For The People

Small businesses encouraged to continue applying for funding

In an attempt to address and get answers to the many questions regarding funding from developmental finance institutions (DFI’s) which are aimed at assisting small businesses with their start-up and other financial needs, Motheo Seleke from the Renewable Entrepreneurs Forum of South Africa hosted a session with the purpose of engaging said institutions on the many challenges small businesses face as set out to make their businesses work.

“We are sent from pillar to post all the time, and when we go from pillar to post, it does not help because they just send us right back to the start of the cycle all over again. When we are not successful in receiving funding after doing all the applications, we are also not made aware as to why or where we fell short,” lamented Seleke in the session.
Representing the various DFI’s were; Hope Jabbie – SEFA (Schedule of Expenditure of Federal Awards), Kgatliso Manake – NEF (National Empowerment Fund) and Mehmood Ahmed – IDC (Industrial Development Corporation of South Africa).

According to Ahmed, the problem lies in the fact that 1) they do not receive applications for funding and 2) of the few applications they do receive, they are sub-standard and very often not in line with what the DFI’s actually fund, “Of the few applications we receive, majority of them are weak. The applicants therefore get denied and then lose their morale and don’t end up coming back. In order to be in business you need to have resilience and be able to come back after you fall,” Ahmed stated. Seconding Ahmed’s explanation, Jabbie explained that very often, small business owners applying for funding don’t understand the type of funding and assistance on offer, “Within SEFA, we are even struggling to meet our targets. Clients are funded when they meet the criteria needed to be favourable. We have realised that one of the major problems is that people don’t understand the mandate as to the type of businesses we can fund. If we assist businesses that do not meet the criteria, we will also end up being interrogated by our superiors. My advice is to take this up with the Department of Small Businesses and talk to them”.

Jabbie continued to give a detailed explanation of how the applications they receive are lacking, stating that very often entrepreneurs come with two sets of financial statements, the one given to SARS and the real one, “Business plans need to be clear. Good, and emphasis on good feasibility studies need to be done as that is one of the main documents needed for the funding application. For existing businesses, we need month to month financial breakdowns in order to be considered and for start-ups, we need sound and realistic cash-flow projections. For existing companies, financial statements are incredibly important. We then find entrepreneurs coming with financial statements that they submit to SARS instead of the real statements, this then greatly contradicts their cash flow projections. The main aim at the end of the day, when it comes to funding is to see that your business is viable because we cannot go ahead and fund recklessly”.

Entrepreneurs are encouraged to do thorough homework on the businesses they plan to start and to continue applying for funding, to not give up the first time that they don’t receive funding and to continue communicating with institutions like DFI’s to assist in receiving the support that they need. Entrepreneurs need to ensure that they are well informed on the criteria necessary so as to increase their chances of success.

Comments are closed, but trackbacks and pingbacks are open.