A Guide to SEDA Funding

Sep 19, 2022

Overview

Capital is a requirement for most new businesses whether it’s needed to acquire stock and equipment, or pay salaries and rent. While there are many avenues available to small businesses looking to secure funding – including traditional lenders such as banks or private investment firms – most business owners’ first port of call when seeking financial support is the government. This is because the government is tasked with providing development funding to entrepreneurs.

One of the government agencies mandated to support and drive the growth of small businesses is the Small Enterprise Development Agency (SEDA) which is an agency of the Department of Small Business Development which provides funding and non-financial support to small enterprises and cooperatives.

Specifically, the agency has the mandate to “implement the national government’s small business strategy, design and implement a standard and common national delivery network”. Additionally, it’s responsible for integrating “all government funded small enterprise support agencies across all tiers of government”.

Of all the government agencies focused on small business development, SEDA has the biggest network of offices with 42 branches nationally and branches in each district municipality. The agency also has a presence in some townships and rural areas.

Additionally, SEDA also supports technology incubation centres across the country. The total number currently exceeds 100 hubs with a focus on the digital space and digital incubators. The hubs provide various programmes and interventions which include training and mentorship programmes.

Key Programmes

SEDA has a broad range of programmes and interventions, they include the following:

  • Entrepreneurship Programme
  • SEDA Funding
  • Franchise Support Programme
  • Export Development Programme
  • Cooperative Programme – CPPP and CIS
Focus Area

Small businesses in South Africa have to overcome many barriers to entry and challenges. SEDA has identified and is working to solve the main challenges that include, but are not limited to the following:

  • Lack of business planning during startup.
  • Difficulty accessing finance.
  • Difficulty accessing markets or meeting industry requirements or standards.
  • Lack of experience among owners and managers.
  • Lack of sector-specific expertise.
  • Inconsistencies in cash flow.
  • Lack of entrepreneurial skills and mindset as well as business acumen.
  • Lack of capacity to undertake market research, resulting in a lack of understanding of market needs and characteristics.
  • Skills shortages, particularly with respect to technical skills and business management skills.
  • Fragmented and uncoordinated support from entities tasked with providing assistance.
  • Lack of innovation and creativity.
  • Difficulty accessing land or securing operating premises.
  • Red tape and cumbersome regulatory processes and procedures.
Priority Sectors

SEDA’s target market for funding and non-financial support covers small-, medium- or micro enterprises (SMME), including cooperatives. It also includes potential entrepreneurs with a business idea. In particular, their programmes target youth and women.

SEDA provides support for the following sectors:

  • Services – ICT & Tourism
  • Agriculture & Agro-processing
  • Manufacturing (Includes Furniture Making and Tooling)
  • Rural Development – Coops & CPPP
Offerings

The agency offers funding in the form of loans, grants, and relief options for various types of qualifying businesses in particular, micro and small enterprises (including cooperatives) from all sectors throughout the country.

There is also business support offered, including business-related information, advice, consultancy, training and mentoring. Business development services include:

  • Information, advice and referrals.
  • Tender information and advice.
  • Import and export training.
  • Trade information.
  • Business assessments and business mentoring.
  • Technical support.
  • Market access.
  • Business linkages.

See Also: How to Access Funding For Your Business

Requirements

All businesses can get access to SEDA funding and support, as long as it’s a micro- or small business. Generally, they only fund tax-compliant businesses with an annual turnover of less than R50 million.

Other requirements include:

  • Businesses must be owned and operated by South Africans.
  • Registered with CIPC.
  • SARS compliant.
  • Employees must be 70% South Africans, and in the case of non-South African employees, they must hold valid work permits as determined by the Department of Home Affairs.
  • SEDA requires a proposal which must be submitted via the application form. One should follow all the guidelines on how to present the document via the online application platform of SEDA.
Programmes

Cooperative Incentive Scheme

SEDA is responsible for the administration of the Cooperative Incentive Scheme (CIS). The scheme helps cooperatives from all industries such as textiles, services, energy, agriculture, print, film, and video production, consumer and housing.

The CIS supports the growth of sustainable cooperative enterprises. The scheme is a 90:10 matching cash grant for registered primary cooperatives. The grant can be used for startup requirements and assets.

The maximum grant offered per cooperative entity is R350 000.

The purpose of the CIS is as follows:

  • Increase the number of cooperatives trading in townships through coordinated efforts with other stakeholders.
  • Increase the number of cooperatives supported through supplier developments development program and through transversal agreements generated through DSBD.

Successful applicants are given cash grants to obtain services to grow their businesses. For a cooperative to qualify for a grant, it needs to fulfil the following requirements:

  • Be mainly black-owned.
  • Be actively helping to create employment and overcome poverty.
  • Be registered according to the Cooperatives Act, 14 of 2005.
  • Have a simple Business Plan, which must be attached to application forms.
  • Provide quotations for the services for which it requires funding.

Supplier Development Programme

This programme offers grants in a cost-sharing scheme to black-owned businesses to improve their core competencies and management abilities, and enable them to become more competitive. Through the scheme, businesses get access to promotional marketing materials, software development and other interventions such as quality, processes and product improvement. The maximum grant for which a single company can qualify is R100 000.

To qualify, businesses must be:

  • Majority black-owned (51% or more).
  • Have a significant representation of black managers on their management team quality for the grant.
  • Should not earn more than R12 million per annum.
  • Must have been trading for at least a year.
  • Need to be registered with CIPC and with SARS.

