South African entrepreneurs know: it’s always the same old story… You need money to grow your business, because there is a growth opportunity. But your cash flow is preventing you from leveraging this chance. So, you turn to lenders to access funding, yet, according to them, your financial statements don’t prove that you are able to repay the loan. In the end, you don’t grow, keeping you in the same cycle. That’s, unless you have something on your side that can take your business’s data and use it to gain accurate insight into its fundability.
What is that something, you may ask? It’s data science.
This field of science uses many methods to look at data and turn it into actionable insights and knowledge. In the context of funding, it takes your business information and allows a data scientist to extract meaning from it.
“Traditional lending models rely heavily on financial statements, collateral and lengthy manual processes. For many SMEs, that information is either incomplete or doesn’t accurately reflect how the business is performing today,” says Daniel Goldberg, founder and CEO of Bridgement, an alternative lender that uses data science to gain better insights into SMEs. He explains how this discipline helps businesses get funded by empowering funders to make informed decisions.
“Data science allows funders to analyse a broader and more real-time picture of a business. By securely analysing operational and financial data from sources such as bank transactions, accounting platforms and payment systems, we’ve built a much more dynamic view of a company’s health and performance,” he shares. “This allows us to assess affordability and risk far more quickly and accurately, which ultimately enables faster decisions and more accessible funding for SMEs.
The Key that Entrepreneurs Miss
Goldberg mentions that it is easy for entrepreneurs to miss how important it is to keep accurate and up-to-date information that is later used when applying for funding.
“Many entrepreneurs don’t realise how valuable their operational and financial data can be in helping them access funding. When lenders analyse data such as transaction history, revenue trends or payment patterns, they are trying to understand the stability and performance of the business. This data often provides a far more accurate picture than static documents like annual financial statements,” Goldberg explains. “For SMEs, maintaining clean, organised and transparent financial data can significantly improve their ability to access funding. In many ways, good data hygiene has become as important as having a strong business idea.
However, he remembers to mention that SMEs who are concerned about free access to their data don’t have to worry about it. “It’s also important to understand that responsible lenders only access data with the business owner’s permission and use it specifically to assess affordability and risk.” These entrepreneurs, therefore, don’t need to stress about how their information is used.
Goldberg continues to unpack the biggest mistakes that SMEs make when it comes to understanding funding, funding readiness, and submitting applications. “One of the biggest challenges is that many SMEs only think about funding when they urgently need it. At that point, it becomes much harder to present a strong funding application.”
Drawing on the example at the start of this article, SMEs should ensure records are in order, and their chances for funding are improved long before a potential growth opportunity that requires capital arises.
“Another common mistake is not maintaining accurate and up-to-date financial records. Lenders need to understand how a business generates revenue, manages expenses and handles cash flow. When financial data is incomplete or inconsistent, it creates uncertainty and increases perceived risk.
“Lastly, many entrepreneurs underestimate the importance of cash flow management. Even profitable businesses can struggle if cash flow is poorly managed. Understanding how funding fits into the broader financial strategy of the business is critical.”
He notes that funding works best when it is used strategically to support growth, manage working capital or unlock opportunities, rather than simply responding to short-term financial pressure.
Addressing the Dreaded ‘Application Denied’ Message
Where it feels like applications are always denied, SMEs shouldn’t be blinded by the disappointment. Instead, they should try to understand why. “Often, the issue relates to credit profiles, cash flow consistency, affordability or incomplete financial information rather than the viability of the business itself,” he says. “But improving financial visibility can make a big difference. Keeping accurate records, using accounting software and maintaining clear transaction histories all help lenders better understand the business.”
Additionally, if the “no” doesn’t stop a business from obtaining funding, the cost of repayment often does. “Business owners should carefully consider the purpose of funding. If capital is being used to generate growth, unlock revenue opportunities or improve cash flow efficiency, the cost of funding can often be justified by the return it enables.
“Finally, entrepreneurs should view funding as part of a broader financial strategy rather than a last resort. Planning ahead and building a relationship with a funder early can significantly improve both access to capital and the terms offered.”
Insight into Bridgement’s Data Science Approach
“Traditional funding models were designed decades ago and often require extensive documentation, manual underwriting and long turnaround times. That process tends to favour larger or more established businesses with formal financial records and collateral.
That is why a simpler, digital process is needed.
According to Goldber, Bridgement has greatly simplified how SMEs can share their financial data and apply for funding, by simply connecting their Accounting software or bank feeds. “To date, Bridgement is the only SME credit provider in South Africa to be integrated into all three of the top cloud accounting packages (Xero, Sage, and QuickBooks),” he proudly points out.
“By using data science and AI-powered technology, we are able to assess businesses using real performance data rather than static documents. This allows us to make decisions faster and provide funding in a way that is far more aligned with how modern SMEs actually operate.
“It also means we can serve younger businesses or businesses that might not fit traditional lending models, while still maintaining strong risk management. The result is a funding process that is faster, more flexible and better suited to the realities of running an SME.”
He also notes that it was important to him and his team to create an innovative repayment structure that fits the cash flows of a business and improves affordability. “Businesses can repay funding with daily, weekly, fortnightly or monthly instalments that match their revenue pattern,” he concludes.
