The Micro Finance Regulatory Council (MFRC) was established in June 1999. All micro lenders that operate in terms of the Usury Act Exemption are required to register with the MFRC and comply with its rules. But the rules still allow them to charge higher interest than the prime lending rate.
How do Micro Lenders Operate?
Micro lenders operate in the same way banks do. They get people to invest with them and pay them interest, while lending out that money to people who ask for loans and charging interest on those loans.
The difference between micro lenders and banks is that banks have a ceiling on the amount of interest they can charge, which is stipulated in the Usury Act. Micro lenders can charge any interest rate they like because of an exemption in the Usury Act.
Micro credit is a small loan designed for people who lack collateral, do not have a verifiable credit history or do not qualify for traditional credit. Microcredit is a financial innovation that is generally considered to have originated with the Grameen Bank in Bangladesh.
In that country, it has successfully enabled the unemployed to engage in self-employment projects that allow them to generate an income and become self-sufficient.
Because of the success of microcredit, this concept is gaining credibility in the mainstream finance industry and many commercial banks are offering microcredit as a source of future growth.
To register a new micro finance company a non-refundable application fee of R500 is needed as well as a R250 branch fee per location. Application forms and all relevant regulations can be easily downloaded from the NCR website or you can download the forms below:
- Application for registration as a credit provider
- Application for Registration as a Credit Bureau
- Application for Registration as a Debt Counselor
How to register?
Documents and information required for the application for Registration as a Credit Provider in terms of Section 40 and 41 of the National Credit Act, 34 of 2005.
Include the following elements in your application to ensure the document is processed:
- Completed and signed application form (form 2)
- Companies and Intellectual Property Commission ( CIPC ) registration document or other official legal registration document
- Copy of the share certificate/s if applicant is company
- Certified copies of ID/Passports of all members/directors/trustees/partners/sole proprietors
- Resolution if applicant is a juristic person (see attached specimen)
- A Criminal Name Clearance Certificate for all the members/directors/trustees/partners or sole proprietors issued by the South African Police Services (SAPS) or other service providers listed in annexure A.
- Proof of payment of the registration fees:
- Non-refundable application fee of R500
- Branch fee of R250 per location or premises at or from which the applicant conducts registered activities
- Initial registration fee as indicated in the table below for each sub-category of registrant.
- A letter from the bank confirming the applicant’s banking details or a copy of a cancelled blank cheque.
- Proof of registration with the South African Receiver of Revenue Services (SARS).
For more information on registering follow this link.
The National Credit Act
The National Credit Act (NCA) aims to promote responsible credit granting and use. To achieve this, when a customer applies for credit, a credit provider would need to check whether the consumer can afford the credit The NCA regulations state that all new credit agreements need to disclose interest rates, fees and additional charges and regulates the interest rates charged to a maximum rate of interest that may be charged. Add-on costs for insurance are prohibited.
Under the Act all costs must be advised in advance and the consumer has the right to arrange insurance directly, rather than pay the credit provider to do so. The Registration Division of the NCR is responsible for the registration of Credit Providers. Approval after submitting an online registration takes about eight weeks. All there requirements are carefully listed on the NCR site.
Want To Start A Property Business That Buys Property And Rents It Out?
Information on starting a property renting business.
Start your property rental business using this guide
I would like to start a property business where I purchase the properties and I rent it out, I already have a paid up property that I am renting out but my taxes are too high on the rental income so I am considering starting up a business. Could you advise me on where I can get more information on the requirements to start this and provide some guidance on whether it would be wise to pursue this business?
Before starting any business, it’s important that you’re absolutely clear about why you’re doing it – and that it’s going to be something that excites you, drives you and challenges you in the long-term.
If you’re only considering starting a property investment and management company to try and reduce your taxable income, then I don’t believe this is an appropriate – or a sustainable – solution.
You should rather consult a reputable financial adviser about other investment options that would better suit your personal needs.
If owning and managing properties is, however, an opportunity you would like to pursue, I would then recommend that you start off by equipping yourself with a proper understanding of what it actually means to be a landlord.
