When you are running a business, the most important resource you can get is funding. Funding for small businesses is important because it helps them keep running, provide employment and ensure they are scalable. But with that, business owners find many question about the topic, and therefore we have gathered the frequently asked funding questions.
Funding is money given to a business by the government, an individual or an organisation for a business. The money is usually granted for a specific reason such as equipment, growth, or equipment.
Small to medium-sized enterprises (SMEs) can get funding from the government in the form of grants. Additionally, you can get funding from individuals or companies in exchange for shares in your company.
In this article, we look at some of the frequently asked funding questions, and give you the answers you need.
Can You Get Funding If You Are Blacklisted?
Yes, most lenders will still give you funding if you are blacklisted. You will need to show that you can redeem your debt by making arrangements with the people you owe money to.
Can I Get Funding If I Have No Collateral?
Yes, some lenders and government organisations such as the Small Enterprise Finance Agency (Sefa), will give you funding without collateral. They will look at your financial history, and if it showcases that you pay back any loans or accounts, funding will be granted.
Can I Still Apply for Funding If I am Under Debt Review?
Being under debt review means you are unable to meet your debt obligations. In this case, you will not be approved for funding because by law you cannot enter into any credit agreements.
Do You Need Good Credit To Get Purchase Order Funding?
With purchase order funding, the money is paid out to you so you can fulfil the order (usually a tender). Your loan is secured by the value of a valid, successful purchase order. The lender will consider your credit history just to ensure that you are not a high-risk loanee.
What Are The Advantages of Getting an Unsecured Loan?
Unsecured loans do not require you to have collateral so your assets are not tied to the loan deal. This is ideal for small businesses and startups who do not have many assets. Unsecured loans have a quick approval rate, so your money will get to you quickly.
Fast & Flexible Business Financing
How Does Revolving Credit Work? And Is It Good For Small Businesses?
Revolving credit is an amount of money you can use, and you only pay back what you have used. A popular form of revolving credit is credit cards. You can get business credit cards from all the traditional banks in South Africa.
What Is An Inventory Loan? And How Can Small Businesses Use It?
Inventory loans are used by businesses to buy mainly stock and are most common in product-based industries. Small businesses use inventory loans for:
- Cover short-term shortages such as cash or stock.
- To buy more stock for occurrences such as ‘Black Friday’ and Christmas.
- To expand their product offering(s)
These are just a few examples of how you can use inventory loans to benefit your business.
What Is The Difference Between Equity Funding and Debt Funding?
Equity funding is when a financer gives you money in exchange for shares in your business. Debt funding is when you get a loan and it’s paid back with interest over the investment. These types of funding are usually done by a government agency such as the National Empowerment Fund (NEF). However, you can get debt funding from private organisations, private lenders or friends and family.
How Long Does It Take To Get A Business Loan?
The time it takes to get your loan depends on the institution you applied to. Some lenders will pay out the money within 48 hours (usually for unsecured loans), while others will take up to 2-3 days. Of course, your loan being approved depends on factors such as your credit and having the correct documentation.
Where Can I Apply To Get Funding From The Government?
There are many government-based institutions where you can get funding. Some financial lending platforms include the Industrial Development Corporation (IDC), Small Enterprise Finance Agency (Sefa), Small Enterprise Development Agency (SEDA), NEF, National Youth Development Agency (NYDA), and the Technology Innovation Agency (TIA).
For more information on funding, read our Guide to Government Funding for Small Businesses. If you have more frequently asked funding questions that you would like answered, add them on our Forum.
