Demystifying funding options for entrepreneurs

Jenine Zachar, Head of Enterprise and Direct Banking at Standard Bank’s Business & Commercial Banking (BCC) division believes it would be useful for South African entrepreneurs to get a full picture of the broad range of funding potentially available to South African small and medium enterprises (SMEs).

“Listing some of the funding options out there – and describing what they are and how they work – might help demystify these products for South African entrepreneurs and help SMEs source appropriate funding,” says Zachar.

Since all businesses are different, Standard Bank has developed a range of funding options for entrepreneurs to choose from depending on the size, length of operation, need and ambition of qualifying enterprises.

• Business Revolving Credit is ideal for financing working capital or income-producing assets when expanding the business by allowing regular loan withdrawals up to a portion of what has been paid off.
• Business Overdrafts allows businesses to take out more money than they actually have in their account, up to an approved limit. Business Overdrafts are ideal for paying suppliers or staff, for example, whilst waiting for payments to come through.
• Business Term Loans with repayment over 24 to 60 months, help businesses budget effectively for their cashflow needs through a fixed monthly repayment.
• Standard Bank’s BizFlex solution provides cashflow-based lending allowing clients to select repayments - calculated as a percentage of revenue – upfront. If a client earns less revenue, repayments are lower. If they earn more, repayments increase. No fees are charged, and no penalty interest is levied if the client takes longer than initially anticipated to repay. The entire process is digital and funds are paid out within minutes of digital signing.
• Business Credit Cards provide 55-day interest free business credit on a revolving basis up to an approved limit, allowing businesses to continue making payments online or physically at point-of-sale devices even when cashflow is down.
• Fleet Cards effectively subsidise transport costs, providing smarter ways to pay for fuel, oil, tolls, repairs and maintenance. Fleet cards also enhanced security and lower transaction fees. Depending on the diesel schemes selected, for example, Standard Bank’s Fleet Management Cards can cut anything between 30c and R1.20 off the cost of a litre of diesel,” says Zachar.
• Enterprise Development Funding aimed at driving economic development assists qualifying businesses with purchase order funding, grants and interest-free loans.
• Property Finance for businesses provides property development capital to owners, occupiers and investors in commercial, industrial, retail and residential property.
• Vehicle and Asset Finance allows businesses to lease vehicles or capital equipment, or provides bridging finance for the purchase of local or international goods.
• Debtor Finance can be structured to fund a business using cash flow and accounts receivable as collateral without incurring debt.
• Crowdfunding aggregates public contributions to specific campaigns launched by individual business owners. Standard Bank has partnered with Thundafund, a crowdfunding platform, to assist SMEs meeting specific criteria raise contributions to help start, manage or grow their businesses. While the platform evolved as a lifeline for businesses impacted by the July 2021 civil unrest, Standard Bank is currently scaling the facility to focus on youth, women-owned and township enterprises as well.

Since enterprise owners are specialists in their own businesses, not banking or finance experts, Standard Bank has also developed “Enterprise Direct, connecting enterprise clients to real live business bankers via 12 call-in hubs across South Africa,” says Zachar. Complemented by internet banking and the Standard Bank mobile app, these business bankers help enterprise clients perform over 90% of all the transactions that they’d normally have to do at a branch – over the telephone. Business bankers are also experts at “connecting entrepreneurs to the loan and capital solutions that suit each business’s needs, ability and repayment potential – affordably” says Zachar.

By building and connecting South African enterprises to funding ecosystems able to transform SMEs into larger, more stable businesses - or move established businesses up the growth and expansion ladder - Standard Bank is working to catapult South Africa’s SMEs onto higher growth trajectories.

As South Africa’s small and medium enterprise segment grows “our SMEs will assume their rightful role as primary drivers of economic inclusion, innovation, growth and employment,” concludes Zachar.