The local lendscape is growing and South Africa is becoming a real player in the sector. This is a result of leveraging tech and data which is not only improving financial accessibility but is also building more solutions for SMEs across the sector at large.
A long-standing challenge for many of the 2.5 million SMEs in South Africa, is access to funding. In fact, traditional funding is reported to be the most difficult source of funding to secure. The sector has been dominated by traditional banking institutions and the process has been full of friction: from long waiting periods to excessive paperwork and strict lending criteria. Fortunately, the industry is changing and working capital is now accessible from non-banks.
Forward-thinking Fintech providers are using data and technology to build detailed customer profiles so they can make better credit decisions and manage their risk better. This data also alleviates the need for high volumes of paperwork which is streamlining the process. Further to this, they offer swift timelines with some lenders like Merchant Capital, providing working capital in under 48 hours. Best of all, they offer repay-as-you-trade repayment terms so repayments work directly in line with turnover. Meaning that when business is slow, repayments are smaller, and when business is up, repayments increase. This makes it far more manageable for business owners so they can use funding strategically to grow their businesses rather than simply plug holes.
The South African lending sector has morphed dramatically in recent years. Gone are the days when SMEs had to scrounge around for working capital and wait for months on end for approvals. The alternative finance sector has totally disrupted this market with solutions tailor-made for the retail sector. For more information on how Merchant Capital can fund your SME’s ambitious growth, contact us today.