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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 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 Employment Fund (NEF). The NEF is a part of the South African government’s development mandate to encourage black participation in business and entrepreneurship. It’s main objective is to assist black entrepreneurs in achieving funding as well as offering entrepreneurs non-financial support. Currently the National Empowerment fund has approved more than R10billion rand to black owned businesses. Its four main channels of funding consist of iMbewu Fund, uMnotho Fund, Rural Community Development Fund, Strategic projects, Arts and Culture Venture Capital fund, Tourism transformation fund
IMBEWU FUND
iMbewu fund is has been setup to support black entrepreneurs that want to start new businesses as well asexisting black-owned enterprises. The Fund offers finance products ranging fromR250 000 to R15 million. iMbewu fund offers the following support;
Entrepreneurship Finance
Enterpreneurship finance isone of the various forms of small business funding under the iMbewu fund.Entrepreneurship finance is aimed at providing start-up and expansion capitalto new and existing businesses that are owned and managed by black people inthe form of term loans, quasi equity and equity finance.
Procurement Finance
The second form of fundingunder iMbewu Fund is Procurement Finance. Procurement finance is meant toassist black-owned SMEs that have been awarded tenders or contracts by publicand private sector entities. The product’s main objective is to ensure thatqualifying SMEs have the capacity to carry out their contracts. Terms loans,bridging finance, asset finance and revolving facilities are offered tobusinesses.
Franchise finance
Franchise finance isanother form of funding for small businesses under the iMbewu fund. Franchisefinance is aimed at entrepreneurs who wish to start their own businesses bybuying a franchise linked to a particular brand to reduce risks associated withstart-up businesses lacking a track record.
UMNOTHO FUND
The uMnotho fund is thesecond small business fund under the National Empowerment fund. The uMnothofund is meant to improve access to BEE capital and has five forms of fundingwhich are Acquisition finance, New Venture finance, Expansion capital, Capitalmarkets, as well as Liquidity and warehousing. Funding is between R2million to R50 million.
Acquisition Capital
The first form of funding under uMnotho fund is the Acquisiton capital.
New Venture Finance
The new venture finance is another form of small business funding under the uMnotho fund. This fund 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
Under the NEF, the expansion capital small business fund provides funding of R5 million to R75million to businesses that are already black-empowered, but seek expansion capital to grow their business.
Capital Markets
The fourth fund under uMnotho is the Capital Market fund. Companies specifically women led businesses receive investment. Also, this small business fund focuses on businesses that seek to list on the JSE or its junior AltX market. The Umnotho Fund through capital markets also helps listed BEE companies to raise additional capital for expansion.
Liquidity and warehousing
The last small business fund under uMnotho is the Liquidity and warehousing fund. This fund helps BEEshareholders who need to sell a portion or all of their shares. It alsoacquires and temporarily warehouses these shares before on-selling them to newBEE shareholders, and refinances BEE shareholdings where existing financingstructures are costly and/or inefficient.
