Funding remains one of the challenges facing small business in Grahamstown, and probably all over the country, but local entrepreneurs claimed to have been hit harder than anywhere else.
Ramie Xonxa, who owns Ukhozi Lentaba Security Company, said that funding is the biggest impediment for local businesses.
“Most of the financial institutions would advertise that they are assisting small business, 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.
Funding remains one of the challenges facing small business in Grahamstown, and probably all over the country, but local entrepreneurs claimed to have been hit harder than anywhere else.
Ramie Xonxa, who owns Ukhozi Lentaba Security Company, said that funding is the biggest impediment for local businesses.
“Most of the financial institutions would advertise that they are assisting small business, 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.
Xonxa said that most entrepreneurs are unable to get funding because they were previously blacklisted from the credit bureau. He has expressed interest in diversifying his businesses to other ventures, but he could not because the financial institutions are not user-friendly to entrepreneurs.
He criticised the growing tendency by the local municipality to do business with companies from outside Cacadu Region, which he said was a major factor in the sluggish economic growth in Makana.
A young agricultural consultant, Siyabonga Mboyiya, told Grocotts that he harbours ambitions of buying a farm to pursue beef production; however he experienced difficulty in accessing funding.
“Most of 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), said they had already allocated about R2.3 billion to deserving beneficiaries and they are now sitting on about R2.7 billion in its coffers due to be distributed to other successful applicants.
NEF provides loans to new, well-established businesses owned by South Africans that meet the requirements of the Broad-Based Black Economic Empowerment code of good practice.
They give the loans to business people who are interested in expanding their businesses, buying equities (shares) or purchasing a franchise (it must cost between R250 000 and R75 million). Equities must constitute at least 26 percent of shareholdings or be worth more than R20 million of the company’s market capitalization. The loan term ranges from five to seven years and the interest rate are determined by the risk associated with the nature of business. The rates are in line with the prime lending rate.
It also made a target of achieving about 40 percent of women in its loan allocation process in order to bridge the wide gap between men and the women in business. Mohlamme said that they usually receive a lot of applications from provinces with high Gross Domestic Product (GDP) rates such as Gauteng, Western Cape and Kwa-Zulu Natal.
“The capital we offer is not for free, but they are refundable loans which must be paid within certain period. We need committed business people who are passionate of what they are doing to pay back loans furnished to them,” said Mohlamme.
How to apply for a loan with the National Empowerment Fund:
- You must fill in an NEF application form for funding. Download the form here.
- You need to have a well-written and viable business plan.
- Your plan must include financial projections, such as the details of all costs, expenditures, losses and profits your business is likely to incur.
- You must include all legal documents, such as Company Certificates and South African Revenue Services (SARS) tax clearance certificates.
- Your application must include all banking details of the business.
- The applications forms can be submitted to:
- Eastern Cape Development Corporations Offices (ECDC) Offices, Ocean Terrace Park, Moore Street, Quigney, East London or can be sent to ec@nefcorp.co.za
- For further information contact Mr. Khaya Ndaba on (043) 704-5619
Related Stories
Incentives and outlooks of small enterprises
