Posts tagged: funding

Business Loans

Business Loans


Business loans are a dime a dozen and for each varying type of finance available to small businesses, there are varying requirements as well. Many small businesses cannot see the light of day if not for financial assistance from a third party and fortunately due to the worldwide effort to boost job creation and encourage entrepreneurship, finance for small business ventures are readily available and accessible from various sources

Business Loan

Business Loan



As an up-and-coming business owner however, you will need to investigate your specific business requirements before making any kind of decision on finance. Think about the following:


  • What do you need to get your business going?
  • How much will this cost you?
  • What amount will you be able to cover in your own capacity?
  • Do you need a business loan for the full amount?
  • Does your workable budget allow for loan repayments? Remember to consider interest rates when working this out.


Once you’ve analysed your needs, you can then go on to consider the various options you have with regard to business loans. Your options will include bridging finance, asset finance, revolving credit, venture capital or a term loan.


How To Secure A Loan


Requirements for loans vary upon the type of loan you are requesting. Consider the following:


  • Venture capital: Requirements depend largely upon the investor in these instances. Most commonly, business owners are required to provide a good business plan, full financial projections and forecast as well as stakes that make the investment worthwhile. These will include things like shares in the business and profit percentage.
  • Term loan: A small business loan requires the presentation of a good business plan that outlines the nature of your business, how much funding you need, what you intend using the funding for as well as financial forecasts and projections. You will most likely be requested to provide some kind of collateral against the loan amount to act as security for the lender.
  • Revolving credit: This type of loan works by means of borrowing a certain amount of money and then having that same amount available to you once you’ve repaid the initial loan. Lenders in these instances most commonly ask for in depth financial statements, projections and evidence of cash flow on a regular basis.


When it comes to business finance, you should be prepared to fulfil basic requirements like having a business plan in place, clear credit record and good credit rating, collateral and the means to prove affordability. This can be achieved through presenting financial statements and performance records of your business, whether actual or projected.


Finding A Loan


You can get finance for your business from a bank, financial institution, venture capitalists, private lenders or government programs that encourage and support entrepreneurship.


Use online resources or networking to make contact with a provider you feel suits your business requirements best and then work from there. Consider things like repayment options and interest rates when making your decision. Keep in mind that business loans often seem like an uphill battle but if you have your ducks in a row, you could have your business running at full steam in no time.

SEFA – Small Enterprise Finance Agency

SEFA – Small Enterprise Finance Agency


SEFA – Small Enterprise Finance Agencyis a new funding option for aspiring business owners. An agency owned by the IDC or Industrial Development Corporation, the main focus of SEFA is to provide finance of up to R3-million to small businesses to boost job creation and further grow entrepreneurship in the country. It makes use of banks, financial institutions and direct lending to do this

Small Business Enterprise

Small Business Enterprise



An important feature that sets SEFA apart from other lenders is that it works to break the current pattern of big businesses in major contracts. It will work to include small businesses in this monopoly by giving them access to bigger contracts where their expertise can be used. This is a wonderful opportunity for small up-and-coming businesses to get a foot in and create a niche for themselves in a competitive market.


Ways in which SEFA – Small Enterprise Finance Agency aims to create a better footing for small businesses include the following:


  • Making access to much-needed funding easier to small businesses who have been denied this by bigger lending institutions due to certain risk factors
  • Giving them access to big contracts that were previously exclusively given to established businesses
  • Encouraging large firms to act as mentor to smaller businesses
  • Creating mutually beneficial partnership between big and small businesses with regard to inclusion in supply chains and the like
  • Focus on establishing entrepreneurship in sectors that require growth like mining, tourism, infrastructure support and green economy


Financing options offered by the agency include:


  • Bridging finance
  • Revolving loans
  • Asset finance
  • Working capital
  • Term loans


How To Secure Funding


The main service of SEFA will be to make business finance available to small businesses who have struggled to receive this funding elsewhere. The agency is willing to overlook certain risk factors in an effort to boost entrepreneurship and job creation. However, funding will not be haphazard or cheap.


For instance, interest rates will be calculated according to the risk factor presented by the business. On average, interest will be prime plus 3-5% and then adjusted depending on how risky the venture is. You will have to do the following to secure a loan:


  • Set up some time to meet with SEFA
  • Have a good business plan to present. Your business plan must outline what your business is, how much funding you will require and what you will be using that funding for. You must also include financial forecasts and projections so that the viability of your business can be properly analysed.
  • During your application process, SEFA will analyse your business proposal and decide whether your business can afford to repay the requested finance out of its cash flow over a specific time period.
  • The nature of your business will also play a great role in the application process because SEFA specifically wants to focus on smaller businesses that cater to gaps in the market. Your chances are therefore better with SEFA – Small Enterprise Finance Agency if you can prove that your business is providing a much-needed service or product in an under-developed sector.


Business Finance

Business Finance And Entrepreneurship


Business financeis no longer limited to funds procured from a bank or other financial institution. With the rise of entrepreneurship and the global response to encouraging growth in this area, there are now many other options available to those looking to start a small business. These options include the following

Business Finance

Business Finance



  • Venture capital: This is where investors and entrepreneurs come together for a common goal, namely profits. Venture capitalists make their money by investing in many different businesses. That is why this relationship will only work if you can prove the future profitability of your business to the investor.
  • Personal loan: Friends and family often form the crux of funding for small business ventures. These loans are great in that they usually have the lowest interest rates and best repayment options.
  • Small business loan: You can get a small business loan from a bank or government program focusing on growing entrepreneurship. You must have a good business plan, clear credit rating and most often some kind of collateral as well.
  • Credit cards: Business finance in smaller amounts can be dealt with by simply using your credit card. The plus side to this option is that you don’t have to jump through any hoops or make any kind of commitments. The negative side is that you will have to pay high interest rates in return.
  • Online funding: There are quite a few websites that connect investors and entrepreneurs. You register with the site and list your business idea along with other important information like financial forecasts. You will then be put into contact with relevant investors who are interested in helping you get your project off the ground.


The Beauty Of Investment Funding


Many people who are on the brink of starting their business are quite weary about opening up their company to outside investors. They tend to feel that they would be sharing something that should be entirely theirs and perhaps don’t want outside input to the way they do things.


Venture capital doesn’t have to work this way though as there are a few options for business owners considering this option:


  • You can offer part ownership of the business but have it limited to a specific time period. For instance, investors will be major stakeholders in your business for a period of no more than five years during which they will benefit from equity and profits. Once this period closes, they will withdraw from the company and you will not owe them anything.
  • Some business owners approach venture capitalists with a booming business idea that they both work to bring to fruition as quickly as possible. The success story is then sold off and the investor ends up making exponentially more than any stakeholder agreement would have made him. You then take your cut from the sale and move on to grow the business you really want.

Business finance doesn’t have to be a heavy shadow over your dreams of business success if you simply take time to properly investigate your options.