- Player: Nadia Rawjee
- Company: Uzenzele Holdings
- What they do: Facilitate a range of non-traditional, developmental grant and loan funding applications to expedite the progress and growth of established businesses.
- Visit: uzenzele.com
What is the first step to securing finance for your business?
You must understand what you need. There’s a basic checklist to follow:
- Do you need money for working or operating expenditure vs capital investment?
- How much do you require?
- How long do you need the money for?
- What is the cost of capital you can afford to repay?
Armed with this knowledge, you can start finding the right fund or finance vehicle for your needs.
How do you identify the right fund for your business?
There are four key steps in the process.
Step 1: Know your business phase
Each phase of business attracts a different type of funder, so it’s important to be clear about which phase you’re in.
- Seed: Your business is just a thought or an idea.
- Start-up: Your business now exists legally. Products or services are in production and you have customers.
- Growth: Revenues and customers are increasing, profits are strong, competition exists.
- Established: Your business is thriving with a place in the market and loyal customers.
- Expansion: Characterised by a period of growth into new markets.
- Decline: Decreased sales and profits.
- Exit: Either the opportunity to cash out on all the years of hard work, or it can mean shutting down the business.
Related: How To Find Funding in South Africa
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Step 2: Identify the funders/financial institutions and their target audience
This information is available on each funder’s website. Read each funder’s mandates to determine:
- What the funders are looking to achieve (black/youth/female ownership, jobs, profitability, rural vs. urban business, contracts etc.)
- Priority industries
- Business phase/size
- Minimum and maximum funding available
- Collateral requirements and personal risk
- Valuation methodology in the case of buying into or selling a business
- Operational involvement of previously disadvantaged individuals.
Step 3: Research the funds within the relevant institution
Funders will, on average, have between two and 26 different funds, each with their own mandate, eligibility criteria, funding type (loan or grant), costing, things they will and won’t fund and other specifics. Read the mandates to find your fit.
Step 4: Reach out to the funders
Call and speak to the funders and be fund specific. Speak to a consultant at the fund to clarify your eligibility before starting the application process.
Ask questions around:
- Their timelines
- When the credit committees or panels sit for adjudication
- What is considered for your application to get adjudicated.
Arming yourself with this knowledge will exponentially increase your chances of being considered for funding. Many applications do not reach the adjudication phase because the business doesn’t match the fund or the application is incorrectly filled in.
You cannot receive funding if your application is not even considered. The correct content and format is vital.
Related: 4 Funding Sources
Are Government grants only for small enterprises?
Not at all. Where a large business is looking to expand its network through distributors, agents or franchisees, wholesale loans from the likes of SEFA, NEF and IDC as well as some developmental grants such as the Jobs Fund, Incubator Support Programme and Social Enterprise Fund are attractive funding models for previously disadvantaged individuals to be included in your value chain as business owners. This is also a way that businesses are able to leverage funding for growth.
Funders approve funding based on different criteria:
- Turnover: mainly grants
- Profitability: loans and grants
- Balance sheet: loans and grants
- Ability to scale: venture capital
Before you apply for funding, do you have the following documents?
- Business plan or relevant application
- Formal contracts directly with a blue chip company or government department
- Letters of engagement with clients
- Tax clearance certificate
- CIPC company documents
- BEE certificate
- Audited financial statements
- Management accounts.
Read next: 9 Different Kinds Of SME Funding