6 ways to get the business funding you need

Did you know that small businesses contributed 21% to South Africa’s formal business sector in 2023? Entrepreneurs and small business owners like you are a vital part of our economy, especially when it comes to creating and putting people in jobs.

If you’re looking to start, grow, or keep your business successfully running this year, you probably need one big thing – money. So how do you go about it? Below, we look at six ways you can apply for business funding in South Africa.

Business funding for sustaining your business

If you have an existing business but need to cover short-term operational expenses or improve cash flow, consider the following options:

1. A Business Line of Credit

Think of this as a credit card for your business. You apply for it at your bank, and it allows you to borrow money up to a set limit and only pay interest on the amount you use. Once you repay the borrowed amount, your credit becomes available again.

• You can borrow only what you need, when you need it.

• Getting it depends on your or your business having strong credit.

2. Working Capital Loans

If your business has seasonal ups and downs or you need short-term funding, a working capital loan can help. It’s designed to cover the costs of operating your business every month - like salaries or inventory during lean periods. Unlike a line of credit that’s revolving, it’s a once-off lump sum that you pay off on fixed repayments per month.

• You can access funds faster than most other loans.

• These loans can have higher interest rates than other financing options.

Businesss Funding For Starting a New Business

While the below funding methods could be used to grow or sustain an existing business, they’re also geared to getting you started.

3. Crowdfunding

This is where you pitch your business idea to the public through platforms like Thundafund or Jumpstarter. Crowdfunding allows people to support your business in exchange for rewards or owning a part of it. This approach works best if you have an exciting, new or compelling story or product to share.

• You don’t need to repay the money you raised. It helps create awareness and excitement for your business.

• There’s no guarantee you’ll reach your funding goal, and these campaigns require a great deal of time and effort to do successfully.

4. Government Schemes

South Africa offers several government schemes aimed at supporting small and medium businesses. Look into options like the IDC ( Industrial Development Corporation ) or NYDA ( National Youth Development Agency ). These programmes often provide grants, loans, or business finance solutions especially for local entrepreneurs who have been previously disadvantaged.

• They often come with low interest rates or no repayment required.

• Approvals can take a long time, and the funds may only be used for approved purposes.

5. Seek Angel Investors

Angel investors are people who invest their own money in exchange for a part of your business or a share of your profits. Networking events, online platforms, and entrepreneurial forums in South Africa are some ways to find potential investors interested in your business.

• They provide funding when banks or lenders might not and often share valuable advice and mentorship

• They may be hard to find, and you might have to give up a portion of your business ownership for their funding.

Compare Business Loan Quotes Online

Comparing business loan quotes online simplifies the quest for the best financing option. By understanding your needs and researching multiple lenders, you take control of your borrowing journey. Remember to check both interest rates and fees to calculate the true cost. Also, look for flexible repayment terms and timely funding. At the end of the day, a well-chosen loan can fuel your business’s growth and success without placing excessive strain on your finances.