Finding Funding For Your Business

Author:

on behalf of Creative Minds®

Hansie Britz.

Libra Small Business Consultants.

P.O. Box 804 Lonehill 2062.

Mobile: 084 583 3143

e-mail: hbritz@global.co.za

As a franchisee, you are at an advantage when it comes to funding. Investors recognize that franchising presents a lower risk than independent business ventures. Reputable franchisors have tested and fine-tuned their business before franchising it, which reduces the risk of lending to a new business owner.

The bank is a lending institution and not an Investor in the business. Investors take risks and are compensated by profit sharing, whereas the banker receives a negotiated rate for making the funds available. This is the reason why security is taken for loans. An Investor may be directly involved in the day-to-day running of the business, thus being aware of all facets of the operation. A banker, on the other hand, sees only how the banking account is conducted and unless informed of what is happening in the business, has little other information. Once a contact is established with the bank, it makes good business sense to keep the bank informed of developments in the business, as this may have an impact on future needs.

What banks look for in a franchisee:

  • Are you in the full-time employment of the business?
  • Do you have the necessary skills to run the business?
  • Do you have a stable and reliable background?
  • Does the franchisor offer training?
  • What is the net value of your personal assets, as a percentage of the total amount of a loan sought?
  • Ability to repay the loan over a certain period at a certain interest rate.
  • What is your age at present? Do you have a succession plan for your business in the event of your retirement, ill health or death?
  • The amount of cash (own contribution) you plan to invest?

Ask yourself: Who is most likely to give me the finance that I need? Then design your proposal to meet your target audience’s expectations. Convincing a banker that you would handle a loan responsibly requires a different approach to attract the interest of other possible investors.

WHERE TO GET FINANCE?

We are recognised by most major South African banks.

The following are other funding institutions available to you.

Start with http://www.seda.org.za/ContactUs/Pages/NationalOffice.aspx

Applying for finance from SEFA (Small Enterprise Finance Agency)

The Small Enterprise Finance Agency (SOC) Ltd (sefa) is a merger of the South African Micro-Finance Apex Fund (samaf), Khula Enterprise Finance and IDC (Industrial Development Corporation)’s small business activities.

sefa was launched in April 2012 as a fully-owned subsidiary of the Industrial Development Corporation (IDC).

The vision of sefa is to be the leading catalyst for the development of sustainable Survivalist, Micro, Small and Medium enterprises through the provision of finance.

Products and Services

Retail Products

  • Working Capital
  • Asset Finance
  • Term Loan
  • Revolving Loan
  • Bridging Loan

Wholesale Products

  • Wholesale Microfinance Business Loan
  • Wholesale SME Business Loan
  • Credit Indemnity Scheme
  • Business Support
  • Land Reform Empowerment Facility

We believe that if you are still under 35 you can apply to the Youth Development Fund.

Also speak to the Dept. of Small Business about one of the many women’s development funds if you are a female.

Another very good option is to try:

  • Black Business Supplier Development Program: http://www.investmentincentives.co.za/enhancement-competitiveness/black-business-supplier-development-programme
    • 50% grant for the cost of approved tools, machinery and equipment to a maximum of R800,000; and 80% grant for approved training and business development services to a maximum of R200 000. How you structure it will depend on your needs.
    • You can try to use the 80% grant for R200 000 for paying for the computer, train the trainer and business training we provide. You can use the 50% grant to buy furnishings, dekor, advertising boards and signage and computers.

We are on the national supplier database and you should qualify as a black-business-supplier of Mict SETA Accredited PC training at the least. Also show them the slides of the Re-ignite the rural Education and Economy-Marius Lubbe-8 March17.pdf (Available from us at info@minds.co.za) which will show them the future. Minister Naledi Pandor spoke about that exact subject recently in an ANC congress feedback.