It seeks to broaden participation in entrepreneurial activity to all, with emphasis on youth development, women, and B-BBEE.
The DTI has identified and prioritised entrepreneurship as a catalyst and means to achieving economic growth and development for South Africa as a whole.
To make this happen, the DTI in conjunction with other government departments and institutions is implementing and executing a number of schemes and policies to ensure that businesses have access to the necessary finance and non-financial support to make their ventures sustainable and successful .
The DTI has a range of funding schemes available to new and existing business ranging from micro businesses to co-operatives to medium-sized businesses. Financial assistance from the DTI can take the form of cost-sharing incentives, loans or grants, and mentorship programmes.
1. Black Business Supplier Development Programme (BBSDP)
A cost-sharing schemes offering cost-sharing grants to black-owned small businesses to assist them in improving their competitiveness and sustainability. For more information visit their website.
2. The Co-operative Incentive Scheme (CIS)
This is a 90:10 cost-sharing grant for registered co-operative enterprises consisting of five or more members, with the aim of improving viability and competitiveness through lowered cost of doing business. For more information visit their website.
Looking for more Government Funds and Grants? We have a comprehensive list of Funding Programmes just for you.
Loans available to South African business owners and start-ups are:
Isivande Women’s Fund
This fund is an exclusive women’s fund established by the DTI to accelerate women’s economic empowerment through affordable, usable and responsible finance. For more information click here.
Khula is the government’s agency for small business finance. It operates across both public and private sectors and is dedicated to providing much-needed funding to businesses. It serves as indemnity to financial institutes providing loans to businesses without assets to put up as collateral. Visit their site for more information.
Grants available through the DTI include:
Aqua-culture Development and Enhancement Programme (ADEP)
This programme is available to registered entities involved in primary, secondary and ancillary aquaculture projects for both marine and fresh water. It is approved for new, existing and upgrading entities. See more here.
Automotive Investment Scheme (AIS)
This scheme is designed to grow and develop the automotive industry through investment in new and replacement models and components that will increase production volumes, sustain and increase employment, and strengthen the automotive value chain. See more here.
Black Business Supplier Development Programme (BBSDP)
This is a cost-sharing grant offered to black-owned businesses to improve their competitiveness and sustainability. It aims to fast-track small and micro-enterprises, foster links between black-owned businesses, corporates and public sector, and to complement affirmative procurement and outsourcing. It provides grants to a maximum of R1 million. See more here.
Business Process Services (BPS)
This scheme aims to attract investment and create employment in South Africa through off-shoring activities. It involves a three-year tax-exempt grant for qualifying businesses. See more here.
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Capital Projects Feasibility Programme (CPFP)
CPFP is a cost-sharing grant contributing to the cost of feasibility studies for projects that will lead to increased local exports and stimulate the local manufacturing sector. See more here.
Critical Infrastructure Programme (CIP)
This programme is aimed at improving the infrastructure of South Africa. The grant covers a minimum of 10% to a maximum of 30% of total development costs of qualifying infrastructure. See more here.
The Co-operative Incentive Scheme (CIS)
CIS is a 90:10 cost-sharing grant for registered primary cop-operatives of five or more members to improve the viability and competitiveness. See more here.
Incubation Support Programme (ISP)
This programme is designed to create and develop successful enterprises with the ability to revitalise communities and local economies. For more information click here.
The Manufacturing Competitive Enhancement Programme (MCEP)
Provides enhanced manufacturing support to encourage facility upgrades to sustain employment and improve productivity. See more here.
Manufacturing Investment Programme (MIP)
MIP is a reimbursable cash grant to local and foreign-owned manufacturers who wish to establish new facilities or expand on existing ones. See more here.
National Youth Development Agency (NYDA)
While it is moving away from grants for youth and going toward mentorship and development programmes, grants are available for youth entrepreneurs. See more here.
People-carrier Automotive Investment Scheme (P-AIS)
This scheme is a cash grant of between 20% and 35% of the value of qualifying investment in productive assets approved by the DTI. See more here.
The Sector Specific Assistance Scheme (SSAS)
A cost-sharing grant offered on an 80:20 principle and a maximum of R1,5 million is awarded to qualifying businesses. See more here.
