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Government Funding

Khula SME Fund

Khula SME Fund was established to provide early-stage and expansion capital to SMEs.

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Vital Stats

  • Company name: Khula Enterprise Finance
  • Contact telephone number: +27 (0)11 807 8464
  • Physical address: 7 Mellis Road, Rivonia, 2128
  • Website address: www.sefa.org.za

Company Profile

Khula Enterprise Finance Ltd is dedicated to the development and sustainability of small business enterprises in South Africa.  A leader in its field, it has a proud history of more than 13 years service of involvement in the rapidly growing and economically vital, small and medium enterprise (SME) sector.

The company is a wholesale finance institution which operates across the public and private sectors, through a network of channels to supply much-needed funding to small business.

Khula’s channels include South Africa’s leading commercial banks, retail financial institutions, specialist funds and joint ventures in which Khula itself is a participant.  Its primary aim is to bridge the “funding gap” in the SME market not addressed by commercial financial institutions.

Fund Overview

Khula SME Fund was established to provide early-stage and expansion capital to SMEs.

Purpose of the fund

  • Provide early-stage debt funding to qualifying SMEs (majority-owned by South Africans)
  • Reach out to SMEs in rural and peri-urban areas of South Africa
  • Promotes black economic empowerment
  • Improves access to finance
  • Create new jobs
  • Encourage meaningful economic participation of black South Africans
  • Foster entrepreneurship for both men and women in the SME sector.

Applicant criteria

  • South African SMEs (preferably black) who hold majority stake in their businesses who seek to start and or grow their businesses.
  • South African SMEs who hold majority stake in their businesses situated in rural areas.

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Government Funding

IDC Risk Capital Facility Programme

Our primary focus is to provide risk finance to companies owned by historically disadvantaged people. In addition, the companies – small and medium enterprises – must show significant job creation potential.

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IDC

Company name: Industrial Development Corporation of South Africa

Contact telephone number: +27 11 269 3000

Postal address:  P.O. Box 784055, Sandton, 2146

Physical address: 19 Fredman Drive, Sandown

Email address: callcentre@idc.co.za

Website address: www.idc.co.za

Company Profile

Established in 1940, we are a national development finance institution set up to promote economic growth and industrial development. We are owned by the South African government under the supervision of the Economic Development department.

Fund Overview

Our primary focus is to provide risk finance to companies owned by historically disadvantaged people. In addition, the companies – small and medium enterprises – must show significant job creation potential. The funding is provided by the European Community through the Department of Trade and Industry. The IDC co-manages the fund with the European Investment Bank.

There are three channels through which funding is provided: a direct channel operating alongside the IDC’s mainstream business; a niche fund channel, where venture capital funds target a specific sector that has a developmental focus; and a third party channel, where funds co-invest with other financial institutions. The maximum investment for the niche fund channel is R30-million.

Applicant criteria:

All applicants must fulfill our investment criteria:

  • Demonstrate financial profitability, technical feasibility and economic viability and be environmentally sound;
  • Highlight job creation features and empowerment compliance;
  • Demonstrate elements of women entrepreneurs;
  • Show a significant involvement of historically disadvantaged persons in management;
  • Demonstrate compliance with South African environmental legislation; and
  • Have a programme for HIV/Aids prevention and awareness.

All sectors of the economy are eligible except for projects in armaments, tobacco, and gambling fields and investment terms are decided on a case-by-case basis.

Guidelines for those applying for direct or third party channel funding:

  • The applicant must be an SME;
  • The minimum historically disadvantaged persons ownership must be 25% and above;
  • Job intensity of an investment, calculated on a cost per job basis, may not exceed R60 000;
  • The minimum investment amount will be R250 000 for township and rural areas and R500 000 for other areas; and
  • There is a maximum single investment amount of R20-million; and funds will be applied to improving the financial structure of under-capitalised companies.

Guidelines for those applying for niche fund channel support:

  • Applicants must invest in SMEs;
  • The maximum investment is R30-million;
  • The Risk Capital Facility Programme will always be a minority equity investor;
  • The exit period will be determined on a case-by-case basis; and
  • The fund manager must demonstrate a sound track record, with a minimum historically disadvantaged persons ownership of 25% plus one share.

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Government Funding

IDC Gro-E Scheme

Under the scheme the IDC offers financial support to start-up businesses, including funding for buildings, equipment and working capital. They also fund companies wanting to expand.

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IDC

Company name: Industrial Development Corporation of South Africa

Contact telephone number:+27 11 269 3000

Postal address: P.O. Box 784055, Sandton, 2146

Physical address: 19 Fredman Drive, Sandown

Email address: callcentre@idc.co.za

Website address: www.idc.co.za

Company Profile

Established in 1940, we are a national development finance institution set up to promote economic growth and industrial development. We are owned by the South African government under the supervision of the Economic Development department.

Fund Overview

Under the scheme we offer financial support to start-up businesses, including funding for buildings, equipment and working capital. We also fund companies wanting to expand. The proviso here is that they must show an ability to create jobs. Businesses should also operate in sectors supported by the IDC.

These include:

  • green industries, which includes renewable energy, energy efficiency, pollution mitigation, waste management and recycling, and biofuels;
  • agricultural value chain, including agro-processing;
  • manufacturing, focusing on advanced manufacturing; automotive, components, medium and heavy commercial vehicles manufacturing; clothing textiles, footwear and leather; forestry, paper and pulp, and furniture; metals fabrication, capital and transport equipment; pharmaceuticals; plastics and chemicals;
  • mining value chain, including downstream mineral beneficiation, mining and mining technologies;
  • tourism and high-level services, which includes business process services and tourism ;
  • media and motion pictures, which has to do with media pictures production, the media value chain of broadcasting (radio and television), media expansion including new media, music value chain, and film production and animation; and
  • the knowledge economy, to do with health care, information and communications technology and biotechnology.

Applicant criteria:

Race: Anyone in the within the wood, paper and renewable energy industry

Gender: Any gender may apply as long as they operate within the industry

Age: No restriction

Other:

  • A comprehensive business plan.
  • Compliance with internationalenvironmental standards.

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Government Funding

Imbewu Entrepreneurship Finance

Imbewu Entrepreneurship Finance would provides risk capital to new businesses and to early stage businesses owned and managed by black people.

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NEF

Company name: National Empowerment Fund

Contact number: +27 11 305 8000

Postal address: P.O. Box 31, Melrose Arch, Melrose North, 2076

Physical address: WestBlock, 187 Rivonia Road,Morningside, 2057

Website: www.nefcorp.co.za

Company Profile

The National Empowerment Fund is a catalyst of Broad-Based Black Economic Empowerment in South Africa.
We enable, develop, promote and implement innovative investment and transformation solutions to advance sustainable Black economic participation, in the economy.

Fund Overview

Imbewu Entrepreneurship Finance would provides risk capital to new businesses and to early stage businesses owned and managed by black people.

Applicant criteria:

BEE applicant should be actively involved in the business

  • Minimum black ownership of 50.1%
  • Industry experience in consortium i.e. from BEE party or non-BEE partners
  • NEF mentorship programme, participation is obligatory
  • Capital structure should be sustainable. NEF to provide  shortfall in equity/quasi-equity capital
  • Business with clear value add – sustainable business model
  • Business should employ minimum of 5 people
  • Maximum NEF funding of R5m
  • The NEF investment horizon is 5 to 7 years
  • NEF will target a nominal pre-tax IRR of between 12% to 18% on  its funding

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