Despite the many financial challenges South African businesses, especially small businesses are facing, there is a way forward.
The Weathering the Storm business imbizo reassured small businesses that there are solutions, options and services available to overcome the economic downturn.
Despite the many financial challenges South African businesses, especially small businesses are facing, there is a way forward.
The Weathering the Storm business imbizo reassured small businesses that there are solutions, options and services available to overcome the economic downturn.
This was the third annual imbizo, and the first one to be held in the Cacadu district. Stakeholders present included small businesses and cooperatives, the Small, Meduim and Micro-sized Enterprises (SMME) portal, the Independent Development Corporation (IDC), the Department of Trade and Industry (DTI), the Eastern Cape Development Corporation (ECDC), and the Eastern Cape Provincial Treasury.
The ECDC’s regional head, Belinda Vabaza, gave practical advice and requirements for small businesses to follow to qualify for funding.
She also gave a number of prerequisites which are to be met:
•Does the project create jobs?
•Is there a BEE element to it?
•Do the owners know and have the abilities to run a business?
•Is there evidence of collateral? (Do you have resources that can be given in lieu of payment if your business fails?)
•Does it add value to the economy? (Is there a market for your product/service, will it be viable?)
•Does it promote rural development?
•Does it encourage urban renewal? (Will your product/ service help the area you operate in develop, will it generate an export income, will it encourage skills development,etc? )
•Does it encourage more women in the business field?
•Does it have a sturdy credit record?
Funding
There are also a number of funding products available from the ECDC: • Micro finance which offers struggling businesses loans from R1000 up to R10 000,
• Bridging finance is an initiative which offers to pay for the materials and resources businesses need. So, they would pay a supplier for the materials you need (i.e. rubber for shoes) and bridge the gap between supplier and producer, this product aims at ‘work flow’.
• Trade finance is the same concept as bridging finance except a different amount is offered, it is a nexus product.
• The ECDC also offer an aftercare service which helps failing businesses to get back onto their feet, they also offer counselling, business advice and registration. The IDC’s transformation and Entrepreneurial scheme has set aside R1-billion to help companies in distress. This includes:
• R400 million for a Women Entrepreneurial Fund;
• R250 for a Development Fund;
• R150 million for a Community Fund;
• R150 million for an Equity Contribution Fund; and,
• R50 million for a people with disabilities fund.
To qualify, applicants must:
• demonstrate economic viability and financial sustainability;
• have projects requiring financing of a minimum of R1-million;
• be in operations that fall within one of the IDC sectors (agriculture, mining, manufacturing, services- related, public private partnerships, development agencies);
• meet the minimum broad based BEE score;
• endeavour to employ one individual with disabilities for every 100 people employed; and
• develop a strategy within nine months of approval to include people with disabilities and employ such people within three years of first draw down.
Entities must also be South African and their activities must conform to IDC guidelines. The DTI offers grant assistance which businesses don’t have to pay back.
They can fund up to 30% of your project.They currently have 19 agencies available to help SMME’s Registration The costs of registering your business, through ECDC, are: Business registration: R150 Co-operative registration: R265 The wait Each different funder has different time frames.
The ECDC, for example, has a loans committee which sits weekly. If everything is in order the funder should get back to you promptly.
However, if there are problems with your proposal they will send it back to you and you will need to resubmit a revised copy.
Also,the larger the amount of money requested the higher up the request has to go, and the longer this will take.
