Getting funding from private lenders is not always easy for small businesses. To better help them, the South African government has developed various funding institutions. One of those funding organisations is the Industrial Development Corporation (IDC).
The IDC was established in 1940 and is fully owned by the government. The organisation seeks to maximise development impact, contribute to an inclusive economy and fund black-owned enterprises. The IDC also has a strong focus on women and youth-owned enterprises.
If you need funding for your business, the IDC is a great place to start. The organisation has a wide range of funding solutions for various industries. If your business is viable, the IDC will provide you with the funding you need.
In this article, we look at the different types of funding from the IDC and how you can apply for them.
IDC Funding Categories
The IDC has four funding categories on its website. The categories are as follows:
Industry Sector Funding: This category contains the funding solutions which are sector-specific. Some of the categories include agriculture, automotive and transport, energy, infrastructure, and mining amongst others.
Tailored Funding Products: This category includes funding products designed for specific needs. The solutions range from green energy, green tourism, junior mining and SME funding amongst others.
Crisis Funding: This category is dedicated to funding solutions which are designed to help applicants get past challenges. The funding solutions include flood relief and business recovery.
Energy Funding: This funding solution aims to help businesses which are being affected by load shedding. The category features the ESCO energy fund and the township energy fund.
Now that you know the categories, we can look at the different funding solutions in each category. This will help you see which IDC funding solution works best for you.
IDC Funding Solutions
Industry Sector Funding
Agro-processing and Agriculture: The aim of the IDC is to develop a competitive industry in the food, beverage, forestry and agro-derivative sectors.
Automotive and Transport Equipment: This IDC business unit seeks to ensure domestic and global competitiveness in the manufacturing of automotive, transport equipment and related components industry.
Chemicals, Medical and Industrial Mineral Products: This funding solution supports entrepreneurship, industrial development and strategic partnerships within the above-mentioned sectors.
Energy: The IDC focuses on providing funding to viable energy projects which boost the country’s energy supply security without adversely impacting the environment.
Infrastructure: This funding solution enables infrastructure organisations to pursue growth opportunities in water and sanitation, telecommunications, logistics and transport. Its funding instruments include debt and equity.
Machinery, Equipment and Electronics: The IDC offers finance and technical assistance to manufacturers with the aim of making them competitive and diversifying the local machinery and capital equipment industry.
Media and Audio-Visual: This IDC funding solution aims to ensure that local filmmakers and producers are able to create content and films which are commercially viable.
Mining and Metals: The IDC aims to support enterprises with funding, so they grow capacity for the manufacturing of critical metal products in South Africa.
Textiles and Wood Products: The IDC aims to build a local and regional competitive industry through its strategic partnerships. The IDC also promotes entrepreneurship and social and industrial development through this fund.
Tourism and Services: The IDC aims to drive sustainable development and growth within this sub-sector. The organisation also aims to facilitate job creation in the local economy.
Tailored Funding Solutions
The IDC’s tailored funding solutions are as follows:
AFD Green Energy Fund: To provide finance to renewable energy and energy efficiency projects. These projects must be of a smaller scale and manufacture green products in South Africa.
Agri-industrial Fund: This fund aims to grow competitive and economically viable activities within the agro-processing sector(s). This is done by developing local and regional resources to supply the domestic demand and increase international trade deals.
Credit Line Offering to Non-banking Intermediaries: To expand the funding reach to SMEs which are black-owned and any small businesses facing challenges.
DSCIF: To develop struggling steel industry enterprises through an interest subsidy that offers discounts to qualifying clients.
Furniture Industry Challenge Fund: To improve the competitiveness and growth of enterprises within the furniture industry.
Green Tourism Incentive Programme: To encourage privately-owned tourism businesses to utilise cleaner and renewable energy sources.
Gro-E Youth Scheme: To develop youth-owned businesses and create employment opportunities.
Junior Mining: To increase the participation of black junior miners by assisting qualifying enterprises in the mining industry with prospecting.
Khoebo Innovation Promotion Programme: To offer funding and development support to SMEs during the early stages of commercialisation.
MCEP: To help manufacturing businesses with working capital.
SME Connect: To grow and deepen the industrial development within the small industrial business sub-sector.
SME and MIDCAP Companies: To help SME and MIDCAP companies access concessionary loan financing for CAPEX and medium to long-term working capital.
Social Employment Fund: To support any employment opportunities and create growth and renewal opportunities.
UIF II: To contribute to sustainable job creation and retention. This is done by supporting job creation transactions while providing concessionary funding.
Innovation Fund: The fund focuses on initiatives that open new opportunities for young people in South Africa.
Crisis Funding
The IDC crisis funding solutions are as follows:
Unrest Business Recovery Fund: This IDC fund has over R1,5 billion in financing aimed at supporting the economy and communities in distress.
Flood Relief Fund: Aimed at helping those who need recovery and rebuilding following the National State of Disaster declared by the President in April 2022.
Energy Funding
The IDC’s energy fund solutions are as follows:
ESCO Energy Solutions: To provide concessionary funding to energy services companies (ESCO). This aims to enable them to provide financed energy solutions to SMEs.
Township Energy Fund: To provide funding to partners who can then give energy solutions to small businesses within townships.
Note: Applications for the township energy fund closed on the 15th of November 2023.
This is a summary of all the funding solutions available through the IDC. You can pick from the list the one that best suits your business and apply.
How To Apply For IDC Funding
The application process for the IDC can be outlined in 5 steps. The steps are as follows:
Step 1: Find the Right Funding
Review the above-mentioned funding solutions and pick which ones are suited for your business.
Step 2: Get All Documents in Order
Once you have identified the funding solution for you, you will need to apply with the following documents:
- Company registration documents.
- Contact details (address, telephone and e-mail etc).
- Company financial statements (funding breakdown and owner contribution).
- Funding information (include industry, funding required, project type etc).
- Comprehensive market overview (product, distribution plan, market analysis etc).
- Management overview (members of the management team).
- Comprehensive executive summary (nature of business, market information and funding required).
- Technical information (business space, equipment required, raw materials, suppliers etc).
- Additional documents (business plan, latest quotations, shareholder IDs, financial statements, management accounts, and 3–5-year financial projections/ budgets).
Step 3: Register With the IDC and Submit Application
Before you submit your application with the correct documents, you need to register on the IDC application portal. Once you have registered, attached all documents and submitted your application, the IDC will let you know once it has received it.
Note: Depending on your chosen funding solution, the IDC may ask you for additional information and documents.
Step 4: Approval Process
If your application is approved, the IDC will inform you in writing and if your application is approved, a process of due diligence will be conducted on your business. If all is in order, you will sign your loan contract, and the funds will be sent to you.
Note: You can also submit your application to any IDC office. If you need to contact the IDC, you can call 0800 303 336 or send an e-mail to idc@tip-offs.com or send an SMS to 39640.
Now that you know what funding is available through the IDC and what you need to apply, you can get started. Find the right funding solution for your business and get the financing you need to grow your business.
