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How to Get Funding for Small Businesses in South Africa


Starting a business can be a daunting prospect. You need to find funding, set up the right systems and procedures, and ensure you have the right staff in place to get your business off the ground. However, there are many organisations out there that can help to arrange funding for small businesses and help them to get started on their journey. The following guide will show you where to go for help with funding when starting up a small business.

Funding Basics for Small Businesses

A small business is an enterprise that employs less than 50 people. It has an annual turnover of between R5 – R20 million, depending on the sector. Small businesses are vital cogs in the South African economy as they contribute approximately 22% of the country’s business turnover and are responsible for over 10 million jobs.

However, despite their value, small businesses face many challenges. These include :

  • Limited access to funding
  • Difficulty obtaining credit
  • High startup costs
  • Competition from larger companies

When looking for funding opportunities to grow your small business, there are some smart ways to navigate the murky waters. 

Do Your Homework

You need to prepare a business plan before asking for financial aid. This will help you understand your business, its goals, and the reasons why it is good to invest in it.

A good place to look for investors is at your local bank or institution, where they have invested in small businesses before. If there are no such institutions in your area, then search for them online on Google or Facebook pages dedicated to helping small businesses get funding from investors.

It also helps if you know someone who has worked with an investor before because they can give advice about what works and what doesn’t work when approaching an investor for funding support of any kind.

The amount of money you’re requesting from the investor depends on what stage of development your idea/project is currently at. If it has just been started, then you’d require less than if you were further along and required more sophisticated equipment like computers or large equipment. 

What to Include in Your Funding Request

When you’re looking for funding, it’s important to include the following items:

  • What exactly do you need the money for? Make sure your request is specific, and specify how much money you are requesting (and whether or not that amount is flexible).
  • How will you repay the loan? This may seem obvious, but having a plan in place will help convince lenders that they can rely on your ability to pay back their investment. Make sure your accounts are up-to-date and you have all the information you need at your fingertips.
  • Are there any risks associated with lending to your business? A lender should understand what could go wrong before giving their approval.

The more information you can offer and the more detailed your plan, the higher your chances of getting the financing you require. 

Where to Go For Help and Advice With Funding

Look for funding in the right places. A lot of small businesses go about looking for funding in all the wrong ways. They don’t look hard enough or put their eggs into one basket (e.g., one bank). Think outside the box when it comes to searching for financial support; there are many avenues out there that might not be immediately apparent to a new business owner.

  • Networking is key. Invest time in getting to know people who can help your business succeed, and you’ll be surprised how many doors open for you.
  • Be persistent with your applications. You may get turned down once, twice…or even more than that! But if your idea is sound and you have a good business plan (see our section on these below), keep applying until someone notices and gives you what you need to make it work.
  • Have a good business plan prepared before approaching potential funders. This will show them that you know what needs doing. You will have researched similar projects elsewhere, know exactly how much money would be needed each month/year, etc. This will make them more inclined towards investing because they see how serious and professional this operation will be from day one.

Using Government Funding Grants

Government funding grants are an excellent way to help your small business get off the ground. You can benefit from these public funds by making the right connections and submitting accurate applications.

Find out what kind of government funding grants are available. There are many different types of government funding grants available for small businesses, including:

Grants for Women-Owned Businesses 

The National Empowerment Fund’s Women Empowerment Fund is designed specifically for women who own their own businesses or who have the desire to start one in the future. Applicants should be able to demonstrate that they will use any money granted towards starting up their company or expanding it in some way. In order to qualify for these kinds of grants, you must be at least 18 years old. You also should have been operating your company for at least three months before applying.


The National Youth Development Agency (NYDA) helps young entrepreneurs develop their businesses financially and non-financially. This is a great opportunity for youth who have novel ideas but no way to implement them. 


The Small Enterprise Finance Agency (SEFA) provides development finance to SMMEs and Co-operatives that may not qualify for credit through commercial banks.

Financial Support From Banks

As mentioned, you can approach your bank for a loan. A personal loan, also known as an unsecured loan, is an unsecured debt that does not require collateral for you as the borrower. On the other hand, a secured loan does require some form of collateral; for example, vehicle finance.

Unsecured loans are based on your own credit rating and affordability and generally attract a high interest rate. Secured loans will be cheaper but aren’t always feasible for start-ups. Your bank may offer a revolving loan or short-term assistance based on your business health and what you need the money for. 

Finding Funding in South Africa

There are many places to go for help with funding when you are starting a small business in South Africa. There is the government, banks, your family and friends, and microlending companies.

The government plays a huge role in funding small businesses as they offer grants and other incentives such as tax breaks. The private sector provides capital through loans from banks, which receive interest rates between 10% and 25%. Family members usually provide funds, but these may be subject to repayment obligations down the road if things do not work out as planned. Microlending allows entrepreneurs access to small amounts of start-up capital without having collateral requirements attached (unlike banks). 

Whatever your funding requirements are, we encourage you to read the fine print and make careful decisions based on hard data. Ensure that you have the right software and training to keep on top of all your financial matters.