Support Programme for Industrial Innovation (SPII)
Aimed to promote technology development in South African industry. Visit their site for more information.
Read More: 8 Steps to Dramatically Increase Your Income
How to access DTI funding
The DTI has core areas of focus that include industrial development; trade, export and investment; broadening participation; regulation; and administration and co-ordination.
Industrial development aims to promote long-term industrialisation and industrial diversification in metals fabrication, capital and transport equipment, green and energy-saving industries, agro-processing industries, automotive and respective components, plastics, pharmaceuticals, chemicals, clothing, textiles, leather, biofuels, footwear, forestry paper, pulp and furniture, tourism and cultural industries, business process outsourcing and off-shoring (BPO&O), and nuclear and advanced aerospace industries to name just some.
For more information on the kinds of funds, loans, grants and incentives available and each scheme’s application criteria, click here.
Contact details for the DTI
The Next Step
Ready to get your business going? Here’s 15 Things Every Newbie Needs to Know About Starting a Business.
The Definitive List Of South African Business Incubators For Start-Ups
Are you looking for an incubator to ensure the sustainability of your start-up? This comprehensive list of South African incubators will set you in the right direction.
70-80% of small businesses don’t survive their first year, says Proudly South African CEO, Eustace Mashimbye, with only 9% surviving 10 years. Incubators were developed to reduce the chances of failure of start-ups by offering sustainable and fundamental entrepreneurial support.
Incubators enable entrepreneurs and innovators to find the necessary support and resources to build and maintain a successful start-up. An incubator can offer you:
- A creative space to work out and discuss every aspect of your business
- More resources and experience than you have when starting out
- The opportunity to develop a network of other entrepreneurs and start-ups to sustain your business in the future.
“Getting involved with an incubator requires more than simply filling out an application. You need to get clear about which type of incubator would be the best fit. One of the most damaging mistakes a brand-new company can make is choosing one that doesn’t thoroughly meet its needs,” explains Nav Athwal, founder and CEO of RealtyShares.
Here are 58 South African business incubators for start-ups and what they can offer you:
- Global Cleantech Innovation Programme for SMEs
- Red Bull Amaphiko Academy
- Aurik Business Accelerator
- Transnet Enterprise Development Hub
- The Techstars Foundation
- Anglo’s Zimele
- Shanduka Black Umbrellas
- SEDA Ekurhuleni Base Metals Incubation Programme
- Silulo Business Incubator
- Maxum Business Incubators
- Mpumalanga Stainless Initiative
- Edge Growth
- Timbali Technology Incubator
- New Ventures Studio
- Thomson Reuters Labs
- Seda Automotive Technology Centre
- Meltwater Entrepreneurial School of Technology
- Seda – Agricultural & Mining Tooling Incubator
- Spark* South Africa
- Garden Route ICT Incubator
- The Khayelitsha Bandwidth Barn
- Biofuels Business Incubator
- French Tech
- BioPark Business Incubator
- The Founder Institute
- Seda NMB ICT Incubator
- Tshimologong Precinct
- Softstart BTI
- African Rose
- The Grindstone Accelerator
- Riversands Incubation Hub
- mLab Southern Africa
- South African Renewable Energy Business Incubator
- Enterprise Elevator
- The Cape Innovation and Technology Initiative
- The Awethu Project
- The Creative Counsel incubator programme
- Green Pioneer Accelerator
Investment Support For Black Business
Business development services to improve core competencies, managerial capabilities and competitiveness.
The department of trade and industry’s Black Business Supplier Development Programme is a cost-sharing grant, which offers support to black-owned enterprises in South Africa. The DTI contributes 90% of the cost of a project and the applicant 10%.
The programme aims to fast-track existing SMMEs that exhibit good potential for growth, grow black-owned enterprises by fostering linkages between black SMMEs and corporate and public sector enterprises, complement current affirmative procurement and outsourcing initiatives of corporate and public sector enterprises, and enhance the capacity of grant recipient enterprises to successfully compete for corporate and public sector tenders and outsourcing opportunities.
The business must be majority black-owned (50 plus one share) and have a significant representation of black managers on the management team. The maximum annual turnover is R12 million per annum, and the business must have a trading history of least one year. Businesses can qualify for a grant to the maximum amount of R100 000. The requested amount should not exceed 25% of the entity’s previous year’s turnover.
