JH
There are plenty of government and private organisations that offer funding for small businesses in South Africa. Most of these funds are meant to support previously disadvantaged South Africans, namely black entrepreneurs and women. Below is a list of some of these small business funds.
THE NATIONAL EMPOWERMENT FUND
The first organisation for small business funding in South Africa on our list is the National Empowerment Fund (NEF). The NEF is part of the South African government’s development mandate to encourage black participation in business and entrepreneurship.
Its main objective is to assist black entrepreneurs in achieving funding as well as offering entrepreneurs non-financial support. The National Empowerment Fund has approved more than R10 billion to black-owned businesses. Its main funding channels include iMbewu Fund, uMnotho Fund, Rural Community Development Fund, Strategic Projects, Arts and Culture Venture Capital Fund, and Tourism Transformation Fund.
IMBEWU FUND
iMbewu Fund was set up to support black entrepreneurs who want to start new businesses as well as existing black-owned enterprises. The fund offers finance products ranging from R250,000 to R15 million.
Entrepreneurship Finance
Entrepreneurship finance is one of the various forms of small business funding under the iMbewu Fund. It is aimed at providing start-up and expansion capital to new and existing businesses owned and managed by black people in the form of term loans, quasi-equity and equity finance.
Procurement Finance
Procurement finance assists black-owned SMEs that have been awarded tenders or contracts by public and private sector entities. Its main objective is to ensure qualifying SMEs have the capacity to carry out their contracts. Term loans, bridging finance, asset finance and revolving facilities are offered to businesses.
Franchise Finance
Franchise finance is aimed at entrepreneurs who wish to start their own businesses by buying a franchise linked to a particular brand to reduce risks associated with start-up businesses lacking a track record.
UMNOTHO FUND
The uMnotho Fund is the second small business fund under the National Empowerment Fund. It is meant to improve access to BEE capital and has five forms of funding: acquisition finance, new venture finance, expansion capital, capital markets, and liquidity and warehousing. Funding is between R2 million and R50 million.
Acquisition Capital
Acquisition capital supports qualifying businesses and entrepreneurs who need funding to acquire or participate in businesses.
New Venture Finance
New venture finance provides capital of R5 million to R25 million per project for BEE parties seeking to participate in medium-sized Greenfields projects with total funding requests of between R10 million and R200 million.
Expansion Capital
Expansion capital provides funding of R5 million to R75 million to businesses that are already black-empowered but seek expansion capital to grow their business.
Capital Markets
The Capital Market Fund focuses on companies, specifically women-led businesses, that seek to list on the JSE or its junior AltX market. It also helps listed BEE companies raise additional capital for expansion.
Liquidity and Warehousing
This fund helps BEE shareholders who need to sell a portion or all of their shares. It also acquires and temporarily warehouses these shares before selling them to new BEE shareholders, and refinances BEE shareholdings where existing financing structures are costly or inefficient.
