Small business is key to job growth, and has the power to transform economic growth and innovation. How to apply for small business funding can be challenging due to the lack of clarity on where and how to apply. We aim to provide a clear process for those looking for funding. Much of the resources listed here are government initiatives.
A quick note: the use of the word ‘funding”’ is broad and can encompass equity investment, unsecured loans, secured loans and grants. Please ensure you are aware of what you are applying for, as each case may be different.
(Also take a look at our guide to raising startup funding here)
Funding from government agencies
National Empowerment Fund (NEF)
The NEF is a great ‘one-stop’ shop to apply for various types of finance and funding for small business. It actually falls under the dti funding arm.
Aimed at Broad-based BEE funding for various small businesses, it is a great partnership between government and corporate. Take a look below as the various projects under their wing to ascertain which is the best fit for you as a small business or startup looking to apply for finance:
This fund is aimed at encouraging black women in business. Only 34% of SMEs in South Africa are women-led, even though women make up around 50% of the population.
Apply for between R250 000 – R75 million
Basic Criteria to apply:
- 51% black women owned
- Operational involvement
- Commercial viability
- Ability for the business to repay WEF funding
- Job creation potential
This is aimed at new business or expanding of existing business.
Apply for between R250 000 – R10 million
Basic Criteria to apply:
- 50.1% black owned
- Active black management involvement
View each criteria for slightly different information on each which will be applicable according to the terms.
Entrepreneurship Finance – For people starting a new business, or growing a business that already has revenue
This fund aimed at, among other things, including aspiring rural entrepreneurs. Covering a wide range of industries including agri processing, eco-tourism and rural non-farm activities.
Basic Criteria to apply:
- 50.1% black owned
- Active black management involvement
This fund provided affordable loans to start or expand small business promoting and developing arts and culture. Apply for between R250 000 – R5 million.
Basic Criteria to apply:
- 50.1% black owned
- Active black management involvement
For all above applications to apply for small business funding under the NEF:
No fees are applicable to apply for small business funding.
CLICK HERE TO CONTACT NEF VIA EMAIL
Technology Innovation Agency (TIA)
The TIA is also an offshoot of the Department of Trade and Industry (DTI), like the NEF. But as the name clearly suggests, their focus is on technology and innovation. So how do you as a startup apply for funding from them?
The seed fund has a very definitive focus to provide or source funding for unique Intellectual Property and innovative solutions coming out of research and development at tertiary level. The seed fund does once off investments and only to one startup per sector, i.e. they do not fund competitive startups.
Contact: (012) 472 2700
National Youth Development Agency (NYDA)
Applying for a grant for your new or existing business if you are 18 -35 years old, is the aim of the NYDA Grant programme.
Type of businesses grant amount ranges:
- Idea generation and survivalist (start-ups) R1,000 – R10,000
- Start-ups PTY and cooperatives R10,001 – R50,000
- Growth stage PTY and cooperatives R50,001 – R100,000
- Expansion stage PTY and cooperatives R100,001 – R200,000*
*for agriculture and technology related projects the maximum threshold is R250,000.00
Contact details:
0800 52 52 52
info@nyda.gov.za
Industrial Development Corporation (IDC)
Aimed at supporting economic growth and industrial development, this is an institution out of the National Economic Development Department.
This is for small, medium and startup businesses wanting to apply for funding from R1 million – R1 billion.
Slightly different criteria for each application.
Agro-Processing and agriculture
Chemical Products and Pharmaceuticals
New Industries (tech & Value chains)
To apply:
You need to sign up to get access to apply – https://protected.idc.co.za/clientportal
The Small Enterprise Finance Agency (SEFA)
Their aim is to help start, sustain and grow SMME’s.
Finance range is from R50 000 to R5 million, dependent on requirements and stage of business.
Start-loans: Loans offered through Direct-Lending to survivalist non-financial co-operatives for working capital e.g. for small orders from government departments, municipalities, and the private sector.
Isivande Women’s Fund (IWF)
Aimed at accelerating women’s economic empowerment, it includes startup funding.
R30 000 – R2 million.
Criteria:
- Must be 50% + 1 share women-owned
- 6 months in business
Contact:
(011) 772 7910
Funding from private sources
Lulalend
Aimed at serving SMME’s for amounts of R20 000 – R1 500 000
Applications cover Bridging Finance; credit facility; equipment financing; inventory finance; refinancing
Contact:
087 943 2381
Retail Capital
Retail Capital provides various funding and asset finance products for SMME’s, noting that SMME”s make up more than 50% of South Africa’s GDP and over 65% of the employment.
Servicing these industries: Restaurant; medical; specialist services; retail; construction; hospitality
Criteria:
- Business must be doing minimum of R100 000 turnover
- Trading for 12 months +
Applications online but contact first made here.
Contact:
0861 17 17 17
Alternative funding sources
Venture Capital and Private Equity
South African Venture Capital and Private Equity Association (SAVCA) has some great information on the various venture funds and equity funds.
Angel Investors
An angel investor is normally an individual who provides a relatively small amount of capital for a new busienss or for scaling, in return for equity investment. They are looking for a higher rate of return on investment that standard institutionalised investing. Most angels are found by word of mouth, and its a case of knowing who to speak to.
- JoziAngels is a Gauteng based angel network and have been very active as a team investing in startups. Innovative and early-stage is their mandate.
- DazzleAngels based in South Africa. Women entrepreneurs and early-stage is their mandate. Max R300 000.
In Closing
Not only is South Africa and the sub-saharan region short of funding for small business, business owners also need to shoulder some of the shortcomings. Too often business owners and entrepreneurs do not do their homework on what the venture fund, or bank or government grant actual mandate is. It takes a few minutes of digging and a little while to complete documentation correctly. But these institutions are geared towards assisting SMME’s so make sure you help yourself but reading the criteria carefully and taking time to submit and complete documentation correctly.
Check details and qualifying criteria to apply as although some requirements are stated here, there may be many more basic criteria and minimum requirements to apply.