This will help you to make an informed decision about whether or not you want to start this (ad)venture as an entrepreneur. At a very basic level, here are some of the things you might want to consider to determine if this is the right business for you:
You need to consider the initial cost that you will be incurring when setting up the business, especially since you have a property in your personal capacity.
You will need to transfer the property from your personal capacity into your business and pay transfer fees and transfer costs.
These costs will be calculated based on the current value of the property.
The work and planning
No matter whether you’re a residential or commercial landlord, property management requires a great deal of work and planning. Remember you will be responsible for all aspects of the property: From purchasing it to maintaining it on a day-to-day basis.
Related: Real Estate Business Plan Sample
This involves everything from transfer to managing the monthly utility bills, all the way through to replacing the geyser when it bursts and ensuring your tenants behave appropriately in the building. You would also need to source your tenants and ensure that they pay you on time.
All by yourself
From a start-up perspective, you would probably need to do all of this yourself in the beginning. As such, you would need to work to build up your own database of reputable suppliers: Plumbers, electricians and handymen.
It’s important that you find experienced, qualified suppliers that you can trust, and who will be able to deliver on time and cost-effectively.
This can be a very time consuming process. Also consider that you would need to be on hand to facilitate all of this work: Arranging the call-out with the supplier and the tenant; overseeing the work delivered; paying the supplier etc.
Business owner development
Above and beyond that, you’re then going to need to develop yourself as a business owner. You will need to equip yourself with the skills and knowledge required to lead and manage this business in order to make it both sustainable and profitable.
This will require a significant investment from you: Time, effort and money. The more you commit to this journey of personal and professional development, the better your chances of success.
If you can picture yourself doing – and enjoying – all of the above, it’s then equally important to consider if this is a viable opportunity.
The greatest barrier to entry in this sector for you as an entrepreneur is probably going to be finance.
You need to be conscious of this from the outset.
- Do you already have access to the funds you need to purchase the properties you are going to rent out?
- If not, what are your plans to secure this funding? And what are the returns you are expecting?
- Also consider the funding of the business itself. How will you finance this, especially during the first year?
My recommendation here is to take the time to do your homework – and the maths. While this could be a business opportunity, it might not be something that will be possible for you to do on your own.
If you have a feasible plan regarding the above, you then need to start working on developing a model for this business – as well as a strategy and plan. All of these will require research on your behalf: From reading Entrepreneur to accessing websites, possibly visiting walk-in centres etc.
This will include unpacking the actual opportunity itself – and determining if there really is a demand for your service offering.
Please note that the above are thinking or “trigger-points” – listed simply to give you an idea of some of the things you need to consider, as well as the mindset you will potentially need to adopt as an entrepreneur. Your response to them should give you a good sense of if this is the path you wish to walk.
Remember that entrepreneurship is a journey – and every day on this road is a learning opportunity. If it is for you, embrace it whole-heartedly, don’t be afraid of failure and be sure to seek out the assistance available to you.
How Do I Start A Transport Or Logistics Business?
An all in one guide to starting a transport and logistics business.
Thinking about starting a transport business?
Forecasts indicate that the demand for freight transport will grow in South Africa by between 200% and 250% over the 15 to 20 years.
Your Free Cheat Sheet: Transport and Logistics Business Cheat Sheet
Some corridors, (high volume transport routes that connect major centres), such as the corridors between Gauteng and Cape Town (which amount to 50% of all corridor transport) will increase even faster.
The scope in the transport and logistics industry is varied – from a one-man show using a small truck to transport goods and offer services, to a fleet of transport vehicles which travel the length and breadth of South Africa’s roads.
Road transportation includes commuter transport from taxis to bus transportation.
It can be a tough industry and there are many threats facing transport businesses but if you get it right, you can build a successful business.
What is covered in this guide:
- How to start your transport and logistics business
- How to get funding for your transport business
- What are the costs involved
- Finding customers and getting transport contracts
- Getting onto suppliers lists
- Buying trucks and employing drivers
- What are the regulations and risks
- Where to find guidance to start your business.
