In April 2013, SEFA began distributing some R737 million to more than 15 000 businesses around South Africa in a bid to stimulate micro, small, medium and co-operative enterprises and create some 18 000 jobs. SEFA’s aim is to double the reach to 34 000 businesses and provide R1,6 billion over the next five years.
Unlike its predecessors, namely SAMAF and Khula that act as intermediaries between public and private sectors, SEFA is piloting direct finance to entrepreneurs wanting to start or grow a business.
SEFA funding: Types of SEFA Funding available
SEFA provides direct funding to businesses in the form of loans between R50 and R3 million in three main ways: Directly to business owners, via retail finance intermediaries, and through banks using credit guarantee schemes such as Khula.
Related: Khula SME Fund
The types of direct funding available from SEFA include:
Bridging loans – short-term loans provided to business owners in order to finance working capital needs such as stock purchases, operating overheads etc. The duration of the loan is up to one year.
Term loans – a loan of a specific amount with a specified repayment schedule, amount and interest rate. These are typically used to finance assets with a medium to long-term lifespan, such as machinery, vehicles, office equipment etc. Term loans may also be used to finance expansion or acquisitions. The period for term loans range from one to five years.
Structured finance – This loan can be repaid over a term of five years and is used for businesses requiring funding that fall outside the parameters of term and bridge loans. It is provided through a debt facility and tailored to the unique requirements of the project. The loan may not exceed a period of five years.
Exclusions for funding include liquor, tobacco, gambling, sex trade, armaments, speculative real estate, leveraged buy-out funds, illegal trade, any business activity that will tarnish SEFA’s reputation, political organisations, individuals under debt review, insolvent individuals and businesses.
For more information on SEFA’s wholesale lending products, visit www.sefa.org.za > Products & Services > sefa Wholesale Lending Products.
How to access SEFA funding
To gain access to SEFA funding, start-up and existing survivalist, micro, small and medium businesses and co-operatives need to meet the following eligibility criteria:
- Submit a completed application form
- Completed a comprehensive proposal and/or business plan that meet SEFA’s application criteria, including initial and supporting documentation
- Demonstrated ability to repay the loan
- Provide personal and credit references
- The applicant must be an owner manager
- Be a South African citizen with ID documents, valid permanent residence (if applicable), or the business must be controlled by a South African citizen
- The business must be legally constituted including sole traders with a fixed physical address
- Must have contractual capacity
- All operations including projects, programmes activities etc. must be within South Africa
- The enterprise must be compliant with accepted corporate governance practices
- A trust that has within the trust deed the power to borrow money and pledge assets as security and to give surety for borrowing.
To apply for funding, applicants can:
- Approach any of the SEFA regional offices around the country for an initial basic assessment
- SEFA will then conduct due diligence and the application is submitted to Committee for a decision
- The decision is communicated to the applicant, and if approved the client enters into a contractual obligation with SEFA
- Funds are then transferred to successful clients who undergo post-investment monitoring and/or mentorship where applicable.
Contact details for SEFA Funding
Visit www.sefa.org.za for more information on regional branches, how to apply, exclusion criteria, products and services available.
To contact head office, call 0860 00 73 32.