In the past businesses seeking funding were at the mercy of banks, investors or waiting in line for government funding. But as of April 2012, SEFA, the Small Enterprise Finance Agency, launched, providing hope for aspirant entrepreneurs all over the country. Here’s what SEFA does and how.
SEFA is the Small Enterprise Finance Agency established in April 2012 when South African Micro Apex Fund (SAMAF), Khula Enterprise Finance and business activities of the Industrial Development Corporation (IDC) merged.
The purpose of SEFA is to respond to and meet the financial challenges faced by small and start-up businesses by providing and facilitating access to finance.
Related: SEFA Funding
SEFA services are primarily targeted to survivalist, micro, small and medium business enterprises and co-operatives that need development to contribute to the economy and employment.
As of April 2013, SEFA plans to distribute R737 million to more than 15 000 small (but mostly micro) businesses by the end of the 1013/14 financial year – helping to create 18 000 jobs.
The organisation lends small businesses amounts ranging from R500 to R3 million in three main ways: Straight to the business owner, via retail finance intermediaries, and through banks using credit guarantee schemes such as Khula.
History of SEFA
The merger was initially brought to public attention when it was announced by the President in the State of the Nation Address in February 2011; leading to the establishment and launch of SEFA in April 2012.
What sets SEFA apart from its predecessors – SAMAF and Khula – is that where they only fund SMES through banks and other intermediary institutions, SEFA provides cash directly to entrepreneurs wanting to either start a business or expand an existing one.
This is an important breakthrough for small businesses previously denied finance for their business by banks because of inherent default risk.
Mandate of SEFA
The mandate for SEFA is to develop sustainable survivalist, micro, small and medium enterprises and co-operatives with the intention of improving local economies and providing job opportunities.
How SEFA hopes to help SME business in South Africa
Over the next five years (from 2013), it aims to have doubled the number of businesses financed to 34 000 small businesses, doubled lending to R1,6 billion.
Finance will be available to micro, small and medium enterprises and co-operatives through bridging finance, revolving loans, asset finance, working capital and term loans.
The agency also plans to investigate partnering with retail chain stores and government feeding schemes in order to expand more effectively into rural areas; improve pre-loan support programmes in partnership with Small Enterprise Development Agency (SEDA) to improve uptake of its credit guarantee scheme; partnering with provincial development finance agencies; and expand its pilot project in partnership with the SA Institute of Chartered Accountants (SAICA) that trains young graduates how to assist small businesses.
Are you looking for Government Funding? Have a look through our Government Funding guide.
It also plans to roll out another nine branches per year, co-located within SEDA or IDC branch offices.
Any small business with a viable business plan can apply for a loan. SEFA will evaluate the business to determine whether it will be able to afford funding, what it will be able to repay, and over what period of time without negatively impacting cash flow.
Visit www.sefa.org.za for more information.
Government Funding And Grants For Small Businesses
Your much needed capital investment could come from government funding and grants. Here is a comprehensive guide to government funding available in South Africa.
Many new small businesses go through the struggle of finding capital to start-up of expand their businesses. Government funding and grants can be a worthwhile way to get the funds that you need.
There are a lot of important things you need to be aware of such as: Strict criteria, a lot of paperwork and maybe even a very long wait. It is worth it in the end so have a look and see which government funding and grants you qualify for.
What are government grants?
This is when a project or initiative is awarded government funding for some or all of its financial support. The business grants do not need to be repaid or accrue interest and have strict guidelines for application. Government funding is linked with efforts such as black economic empowerment, job creation and developing the economy.
Here is a list of some of the government grants available for business funding in South Africa:
- Automotive Investment Scheme (AIS)
- Black Business Supplier Development Programme (BBSDP)
- Clothing and Textile Competitiveness Improvement Programme (CTCIP)
- Critical Infrastructure Programme (CIP)
- Film Incentive Programme
- Business Process Services (BPS)
- Capital Projects Feasibility Programme (CPFP)
- Support Programme for Industrial Innovation (SPII)
- National Youth Development Agency (NYDA)
- National Empowerment Fund (NEF)
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
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