Applications must include a detailed business plan, financial statements, turnover projections and a tax clearance certificate.
Go to www.dti.gov.za
Expansion Funding Options For Your Growing Business
Growth can put an enormous strain on the cash flow of your business. Luckily, there are financing options available to you if you know where to look, enabling you to keep that growth on track.
One of the first things you notice when your business starts to grow is that your costs shoot up, while your profit doesn’t immediately follow. Growth can put an enormous strain on the cash flow of a company and business owners often make the mistake of financing growth from their cash flow — which is like using your credit card to finance your home renovations.
Doing things this way results in unnecessarily high financing rates and challenging repayment terms, which can also leave you vulnerable to a sudden cash flow crisis without the time required to line up financing.
Financing business expansion requires planning, especially for fast growing companies.
When planning for fund raising, consider applying for sufficient funds to cover the cost of existing debt and the cost of the expansion. When it comes to business expansion funding, the total amount of the finance required will determine which finance options are most suitable.
If your finance requirements are relatively low and your cash flow history is good, consider a term loan or business overdraft to fund your growth while you work on increasing your sales to meet your growth expenses. If your expansion needs include additional equipment or machinery, asset finance is available.
However, if your SME is growing rapidly and you want to enter new markets, scale your team or undertake new product development, look at longer term funding solutions. Equity finance is the most common option for this kind of funding requirement and there are also government funds that cater for business expansion.
Government lending agencies provide a range of finance options for SMEs to foster growth in high priority sectors, specific geographic areas and to promote economic inclusion for previously disadvantaged people. The finance options include incentivised financing, cost sharing options, equity, loans and grants.
Government has partnered with Finfind, which has an up-to-date database of all the government funding offerings available to SMEs.
If your business profile or funding need matches any of the government funds, Finfind will match you with the offering and provide you with the details of what is required to apply.
Equity finance refers to the sale of a percentage of ownership in your company in return for business expansion funds. One of the biggest benefits is that these lenders are often prepared to fund businesses that are not currently profitable, but have the potential to generate large returns. As equity funders take more risk than traditional financiers, they expect a higher rate of return on their investment from businesses that can scale into large markets and show highly profitable future returns.
In the SME market, early-stage equity finance is usually provided by venture capital companies (VC), while mid-stage or larger expansion funding requirements for medium size enterprises are provided by private equity funds or bank loans. VCs look for businesses with a strong founder, that have proven product market fit, a team to execute the business plan and a robust business model showing strong future returns. Funding amounts usually vary from R1 million to R20 million.
What Funders Want
Funding applications require preparation, including a detailed business model that outlines expansion plans and makes a compelling case for investment.
CVs of key staff will be important as well as an organogram that shows the impact of the expansion on your team, detailed projected income and expenses, historical, audited financial statements, bank statements for the business’s bank account/s, tax clearance certificate, and personal statements of assets and liabilities for all owners as well as company and tax registration documentation. Keep an electronic folder with this documentation and update it monthly so that you can access it whenever it is needed.
If the initial funding meetings go well, the potential funder will perform a due diligence where the financials, the business model and its assumptions and projections will be scrutinised. They may interview some customers and your key staff members. Funders are especially interested in the founder and team running the business, as they are responsible for ensuring that the projected growth is realised. They look for experience, deep knowledge of the industry and operational competence.
Finfind is SA’s leading access to finance solutions for SMEs. This revolutionary online platform links finance seekers with matching lenders, providing easy access to over 200 lenders and over 350 loan options. Finfind is supported by USAID and sponsored by the Department of Small Business Development.
Go to www.finfindeasy.co.za to find the business finance you need. It’s free and easy to use.
- Do your homework: Each equity fund has a clear investment strategy. Familiarise yourself before engaging.
- Educate yourself: Get to know the equity finance terminology and what to expect during the various stages of the deal process.
- Develop an exit strategy: This is a common question and an important issue for funders.
- Consider alternative funding: Can your expansion be funded with alternative or cheaper sources of finance that do not require giving up shares? Keep in mind, though, that the right investors bring more than money. They provide expertise and access to networks that can expedite your expansion plans.
Lastly, while you don’t always get the luxury of choice, do your best to partner with people you will enjoy working with, it can be a long marriage.
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