The report provides insights into the supply and demand for SMME funding, and profiles the SMMEs seeking finance; by geographic location, turnover, age of business, sector, job creation, financial need and amount of finance required. It also profiles the funders and finance products, and then looks at how the supply and demand compare.
Here are some highlights from their findings:
1. The report shows that the potential of the SMME market for funders is significant. The credit gap is estimated to be between R86bn to R346bn.
2. Startups and micro businesses are the most underserved in the formal business market, and represent the largest funding gap.
3. 44% of the SMMEs who requested funding were for amounts less than R250 000.
4. The top four reasons SMMEs requested funding in 2017 was startup capital, buying equipment, expanding businesses and working capital. Together they make up 62.4% of the total SMME funding requests.
5. SMMEs have poor knowledge of their business’ credit record, with 61% not knowing their businesses credit score, yet this remains the standard way that funders access their credit worthiness. There is a need for alternative credit scoring and risk assessment models.
6. Low human capital and a lack of skills are a barrier to accessing finance. Finance readiness is a challenge for SMMEs (i.e. not having financial statements and the other documentation required by funders to qualify for finance).
7. 86% of the funding requested on the Finfind platform was from micro businesses.
8. Medium size businesses represent 3% of the formal SMME sector but employ 39% of the employees.
9. The Finfind platform received R40.9 billion in funding requests in 2017.
10. The median size of funding requested by an SMME is R400 000.
11. The median size funding request from a micro business is R300 000, for a very small business it is R500 000, for a small business it is R1 million and for a medium size business it is R3.6 million.
12. The most common SMME funding product offer is a long-term loan.
13. The manufacturing sector has the most industry-specific funding products (43), followed by ICT/Technology and Agro-processing.
14. SMME lending has remained flat since 2008, but lending to large businesses has increased.
15. 73% of the loan amounts requested were for R1 million or less.
16. 66% of the funding products are products offered by the private sector, and the remaining 34% are government products.
17. 68% of the businesses that requested funding were owned by males, and 32% were owned by females.
18. 66% of the businesses were black-owned, 19% were white, 10% were coloured and 5% were Indian.
19. 21% of the businesses were owned by black women, and accounted for 66% of the total businesses owned by women.
20. 29% of the requests were for funding between R250 000 and R1 million.
For a copy of the report visit https://www.accesstofinancereport.co.za/