they desire efficiently and sustainably to get their ideas running. In fact, you can get between R50,000 and R5 million from them as loans.
5. Isivande Women’s Fund (IWF)
How do I get government funding to start a business? If your concern is how to get government funding for your business, there are various sources that the government has set up to help out entrepreneurs. So, apart from some of those mentioned above, there are others that you can also get information about and access.on manages the fund, and anyone who needs a capital between R30,000 and R2 million can always submit an application that would be reviewed by the IDF Managers.
How do I get government funding to start a business? If your concern is how to get government funding for your business, there are various sources that the government has set up to help out entrepreneurs. So, apart from some of those mentioned above, there are others that you can also get information about.
Business loans South Africa
Among other things, loans have remained among the best options available for small businesses. Those who are at the threshold of starting a new venture or who have been into one for long have found this option useful. Some financial institutions give start-up business loans South Africa and among which are banks. Even though you will have to pay back with an interest, once they see that your business idea is a viable one, they will grant your request.
How do I get a business start-up loan?
Even though various financial institutions are willing to grant anyone a loan, there are certain things that they watch out for to ascertain the eligibility of whom they are giving the loan. Therefore, the following are some of the things that you need to take note of.
1. Come up with a detailed business proposal
Before you can be considered for a loan, the first thing that you need to do is to be detailed on what exactly you need the loan for. Do not expect that the lenders would figure that out for you. Also, when you are writing the proposal, you have to be explicit enough. Whether you are communicating your purpose in an interview session or through your proposal, ensure that you do not leave anything unclear.
2. Supply the necessary documents
Take note of the documents that you are asked to present by your lenders. And of course, one of those is the registration document of your business organisation. The essence of those documents is to prove your reliability and genuineness so that they do not put their money into the wrong channel. So, if you have not registered your company yet, you can read up on how to register a small business in South Africa or you can make inquiries on how to go about it.
4. Get your credit score in perspective
Bear in mind that before any financial institution considers anyone for a loan, one of the first things that they consider is the eligibility of the applicant. And one way through which they do this is by checking up the credit score of the applicant. So, on your part, you have to check out your credit reports and scores. Remember that the lower your credit score, the riskier it becomes to be considered for a loan. You can read up the article on "What is a good credit score South Africa and how to get one in 2020" to learn better.
5. Keep proper financial records
It is excellent to have good financial statements as that is one of the things that these funding agencies would want to check, especially if you already have a business running. Your balance sheet, income statements, cash flow statements and others are usually considered to confirm your ability to repay whatever loan you get.
How to start a small business in South Africa without money
Some aspiring entrepreneurs have always dreamed of having their ventures, but due to the lack of money, they have not started. While money is not all there is to starting a profitable organisation, you should bear in mind that the will and passion for seeing your dream finding expression are very vital. Therefore, if you want to start your enterprise but you are held back because of the start-up capital, here are a few points that can be of help to you.
- If you have a business-oriented network of people around you, you can discuss your plan with them and see how they can help you raise the capital or render their hands of support.
- There are several business incubation programmes that you can also join. Among other things, these programmes provide coaching, technical support, office space, and even some funds, as the case may be.
- Sometimes, you may also have to use what you have to get what you want. Think of what you can do with your laptop, computer and other items in your home that could earn you some income.
- If you have a skill or talent, consider monetising it. Think of how to get platforms where you can use your gift of singing, comedy, acting, writing and so on and make some money. For instance, if you are gifted in writing, search through the internet to see how you can start blogging or writing for pay.
- Lastly, once you have done your homework in terms of writing your business plan, you can pitch your idea before potential investors, and you never can tell, you might be one of the fortunate people that would be chosen.
You are never on your own as far as your business idea is concerned; there are small business funding opportunities from the government and private agencies that you can always approach to raise capital. And with some of these agencies which have been discussed above, I hope you make the best use of them to get the necessary capital to launch out your business and expand. Also, if you need to get a loan, the tips explained above will help you.
DISCLAIMER: This article is intended for general informational purposes only and does not address individual circumstances. It is not a substitute for professional advice or help and should not be relied on to make decisions of any kind. Any action you take upon the information presented in this article is strictly at your own risk and responsibility!