Small Business Finance in South Africa

Entrepreneurs all over seeking finance for their business ventures often find it a frustrating and very disappointing task, especially when trying to obtain finance through the traditional lending routes.

South African finance applications are often long dragged out frustrating processes with unnecessary red tape in between.  Lenders and the traditional banks will in most cases require a clear credit record and very good security (collateral).

Having a clear record and offering collateral does not guarantee success as each application is dealt with on merit.  The traditional banks in South Africa are not known for taking irresponsible risks as they have “burnt their fingers” in the past with numerous small entrepreneurs who have defaulted on their loan agreements resulting in the banks suffering unnecessary financial losses.

Several commercial businesses who operate in the lending space will offer small business loans at higher interest rates to entrepreneurs who cannot raise finance through the traditional channels.  This is proving to be just as challenging as it is finding small business assistance from the traditional banks.

In recent times Venture Capital Funds and Angel Investors have become more accessible to the South African entrepreneur.  Venture Capital Funds tend to invest in established businesses with a proven track record and annual turn-over while Angel Investors will make small seed investments at start-up to get a business idea off the ground.  Venture Capital Funds and Angel Investors will normally offer their expertise and require some form of control in your business, normally at board level.  Venture Capital Funds and Angel Investors normally expect a 15 – 30 percent share in your business (ROI), and will offer to sell their share back to you or another interested buyer.

To find out how we can assist you with your start-up and put you in touch with Venture Capital Funds and Angel Investors we deal with feel free to contact us on 086-12-7775 during our normal business hours, Monday – Friday, 08h00 – 16h30.