Despite the existence of groups which encourage business development, local entrepreneurs have criticised the municipality and financial institutions which make it difficult to obtain the funding they require.
Despite the existence of groups which encourage business development, local entrepreneurs have criticised the municipality and financial institutions which make it difficult to obtain the funding they require.
Local businessman Ramie Xonxa, specifically criticised the growing tendency of the local municipality to work with businesses from outside the Cacadu Region, instead of stimulating economic growth by contracting local businesses.
Xonxa, owner of the Ukhozi Lentaba Security Company and a member of the National African Federated Chamber of Commerce (Nafcoc), explained some of the problems encountered by local businesses.
“Most of the financial institutions advertise that they are assisting small businesses – but when you knock on their doors they will demand a lot of things that your company might not have. This prevents us from accessing finance,” Xonxa said.
Another local entrepreneur, agricultural consultant Siyabonga Mboyiya, explained how he had found it difficult to secure the funds needed to purchase the beef farm he hopes to own in the future.
“Most financial institutions require collateral (security) against the loans we wish to take – but most of us don’t have the assets for that purpose,” Mboyiya said.
Emmanuel Mohlamme, a corporate communications manager at the National Empowerment Fund (Nef), explained that the Nef existed to assist with the funding of businesses that meet broad-based black economic empowerment requirements.
“The capital we offer is not for free. They are refundable loans which must be paid within a certain period. We need committed business people who are passionate of what they are doing to pay back loans furnished to them,” said Mohlamme.
Mohlamme said that Nef has already allocated about R2.3 billion to its beneficiaries and now has about R2.7 billion available to distribute to other successful applicants.
However, Mohlamme said that the Nef received most of their applications from businesses located in provinces like Gauteng, Western Cape and KwaZulu-Natal.
Successful applicants include entrepreneurs who needed funding to expand their business, buy stock in other businesses or purchase franchises which cost between R250 000 and R75 million.
The loan terms range from five to seven years and the interest rates are determined by the risk associated with the nature of business.
Requirements to apply for a loan with the National Empowerment Fund:
1. Download and complete an application form.
2. Submit a viable business plan, which includes financial projections, such as the details of all costs, expenditures, losses and profits your business is likely to incur.
3. Include documents, such as Company Certificates and South African Revenue Services (SARS) tax clearance certificates, with the application.
4. Include the banking details of the business with the application.
5. Submit the application forms to: Eastern Cape Development Corporations Offices (ECDC) Offices, Ocean Terrace Park, Moore Street, Quigney, East London, or email them to ec@nefcorp.co.za
