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What is SME Business Finance?
Not all businesses in South Africa fit the traditional model of business finance which banks offer.
SME finance is a way for small, medium and micro enterprises to get access to specialized business finance which is quick, easy to access and fair.
SME finance normally uses specialized types of products to extend finance to businesses which others would not qualify through banks. Types of finance include:
- Purchase orders;
- Invoice factoring/discounting;
- Unsecured finance;
- Revolving credit facility;
- Secured finance (property backed, normally);
- Debtor finance;
- Specialized digital marketing finance;
- Property finance;
- Vehicle & asset finance;
- Many more.
The advantages of these types of products are that they provide finance quickly and easily where banks otherwise would not. It is putting the power back into the hands of business owners.
How does FundingHub Work?
FundingHub is a 100% free platform which helps you compare offers from over 35 different lenders.
- You fill in your application details;
- We find the best match according to your needs;
- We pass on your details, with your permission;
- They deal with you to work out the details of the loan;
- Done!
We don’t fulfill any loans, we only help you find the right partner.
FundingHub works with NCR registered lenders, we would never work with anyone we wouldn’t borrow from ourselves. As a small business ourselves, our interests are aligned with small business owners.
How to Qualify for a Small Business Loan
There is no one answer to find what the qualification requirements are for a small business loan.
As a good rule of thumb, though, these are the general qualification requirements:
- A minimum trading history of 6 months: That means you have been earning revenue for 6 months or more.
- A minimum monthly turnover of R30 000: That means for the 6 months (or more) that you have been trading, you must have earned at least R30 000 on average in each month. That equates to an annual revenue of around R360 000.
Other than that, you need to have:
- A registered business, and
- A business bank account.
Different Types of Finance Qualification Requirements
Each different type of finance has different qualification requirements. You can reach about each of them, here:
- Unsecured Loan Qualifying Requirements
- Merchant Cash Advance Qualifying Requirements
- Property Backed Loan Qualifying Requirements
- Invoice Discounting Qualifying Requirements
- Purchase Order Finance Qualifying Requirements
- Trade Finance Qualifying Requirements
- Vehicle Finance Qualifying Requirements
- Equipment Finance Qualifying Requirements
If You Don't Qualify
Your best bet if you don't qualify for a business loan will be to look at crowdfunding options, or potentially a personal loan.
Remember, for a personal loan you will likely be required to sign personal surety, which is very risky.
The Most Affordable Small Business Loans
The most affordable small business finance is one where there is a form of collateral used in the transaction.
The golden rule of SME business finance costing is that: The more risky the decision for the lender about whether your business is going to pay the loan back or not, the more expensive the loan is going to be.
That means, if you can offer any type of security in the transaction, it's going to make it much more affordable.
The cheapest type of small business finance is probably: A property-backed loan.
The most expensive type of small business finance is probably: A merchant cash advance.
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