What loans are available to businesses in South Africa?

    October 18, 2017

    When it comes to business loans in South Africa, you are spoilt for choice. Banks cater to all businesses big and small,

    • A bank is the best place for a business loan
    • Short and medium-term loans available
    • Government-funded loans are more flexible and affordable
    • There are also alternative finance options available
    • Online business loans save owners time and money

    Business loans and Taking the Bank route

    South African banks make loans based on several factors. Whether you need cash for expansion, to purchase assets or simply to finance business costs. Loans are available over the short and medium term.

    First National Bank, for example, sets the following rules:

    • Choose between loan periods of three months to five years
    • Minimum loan amounts of R2 000
    • An active FNB account for at least 15 months
    • Annual turnover of at least R500 000

     

    Absa Bank offers different options:

    • Development Credit Fund for small, medium and micro enterprises (SMEs).
    • Loan amounts between R50 000 and R5 million.
    • Women Empowerment Fund for women with skills and expertise.
    • SME Fund for past disadvantaged people with 100% black-owned companies

     

    Thembani International guarantee funds for BBBEE companies with at least 51% black ownership. Loans granted from R50 000 to R10 million. Your firm must operate in South Africa or in countries where Absa operates.

    Business loans Qualifying criteria

    • Loans only available to South African citizens
    • The major shareholder (more than 66%) must be involved in the daily running of the business
    • A proven record of business-related skills
    • A solid business plan
    • A proven track record of profits
    • Cash-flow forecasts
    • A proven record of revenue stream
    • The firm must operate in an approved industry
    • Repeat loans required
    • Main bank account held with Absa

    Government-funded Business loans

    Business loansMany small business start-ups face the task of raising capital. And a Government funded loan is the most cost-effective way to go.

    However, patience is the name-of-the-game when applying.

    • A lot of paperwork has to be completed
    • The loan is subject to very strict selection rules
    • Prepare for a very long wait

    What is a Government business loan?

    The price of all the red-tape and a long wait is worth it because the loans offer:

    • Much cheaper interest rates
    • Easy repayment terms
    • Extended loan periods

     

    The loans are funded by the Small Enterprise Development Agency (SEDA) and the Department of Trade and Industry (DTI).

    Government funding for Business include:

    • Auto Investment Scheme
    • Black business supplier programme
    • Clothing and Textile
    • Infrastructure Programme
    • Film Incentive
    • Business Process Services
    • Capital Projects
    • Industrial Innovation
    • National Youth Development Agency
    • National Empowerment Fund

    Other sources for Business loans

    There are other South African finance firms geared to assist business owners. Among these are:

    Genfin

    To qualify for a loan from this company, a business must have been operating for more than a year and with an annual turnover of at least R1 million  Loans depend on proven cash-flow records and growth.

    To qualify for a loan the owner must provide:

    • Bank statements
    • Management records
    • All relevant company records

     

    How long does it take and what do I get?

    • Loans are approved within 2-5 working days
    • Between R100 000 and R5 million available
    • When 50% of the original amount is paid off you can refinance the loan
    • No hidden costs are involved

    Finding a Business loan Online

    For people who do not have the time or expertise to front their own loan applications, going the online route could be the solution. There are a number of firms that do all the hard work on your behalf.

    Simply search the web for business loan service providers. Fill in the online form, and wait for them to come back with the best possible solution for individual company needs.

    Conclusion

    The South African financial market caters for all business owners. Black or white, big or small, male or female, there is a loan solution out there to grow a business idea. All you need to obtain the cash is to meet the criteria that the various financial outlets demand.

    All info was correct at time of publishing