Ready to get going? Click the arrow button to learn how to start your own transport business.
How Does One Start a Petrol Station in South Africa?
How to become a supplier of fuel to the public.
Starting an independent filling station
South Africa petrol stations fall into two categories, independent and franchise operations, both of which are funded in the same way.
Independently owned garages still play a big roll in the South African economy.
According to South African Petroleum Retailers Association (SAPRA), who represents all the stakeholders in the petroleum industry, before a new filling station can be opened, three sets of approvals, authorisations and licenses are needed.
- Land use rights for purposes of a filling station;
- An environmental authorisation; and
- Site and retail licenses.
In terms of the Petroleum Products Act, 1977 (PPA) as amended in 2006, and which is administered by the national Department of Energy, one cannot apply for a site and/or retail license before you have both land use rights and an environmental authorisation.
Existing filling stations are in a particularly strong position because of the PPA which controls the energy authorities to ensure that the number of filling stations is appropriate to local sales volumes and does not exceed the optimal number for an area.
Petro companies (Engen, Sasol, etc) offer franchises which include intensive training programmes and stipulations for franchisees. Sasol, for example, will mentor and promote franchisees on a monthly basis and assist the franchisee throughout the process. and visit each month and provide support and guidance.
“It isn’t difficult to get a franchise as long as you have funding. A Sasol filling station franchise costs in the region of R1 million”, says Able Mokoena, Franchise Consultant for Sasol.
“If you have your own site, then Sasol will undertake an inspection of the site before proceeding. Licences are required which are included within the franchise agreement”.
Franchise concept comprise of separate business units
Often, depending on the franchise company, the concept could comprise of separate business units such as the forecourt, a convenience store, a bakery, car wash or a quick-service restaurant. These can be added under certain conditions.
Each business unit has to adhere to individual standards for methods of operation, service levels, management, profitability and continuous training of staff. Most importantly, each unit is regarded as an individual profit centre, and may not be run at a loss and be offset by the other units.
After extensive market research, the franchisor determines which business units are suitable for the particular site and grants a licence to a single franchisee to operate the entire outlet.
Before you sign an franchise agreement understand clearly what franchise royalty fees, penalty clauses, support, training, and requirements you are responsible for or will receive.
The Franchise offers a certain name brand of petrol related products, which are subject to the rules and regulations of the franchisor.
Make sure that all licenses, agreements, and permissions are in place. These should also be a pre-condition in the purchase offer. Find out where the competition is located, what services they offer.
A business plan is a must
Create a working business plan. Make sure you include a provision on monitoring cash flow. Also, include marketing techniques to promote the filling station. Without one, you won’t be able to apply for funding.
There are many different ways to cook an egg and the same applies to raising funds to start a petrol station, or for that matter, any new business. If traditional options such as banks and private funders don’t work, consider the possibility of collaboration with a group of investors. Visit the following links for guidance:
- Overcoming financial hurdles
- No capital, no collateral, no problem
- Where to get the money
The petrol retail price is regulated by government, and changed every month on the first Wednesday of the month. The calculation of the new price is done by Central Energy Fund (CEF) on behalf of the Department of Minerals and Energy (DME).
The petrol pump price is composed of a number of international and domestic elements. The international element, or Basic Fuel price (BFP), is based on what it would cost a South African importer to buy petrol from an international refinery and to transport the product onto South African shores.
Then a number of other elements are added to reach the final price such as Fuel tax, Customs & Excise levy, Slate levy, Retail margin and the Road Accident fund.
If you are thinking of starting a filling station you should read Africa’s Greatest Entrepreneurs by Moky Makura, (2008) published in paperback by Penguin Books. It tells the story of T K Mmusi, a man armed with little knowledge or experience, who started a Total petrol station in Botwana.
Its success provided the capital to start Pula Carriers, a logistics company with a fleet of 20 tankers, each one fitted with state-of-the-art technology. Today, Pula Carriers is a major distributor of fuel in Botswana.
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