As we’ve mentioned before, SMEs are the lifeblood of the South African economy – providing for over 60% of employment across the country. But it’s not easy being a small business and trying to grow when there are constant hurdles that you have to navigate around.
According to a recent report commissioned by The Small Enterprise Development Agency (Seda) one of the many challenges, and probably the biggest of all, is access to finances and credit.
The struggle has always been that traditional lenders are risk averse and the reality is that small businesses are a high risk. Because of their cautious attitude, when it comes to small businesses banks are unwilling to meet the demand for access to finances – even with evidence of a good track record on the part of the business. More so than this, fair finance isn’t always easy to come by. There are hidden costs, high-interest rates, increasing supplier rates and penalty fees involved across a lot of the financial services market.
There are plenty of challenges stacked against SMEs but this is often the start of a domino effect. The thing that most people forget is that many of the businesses across this sector not only positively affect our economy but they are often the only source of income for business owners and their employees. The stakes are high for them as individuals. It’s a brave move to start and run your own business and sometimes there is no other option. Either way, it takes resilience, the challenges are relentless and there is constant pressure.
As the FinTech space has opened up in the South African market it has provided businesses with alternative finance options in order to build their business. FinTech is confronting the issue of accessible financial options and is providing more alternatives that will undoubtedly play a significant role in the growth of this sector. These companies have come in swinging – challenging the status quo and differentiating themselves through a fairer finance approach. They recognise that SMEs don’t have the same advantages that large, established organisations have so they meet SMEs where they are at by understanding where they are coming from.
Here’s our list of some of the options you can turn to for fairer finance options as an SME:
Yoco:
We had a chance to hear from Yoco CEO, Katlego Maphai at a recent FinTech event in Cape Town. Not only is he a dynamic speaker but he’s built a company that is technology-driven and customer-centric. Merchants know that if you don’t accept card payments these days you’re losing out on business. Yoco’s mobile point of sale app and card acceptance solution is easy to use and doesn’t come with all those monthly rental and admin fees that traditional card machines come with.
These guys aren’t new to most people. They’ve done a stellar job at building a faithful following because they offer an easy mobile payment option for small businesses and consumers. Using your mobile device to scan a QR code you can make a quick transaction without ever reaching for your wallet or swiping your bank card.
If the tax return season fills you or your company with dread, you should look into TaxTim – a digital tax assistant who helps you to better understand tax requirements and based on answers to a few questions completes your tax return form instantly. They take the sting out of the tax process and make it manageable and a lot less intimidating.
Is a mobile and web app that helps individuals manage their finances all in one place. By linking all your bank accounts, store accounts, investments, and loans 22Seven helps you keeps track of your transactions and budget. It gives you an honest view about where you spend your money and helps you make the changes you need to save money. This app is not only great for the individual but for the small business owner to get a view of where and how their business is spending money.
PayFast is a payments processing service for South Africans and South African websites. With a strong focus on eCommerce, PayFast enables easy, secure and instant transfer for money from online buyers to sellers. They work with a number of eCommerce platforms to enable easy payment methods on their sites.
Jumo:
With most people in Africa having better access to a mobile device than to financial services Jumo facilitates access to finances through a mobile wallet. They help to present people, and small businesses, with great savings and borrowing choices from banks.
These guys make contactless payments and withdrawals possible via a GeoTeller. It’s an online, fast and easy way to deposit or withdraw cash and makes these transactions possible across borders. It’s one of the easiest ways to deposit, withdraw, send money or make a payment.
The challenge for many SMEs is getting credit from traditional lenders. Lula provides an online, automated application process for funding that is quick and easy. Based on unique scoring technology businesses can have access to funding within 24 hours of applying. With access online and the speed at which the funds are made available, Lula has established itself as South Africa’s only online small business lending platform and SA’s first dedicated SME banking platform.
More and more opportunities for funding, payment options, mobile wallets and tax assistance are becoming available to SMEs across South Africa and the continent of Africa. It is a huge leap for businesses that haven’t always had the opportunity to receive help through more traditional means. We hope to see more small businesses around the country and beyond grow and expand as a result of FinTech innovation making accessibility an opportunity.
