UPDATE: This article was originally published in May 2015, but due to its popularity it’s been updated on 25 October 2021.
The National Youth Development Agency (NYDA) business funding last year changed its youth enterprise funding model from a fixed interest loan structure to that of a micro-finance grant provision system.
The agency partnered with the Industrial Development Corporation (IDC) and the Small Enterprise Finance Agency to provide funding and support to youth-owned businesses for a five-year period.
The R2.7 million grants programme offers qualifying businesses both financial and non-financial support to youth entrepreneurs (between ages 18 and 35), which unlike a loan does not have to be paid back.
We unpack what is this NYDA business funding programme and how you can benefit from it.
What is NYDA grant programme?
The grant programme aims to benefit a total of 500 South African youth-owned enterprises with financing and give thousands of more access to non-financial business support services.
Financial support starts from R1000 and goes up to R100 000. The financial assistance from the grant can be used for working capital, financing the assets and purchasing stock. By June this year, over R200-million had been disbursed to businesses owned by young people.
How can the NYDA assist you?
The NYDA grant programme focuses on youth entrepreneurs who are intentional, promising and currently at a new stage of development.
The NYDA offers non-financial support to businesses that qualify. The support includes mentorship, business consultancy services, market linkages and business management training programmes among others.
How does it work?
The grants programme is made up of two categories, financial and non-financial business support services under which entrepreneurs have to be committed for two years.
Under non-financial business support services, entrepreneurs will benefit from programmes ranging from mentorship, market linkages, voucher programmes, entrepreneurship and youth cooperative development programmes, and also other necessary business support systems.
Young people interested in accessing the grant programme will have to commit to participating in the NYDA mentorship and voucher programme for a minimum of 2 years.
“The focus of the programme is youth entrepreneurs who show potential but are still in need of financial assistance and support”
The grants programme has also reduced the lead time for any businesses to receive a response (whether favourable or not) to 21 days.
Levels of grants
There are three levels of grants, each focusing on different types of youth enterprises including:
1. Formal and informal businesses grants are issued to individuals who are at the promising and start-up phase of their development or development stage.
2. Individuals benefit from the grant programme when they come together and form co-operatives with a minimum of 5 persons, to meet their common economic and social needs.
3. The grants programme facilitates a process of community development through identifying projects that are funded through NYDA funds and/or funds sourced from partners.
The focus of the programme is youth entrepreneurs who show potential but are still in need of financial assistance and support. The applicants must have necessary skills and experience or a potential skill appropriate for the enterprise that they conduct or intend to conduct.
“The business must have a profit motive, be commercially viable and sustainable”
The types of businesses assisted through the grant programme are mainly: artisan skilled entrepreneurs. These include, but are not limited to, motormechanics and panel beaters, electricians, plumbers, domestic appliance repair services, beauticians, hair dressers, cleaning companies, small scale recycling companies, street vendors, car washes and others.
Entrepreneurs must be involved in the day-to-day operation and management of the business. Businesses must operate either informally or formally – that is generally recognised as micro-enterprises, for example, street traders, vendors, emerging enterprises. The business must have a profit motive, be commercially viable and sustainable.
There are three thresholds by which businesses are measured. These are a survivalist business, start-up and growth business.
For a survivalist business, a grant of R1,000 – R10,000 is given. Start-ups receive between R10 001 and R50 000. And for the growth of business, a grant of R50 001 to R100 000 is dispatched.
The application process for the NYDA grant includes:
- You must apply before the age of 35.
- Submit all required documents.
- Proof that you have attended a business management course.
- A 10-minutes business pitch can be conducted telephonically or in person.
- A due diligence report will be conducted by an NYDA official.
You can contact the NYDA call centre on 0800 52 52 52, visit your local branch or download an application form on their website here.
Who is excluded?
There are business activities that the NYDA grant programme, for moral reasons, does not support. These include tobacco, gambling and alcohol as primary income generators, and pyramid sales schemes.
There are terms and conditions that must be met, including due diligence, before the grant is approved.
The grant funding cannot be used for the following:
– To pay a bribe.
– To pay back existing loans your business has.
– Any material purpose not contained in the application for a grant or defined during the due diligence stage and detailed in the approved Terms & Conditions unless written approval has been granted by NYDA.
The grant funding will not provide for:
– The financing of vehicles.
– To resolve arrears or outstanding South African Revenue Service (SARS) liabilities, whether it is current or non-current.
– Individuals who have already benefited from another Development Finance Institution to an amount above R500,000.
– People who have been convicted of fraud will not be considered for this grant.
Source: NYDA website