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Small Business Funding in SA: Options and Links to Resources

Small Business Funding in SA: Options and Links to Resources
January 17, 2020 gnuworld
small business funding

Want to take the leap and turn that fantastic idea into a flourishing business? Here’s what you need to know and who you need to get in touch with about funding options for your startup business.

Government funding

The South African Government is a firm supporter of job creation and entrepreneurship in South Africa. It offers various types of funding for small businesses:

  • Grants: Grants are awarded in percentages. A 100% grant means no repayment, whereas a lower percentage grant requires the remaining balance to be repaid by the grant recipient.
  • Incentives: To encourage economic growth, incentives such as tax advantages can be made use of after profit has been generated. This includes tax incentives, for example.
  • Equity funding: The government acts as an investor and provides funding in return for a shareholding percentage in your business.

Depending on your industry and type of business, you may qualify for funding from the following government sources:

The Department of Trade and Industry (DTI)

The DTI is responsible for promoting trade, consumer protection, Black Economic Empowerment, and commercial and industrial policy, among other things.

The DTI currently offers funding, grants and incentives via the following avenues:

The Black Industrialists Scheme (BIS)

Managed by the Industrial Development Corporation, the BIS is a grant that can be obtained by black entrepreneurs, on the basis that co-funding has already been obtained.

Green Fund

A fund specially developed to support green initiatives.

Tourism Transformation Fund

A National Empowerment Fund (NEF) Initiative, this fund is specifically aimed at supporting black entrepreneurs and communities in the tourism industry.

Growth Fund

This fund is for emerging SMEs experiencing growth to the point where permanent jobs will be created. You will have to meet certain criteria to qualify for grant funding.

Technology Innovation Seed Fund

You can apply for grant funding of up to R1 million to improve research, develop prototypes and concepts that can be used for further business development.

National Youth Development Agency (NYDA)

If your business involves any form of youth development or upliftment, you can apply for NYDA funding programmes.

Industrial Development Corporation (IDC)

The IDC provides funding to specified sectors including basic and specialty chemicals, agro-processing and agriculture, clothing and textiles, and heavy manufacturing

National Empowerment Fund (NEF) and NEF Women Fund

NEF provides support and funding to black-owned, and female-owned businesses.

Crowdfunding

Instead of approaching one large entity such as a bank or a single investor, crowdfunding involves trying to raise small amounts of money from a large number of people.

Crowdfunding can be very successful, especially if entrepreneurs share their business plans, pitches and progress via social media to spread awareness.

A few popular crowdfunding sites suitable for the South African context include:

  1. Thundafund
  2. Backabuddy
  3. Uprise.Africa (Equity crowdfunding platform)
  4. GoGetFunding

Angel investing

Angel investing is when high-earning or affluent investors back small businesses. Often this kind of investment happens during a phase when the ventures don’t qualify for other forms of traditional funding.

Angel funding often takes place in exchange for shares or equity; or there will be a repayment agreement involved.

Pitch your idea on a hosting site such as the Angel Investment Network, or make direct contact with anyone on this list of South African angel investors.

Business incubators

Incubators are specialists in developing and accelerating small businesses with potential to scale.

They may provide startup capital and/or other resources, such as office space, management training and financial and marketing advice.

Consult this list of South African incubators if you think this could be beneficial for your business.

Bank loans

All major banks in South Africa offer business loans.

Business bank loans involve a lot of administration and paperwork, and you have to meet a long list of minimum criteria to qualify.

However, they provide a more affordable form of business funding than alternative lenders.

As a bonus, some banks will help you set up and register a company.

What we offer at The Workspace

At The Workspace, we don’t offer funding – but we can save your small or medium business time and money!

We offer affordable, fully serviced offices and coworking, and all our members have access to meeting rooms, boardrooms and a range of on-site business services.

That means you can avoid many of the setup and running costs associated with traditional office space. Simply move in and start running your business.

For more information or to arrange a tour of one of our branches, call us on 0861 250 259 or contact us online.

Contact us to find out more

We're celebrating Women's Month! Businesswomen get up to 15% off office rental and some fantastic extras. Contact us to find out more. T&Cs apply.
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