Application procedure: Obtain application guidelines and an application form. Complete the application form. Obtain and attach a tax clearance certificate, and submit the application.

Township and Rural Entrepreneurship Programme (TREP)

The purpose of the TREP schemes aims to support informal micro and small enterprises in township economies. It provides dedicated business support to enterprises in rural and township areas, additionally, funding and business development opportunities to help them develop their businesses.

Scheme interventions include a one-stop-shop business support service, business incubation to help entrepreneurs develop their new ventures, business skills training programs, and product development support. Successful TREP candidates can also access a credit guarantee, access to funding including working capital, and a pitch-for-funding channel.

The following support programmes are available for qualifying entrepreneurs:

  • Small-scale bakeries and confectionaries
  • Autobody repairers and mechanics (as well as small and independent auto-spares shops and informal automotive entrepreneurs)
  • Butcheries
  • Clothing, leather and textiles
  • Personal care
  • Spaza-shop
  • Tshisanyama and cooked food

Qualification criteria

  • Informal/ micro or cooperative business including home-based;
  • Registered as a legal entity (CIPC, and SARS);
  • Valid CIPC registration document;
  • 100% South African ownership;
  • 70% South African employees or a valid work permit;
  • Valid South African identity document;
  • Businesses with a turnover not exceeding R1 500 000 per annum;
  • Have a valid business bank account (including newly opened); and
  • Willing to participate in the bulk buying scheme and must be owner-managed, operating in a township or village.

The implementing agencies for the scheme are SEDA and SEFA.

Find out if your business qualifies for TREP funding here: Township Business Funding Opportunities – TREP 

SEDA Technology Programme (STP)

SEDA Technology Programme (STP) provides financial and non-financial support to small enterprises through business incubation, technology transfer, and quality and standards services. It has an Incubation Unit, a Quality and Standards Unit (to assist SMMEs with quality control and assessment processes, as well as internal management and operation systems) and a Technological Transfer Unit (to assist SMEs with access to and use of technology or technological equipment). The target is potential and existing SME (small and micro) entrepreneurs in specific industries, such as in ICT, aluminium, platinum and bio-diesel.

The programme provides non-financial support services in the following four categories:

  • Improving access to technology information for small enterprises.
  • Improve access to technology transfer funding through structured referrals
    to funding institutions.
  • Facilitate access to technology through business-to-business linkages.
  • Technology consulting.

Opportunities are also created for sharing sector-specific knowledge and skills for entrepreneurs, facilitating awareness and introduction to appropriate technology and intellectual property, peer networking and forming productive partnerships.

One of the programme’s objectives is to provide specific technology support to women-owned enterprises. These are enterprises with more than 50% women ownership.

Read more about this fund: SMEs Not Taking Full Advantage Of Tech Support Programmes

Funding for acquisition of technology through a technology transfer fund is up to a maximum of R 600 000.

STP Quality

This programme provides financial and non-financial support for businesses in the manufacturing, services, agriculture and ICT sectors. The objective of the programme is to promote quality and excellence as competitive tools for SMEs.

As part of the programme, businesses get a grand of R150 000 towards implementation Management System-ISO 9001: 2008 and testing & certification of products with SABS.

Non-financial support services include capacity building on the different national (SANS) and international (ISO) compliance standards training for the sectors above.

Qualifying criteria to apply are:

  • Completed application form
  • Registered company
  • Viable business plan
  • Feasibility plan
  • Strategic plan
  • 6 month trading history

The Tourism Technology Grassroots Innovation and Incubation Programme (TTGIIP)

This two-year programme supports tech-savvy entrepreneurs with the goal of inspiring innovation amongst enterprises in the travel and hospitality sector. To qualify for the fund entrepreneurs must have an innovative tourism tech solution that they would like financed.

The target is women and youth between the ages of 18 and 35 in tourism business operations.

The programme aims to drive innovation among businesses in the travel and hospitality sector and to increase the sustainability of youth and women in tourism businesses, develop skills, as well as provide market access funding.

TTGIIP focuses on four key elements of business development, namely:

  • The business management skills of the entrepreneur through skills development and training,
  • The enterprise idea and prototype design and development, business viability and market testing, regulatory compliance, business financial/ risk structure and quality standards,
  • Facilitate start-up funding and venture capital for business expansion, and
  • Facilitation of market and trade linkages for the commercialisation of enterprises.
Incubation Programmes

Moreover, SEDA runs the only government incubation programme. The key focus here is on administering the country’s business incubator programme – this includes designing incubation models, managing national incubation standards, market assessments aimed at feeding opportunities to the ecosystem, influencing or directing private sector and government spending accordingly, monitoring and evaluating the entire system, to name a few.

SEDA supports over 100 technology incubation centres across the country. Through incubation enterprises can develop skills, knowledge and markets, thereby nurturing them through the early stages of development and increasing their profitability and growth in the long run.

Qualifying criteria

Anybody with a viable business idea or any registered small-, micro- or medium enterprise (SMME) that is struggling to grow can apply for an incubation programme.

Each of the SEDA-supported incubators has its own incubatee recruitment/selection process that is unique to their sector. Applicants must contact the relevant incubator for the recruitment criteria.

Examples of the types of incubators that SEDA supports are the Bakery and Food Technology Incubator which provides food technology and commercialisation services to all incubated bakery and food manufacturing enterprises. The Ekurhuleni Jewellery Project (EJP) provides incubation and technology transfer to emerging jewellers. Finally, the Savant is a commercially focused hardware technology incubator based in Cape Town that provides bespoke business development support.