SME INSIGHTS: Why More Business Owners Are Skipping the Bank (and What They’re Doing Instead)

Banks were once the first port of call for business finance. But times have changed, and so have your needs as a business owner. Today, more SMEs are turning away from traditional bank loans and looking for a smarter, faster, more flexible way to access a cash advance.

This shift is a response to real-world challenges and frustrations around traditional banking and business loans that many entrepreneurs face every day. Here’s why more business owners are skipping the bank, and what they’re choosing instead.

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Skip ahead. Discover Alternative Business Financing for SMEs.

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Why Traditional Banks Are No Longer the Default for SME Lending

According to a McKinsey study, small to medium enterprises (SMEs) make up around 98.5% of all businesses in South Africa. Micro and small businesses are an essential part of the country’s economy, yet traditionally they have really struggled to access the funds they need to grow and thrive.

In fact, according to a 2018 survey by SME South Africa, only six percent of SMEs report that they received government funding and nine percent that they obtained finance from private sources. Where does that leave the rest of us?

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While traditional bank loans may still dominate the conversation around business finance, for many entrepreneurs, they’re no longer the obvious choice.

The reasons why SMEs are moving away from traditional bank loans are not new or novel. Rather, they are exactly what we all experience when dealing with our banks:

• Long queues
• Arduous paperwork
• Outdated processes
• You’re just a number
• Over-the-top (often surprise) fees

Essentially, banks only offer a one-size-fits-all loan criteria that protects the bank’s interests and doesn’t reflect the reality of running a modern business.

When opportunities come, or cash flow gets tight, you can’t wait for a bank to decide if you tick all the right boxes before you get funds.

You need a faster, more responsive solution.

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The Rise of Alternative Business Finance in South Africa

That’s where alternative business finance comes in. Instead of dealing with the slow and unforgiving world of traditional lending, more business owners prefer the personalised approach offered by alternative business lenders like Merchant Capital.

We understand that your business doesn’t operate in a vacuum. Revenue fluctuates. Markets shift. You need a funding partner who moves with you, not against you. Our flexible funding solutions are built specifically with SMEs in mind, helping you access working capital quickly and repay it in a way that matches your cash flow.

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Can you afford to borrow business funds? Find out here.

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Why Flexible Funding Makes More Sense for Your Business

Let’s talk about what really matters: control, speed, and flexibility. Our funding solutions are tailored to your business needs, whether you’re launching a new product, expanding your team, managing stock, or bridging a seasonal dip.

What you can expect from Merchant Capital’s personalised finance for SMEs:

• Access funding in as little as 48 hours
• Repay at a pace that fits your cash flow
• Get personalised support from a real person, not a chatbot
• Focus on growing your business

That’s what alternative business finance should look like. And that’s what we deliver.

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‍Any questions? Find quick answers here.

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Industries That Use Alternative Business Lenders (and Why)

We’ve helped thousands of businesses across South Africa access the funding they need to grow. Our clients span a wide range of industries, from retail and restaurants to healthcare, manufacturing, and professional services.

• Retailers use our funding to manage stock ahead of busy trading periods
• Medical practices lean on us to buy equipment or hire staff when patient loads increase
• Restaurants turn to us for renovations, new menus, or weathering the seasonal ups and downs
• Sales and distribution companies rely on our fast approvals to bridge the gap between contracts
• Professional services firms use our working capital to invest in tech, training, and talent

Whatever your industry, our funding solutions are designed to meet the real-world needs of SMEs that banks too often overlook.

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Why You Can Trust Merchant Capital

We get it. Your business is your business. So, when you choose an alternative lender, you need a funding partner that understands small business. That’s us. We’ve built our entire business around supporting you.

We’ve funded over R10 billion in working capital to more than 30,000 South African SMEs. We’re proud winners of the Best Alternative Lender award at the African FinTech Awards and have been recognised for innovation and customer excellence by global fintech platforms.

Behind our technology is a team of experienced funding specialists who take the time to understand your goals.

• We don’t do one-size-fits-all funding.
• We listen.
• We assess.
• We tailor.
• And we walk the journey with you.

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Partner with the best to fund your business: Merchant capital named as best small business funder in international fintech awards.

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See If an Alternative Business Loan is Right for You

If you’re tired of long bank queues, rigid terms, and slow approvals, it might be time to consider a better option. With Merchant Capital, you get fast, flexible funding that works the way your business works.

Try Merchant Capital today.

You deal with real people. You get real answers. And you access funding that’s designed for real businesses just like yours.

We can call you back, or you can apply right away.

Let’s grow your business, together.

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FAQs

Why don't banks lend to small businesses?

‍Traditional banks tend to view small businesses as higher risk, especially if you don’t have years of trading history, perfect credit, or significant collateral. Their rigid lending criteria often overlook the realities of how small businesses operate today. That’s why many SMEs prefer safe, alternative lending partners like Merchant Capital.

What are 5 reasons a bank may not lend money?

‍Banks may reject a loan application if your business has insufficient credit history, inconsistent cash flow, limited collateral, a poor credit score, or if you're in an industry they deem high risk. They typically rely on rigid formulas and legacy systems that don’t account for the real-world potential of growing SMEs. We take a more holistic view to help you access the capital you need to grow your business.

What is the relationship between banks and businesses?

‍Banks provide a range of financial services to businesses, including accounts, loans, and merchant services, but often with strict conditions. While many businesses start with traditional banks, more are now choosing alternative lenders like Merchant Capital for faster access, personalised service, and flexible repayment options. The relationship is shifting as businesses look for finance partners who actually understand how they operate.

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