Connect with us

Government Funding

SEFA Guide For SMEs

What is SEFA and how can it help your business?

Entrepreneur

Published

on

features-funding-sefa-funding

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.

About SEFA

embedded-funding-sefa-fundingSEFA 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.

Related: Attention Black Entrepreneurs: Start-Up Funding From Government Grants & Funds

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.

Related: National Youth Development Agency (NYDA) Funding

South-African-provinces

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.
  • Improve partnering with provincial development finance agencies
  • 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.

Contact SEFA

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.


Related: Government Funding And Grants For Small Businesses

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

Advertisement
2 Comments

2 Comments

  1. nt

    Oct 27, 2013 at 03:52

    I registered a busines in 2008 and kept the business account active by depositing 100 rand per month though I would withdraw it back on a monthly basis. I want to manufacture through sewing, I got buy in from spar and ok. But I dont have funding to make barcodes which cost 5000 rand and I want to buy an industrial machine which cost 8000 and employ 1 woman to help me with production, per day I can produce 40 items. How do I go about getting financial assistance my email address is ntombimasombuka@ymail.com

    • Morgan

      Aug 10, 2016 at 14:35

      Hi Ntombi what exactly do you want produce If I may ask?

You must be logged in to post a comment Login

Leave a Reply

Government Funding

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.

Nicole Crampton

Published

on

Prev1 of 59

definitive-incubator-resource

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:

  1. Global Cleantech Innovation Programme for SMEs
  2. Red Bull Amaphiko Academy
  3. Aurik Business Accelerator
  4. Transnet Enterprise Development Hub
  5. Injini
  6. The Techstars Foundation
  7. Anglo’s Zimele
  8. Shanduka Black Umbrellas
  9. SEDA Ekurhuleni Base Metals Incubation Programme
  10. BizQube
  11. Silulo Business Incubator
  12. Sw7
  13. Maxum Business Incubators
  14. Mpumalanga Stainless Initiative
  15. Edge Growth
  16. Smorgasbord
  17. MASDT
  18. Ignitor
  19. Timbali Technology Incubator
  20. Raizcorp
  21. OneBio
  22. SABizHub
  23. 88mph
  24. Enterpriseroom
  25. Chemin
  26. eKasiLabs
  27. New Ventures Studio
  28. Thomson Reuters Labs
  29. Seda Automotive Technology Centre
  30. eGoliBIO
  31. Meltwater Entrepreneurial School of Technology
  32. Seda – Agricultural & Mining Tooling Incubator
  33. Spark* South Africa
  34. Garden Route ICT Incubator
  35. Seda
  36. The Khayelitsha Bandwidth Barn
  37. Furntech
  38. Biofuels Business Incubator
  39. French Tech
  40. BioPark Business Incubator
  41. The Founder Institute
  42. Seda NMB ICT Incubator
  43. Tshimologong Precinct
  44. LaunchLab
  45. Softstart BTI
  46. RLabs
  47. African Rose
  48. The Grindstone Accelerator
  49. Riversands Incubation Hub
  50. mLab Southern Africa
  51. South African Renewable Energy Business Incubator
  52. Enterprise Elevator
  53. The Cape Innovation and Technology Initiative
  54. Endeavor
  55. The Awethu Project
  56. DACT
  57. The Creative Counsel incubator programme
  58. Green Pioneer Accelerator
Prev1 of 59

Continue Reading

Government Funding

Investment Support For Black Business

Business development services to improve core competencies, managerial capabilities and competitiveness.

Monique Verduyn

Published

on

3-featured-image-investment-support-for-black-business

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%.

Objectives

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.

Qualifying criteria

3-embedded-image-investment-support-for-black-business

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.

To apply

Applications must include a detailed business plan, financial statements, turnover projections and a tax clearance certificate.

Contact

Go to www.dti.gov.za

Continue Reading

Government Funding

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.

Darlene Menzies

Published

on

features-funding-expansion-funding-options-for-your-growing-business

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.

Related: 3 Ways For Social Entrepreneurs To Access Fundraising

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 Funding Options

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

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.

Related: What Type Of Growth Funding Do You Really Need?

What Funders Want

business-funding

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.

Resource

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.

Related: The Ups And Downs Of Borrowing From The Bank


embedded-funding-expansion-funding-options-for-your-growing-businessGet Funded

  • 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.

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending