This is a question which comes up regularly from our community looking for lending solutions but not comfortable going to a bank for a loan.
The good news is that the SME lending environment in South Africa is definitely starting to innovate and a number of new players have come into the market.
Two of the players we are working with are:
Bridgement:
Obtaining business finance shouldn’t be time-consuming and complicated, so Bridgement created a simple way for you to access up to R5 000 000 instantly. Bridgement will fund businesses who have a minimum of 6 months trading history and are turning over a minimum of R500 000.
They make use of invoice factoring by allowing you a revolving credit facility based on your debtors.
Their online registration process is incredibly easy to use and you can get same-day approval on your loans.
Check them out – obligation free – HERE
Fundrr:
Fundrr uses technological innovation and automated models to provide quick and efficient loans to small businesses. By the use of a simple, free and paperless application process, they are able to take the hassle away and allow you to focus more on your business.
They provide loans from R20 000 to R500 000 ranging in duration from 3 to 12 months and repayments are made either on a daily, weekly, bi monthly or monthly basis, depending on your cashflow
You can check them out here.
LulaLend:
Are you looking for R20 000 to R1m in small business funding to help you manage your cash-flow or expand your business?
LulaLend is a lending option that you may wish to consider.
Unlike Bridgement [who lend against your invoicing], LulaLend will extend cash loans inside of 48 hours to qualifying businesses.
LulaLend require a minimum of 12 months trading history and an annual turnover of R500 000
You can check out LulaLend HERE for your SME lending requirements.
FAQ: Aren’t these online lenders expensive?
While the SME lending landscape in South Africa has begun to innovate, the reality is that failure rates amongst local SMEs remain high and lenders have to price for this risk.
Our key message to SMEs is always to understand WHY you are borrowing money – it doesn’t make sense to dig a deeper hole for yourself and saddling yourself with further debt.
Borrowing money for your SME is a case of understanding the time value of the money you are investing.
If you are looking for SME funding to fulfil a key order, appointing a crack staff member or expanding into new markets, this could drive growth for your SME delivering a return on the loan.
Both LulaLend and Bridgement charge no early repayment fees so the moment you have generated positive cash-flow, you can pay down the debt – thereby reducing the interest payments.
FAQ: How do I know if I can afford the cost of the debt?
This is a critical question and one that every entrepreneur should be asking themselves before they take on debt in their business.
It may be a simplistic answer but we try to draw a comparison between taking on a new car. If you are asking for a R1m loan, ask yourself whether you would be comfortable taking on a R1m car? Will you have the cash-flow to be able to cover the monthly car instalments?
If you are unsure whether your business is ready to take on debt, consult your bookkeeper or accountant. If you need assistance with putting together your financial data to prepare for a lender, please contact us HERE and we will be happy to assist you.
