Sefa’s blended funding gives a lifeline to start-ups

Johannesburg – The Small Enterprise Finance Agency (Sefa) is gearing itself towards supporting start-ups with its blended finance programme that offers a combination of a grant and a loan to small businesses.

Sefa CEO Mxolisi Matshamba is well-positioned to fuel economic growth and job creation in SA by offering accessible, affordable development finance in the form of a loan, credit facilities and loan guarantees to SMMEs (small, medium and micro enterprises) and cooperative enterprises.

We are also introducing creative new ways to extend finance

“In addition to giving a financial lifeline to thousands of small businesses across the country, we are also introducing creative new ways to extend finance. For instance, over this past financial year, Sefa introduced new products such as the blended finance programme and small business innovation fund,” said Matshamba.

The entity approved loans to the value of R1.4-billion in the 2019/2020 financial year, providing financial assistance to more than 70 000 small businesses.

The figures are contained in Sefa’s annual report for 2019/2020.

The report also notes that the loan book activity is a 99% increase on the previous financial year (R703-million) and saw more than 87 000 jobs being facilitated.

Small Business Development Minister Khumbudzo Ntshavheni said small businesses, if they are sufficiently supported, can drive the country’s economic recovery because they tend to be resilient and adapt easily to change.

Minister Khumbudzo Ntshavheni, PICTURE: GCIS

“To stimulate economic recovery as a result of the COVID-19 pandemic for the SMME sector, the department, through Sefa, will introduce various SME [small and medium enterprise] and informal and micro enterprise programmes to the value of R1.23-billion for economic recovery and R776-million for COVID-19 response. The programmes will comprise debt relief, credit guarantees and other instruments to address different funding constraints,” she said.

Raizcorp’s head of sales, Dylan Baxter, said loan funding is not always the answer for SMMEs.

“There’s a perception among some corporates that giving small businesses money will make their problems go away. Certainly, the money can be used to pay overheads such as salaries, but it can only go so far. Loans and grants have their place but, if done without due diligence, could land the SMME in a deeper hole.”

Dylan Baxterof Raizcorp.

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