Business Loan in South Africa - Get The Best Deal
Get a suitable small business loan to expand your business.
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If you’re a business owner wanting to expand or starting a new business, you may need working capital.
You might need new machinery, invest in cars, require supplies, etc.
If this sounds like you, then you might need to get assistance through funding. Millions of small and medium-sized enterprises (SMEs) find it challenging to access business funding in South Africa. Getting financing for your business should be a quick and straightforward process.
Small Business Loan lenders in South Africa
R20,000
R2,000,000
1 - 12 months
2 - 6% monthly
Good to know:
- Transparent pricing
- Save money with earlier repayment
- Get funded within 24 hours
R20,000
R5,000,000
1 - 12 months
N/A
Good to know:
- 2 minutes to apply
- Approval within 24 hours
- Can access funds in 24 hours
N/A
N/A
N/A
N/A
Good to know:
- Must have owned business for over 6 month
- Need to have 3 months of trade history
- Need to have over R30,000 turnover monthly
N/A
N/A
3 - 12 months
N/A
Good to know:
- Must have owned business for 6 months
- 3 months of trade history required
- Need to have over R30,000 monthly turnover
R2000
R400,000
3 months - 5 years
N/A
Good to know:
- Required to open Business Account with FNB
- Need 6 months bank statement and business plan
- Automated repayment
R10,000
R3,000,000
24 - 60 months
N/A
Good to know:
- Required to open Business Account with Standard Bank
- One-off initiation fee is 1,15% of the loan amount
- The monthly service fee is R69
N/A
N/A
N/A
N/A
Good to know:
- Funding within 48 hours
- Requires 12 months of business operation
- R80,000 monthly average card sales
R100,000
R3,000,000
3 - 12 months
8 - 25 %
Good to know:
- Fast application
- Need 12 month bank statement
- Get funded in 72 hours
What is a small business loan?
There are several loans available for you to choose from if you want to grow your business.
- Traditional short-term business loans
- Business lines of credit
- Debtors factoring and invoice discounting
- Merchant cash advance
- Bank overdrafts
- Business credit cards
Why use a small business loan?
Most businesses seek a business loan to finance equipment, expand their business, or startup costs. Working capital is provided and used by businesses for the following reasons:
- Improving cash flow
- Purchasing equipment or stock
- Business expansion
- Debt consolidation
- Payroll
- Marketing and advertising
It is not easy to apply through a bank for business funding, especially if you don’t have considerable assets or long credit history. Getting financed through a bank can also take time, sometimes months.
However, some private lenders offer South African business owners quick, flexible, and convenient ways to get funding. Whether you need funding to cover a short-term gap in cash flow or buy expensive machinery, there are alternative options available.
How to get a small business loan in South Africa
Depending on the lending company, there are various ways to get a loan for your business in South Africa. The following is what you typically need for an application at a bank or private lender:
- South African ID
- Three months salary payslips – some lenders require you to get a salary from your business to be eligible
- Three to six months bank statements
- Annual financial statements
- One year transactional history
- Cash flow statements
- Year-to-date management accounts
- Balance sheets
- Income statements
- Business plan
- Pro forma invoice that shows the intended use of the funds, up to 70% of the advance value
- Notice of incorporation
- Shareholder certificate
- Registration certificate
- All directors must be present to sign the application
When applying, you can do it in the following ways:
- Online application
- Telephonically
- Apply in-branch
- Request a call-back from the lender
Get a business loan up to R5,000,000
Most banks provide business funding up to R2,500,000. However, there are private financial institutions or private investors who will provide funding up to R10,000,000. Therefore, getting a business loan up to R5,000,000 can be done.
Research various lenders to determine who can provide you with the funding amount relevant to your situation. If you need assistance, Loanda can help you find the most suitable lender for you.
How to qualify for a business loan?
To qualify for a small business loan, you typically need to either be the director or owner of a company.
Depending on the lender, business loans have different requirements. Before applying, you could speak to the lender and determine what information they require for the application process. The following are a few of the primary requirements you will need.
After submitting your application, the lender will access your credit history and data from the credit bureaus. A positive payment history will influence your credit rating positively.
For an unsecured loan a collateral is not required. However, if you’re applying through a bank, they will require collateral from you. A collateral guarantees they can recover the money from you if you can’t stick to paying back your business loan.
Once an asset gets put up as collateral, you’re permitting the lender to claim that asset via court.
Examples of collateral include the following:
- Real estate
- Equipment
- Stock
- Vehicles
The majority of business loan providers claim time in business as a vital requirement. Usually, business owners who have been operating for a few years get excluded from this. Some lenders, however, will not see this as a critical requirement and will only require you to have one year of trading history.
Depending on the lender, they will have a set minimum revenue requirement.
The following are examples that you might get subjected to in the qualification process:
- No unpaid debts on your account
- The business account must have a 12-months turnover
- A good personal credit rating
- Depending on your credit assessment, lenders may examine your application thoroughly
- Based on your financial statements, minimum affordability is to get determined
- Proof of two years operating history
- Business turnover of R1 million and above
- One year transactional history
- Sole traders aren’t eligible
- Must earn a monthly salary from your business
This step requires you to have the proper documents ready.
- South African ID
- Three months salary payslips – some lenders require you to get a salary from your business to be eligible
- Three to six months bank statements
- Annual financial statements
- One year transactional history
- Cash flow statements
- Year-to-date management accounts
- Balance sheets
- Income statements
- Business plan
- Pro forma invoice that shows the intended use of the funds, up to 70% of the advance value
- Notice of incorporation
- Shareholder certificate
- Registration certificate
- All directors must be present to sign the application
Frequently Asked Questions
When calculating the total cost of a business loan, you need to consider three factors, namely:
- The loan amount: Your repayments will be more significant the more you borrow.
- The interest rate: Business loans will cost more to repay if the interest rate is high. Various business loans offer either variable rates, which fluctuate with market rates, or fixed rates, which remain unchanging for the loan’s term.
- Fees: Read the fine print of your loan agreement to determine the ongoing fees and upfront costs.
If you want to get access to a business loan, you need to meet the lender’s requirements. Generally, they require you to be in business for at least a year, and you will need to provide them with financial documents relating to your business, such as tax returns. However, it will be at the lender’s discretion whether they will approve business funding if you have no money.
Your personal credit score is just one of many factors that get considered when a lender determines your business credit score. But, a poor personal credit score can still negatively affect your application.
A good personal credit score is usually between 640 to 700 – the higher the score, the less risk there is.
If you want to borrow money for your business, you need to consider how much your business needs. Speak with your chosen lender or use an online calculator to help you calculate your financial projections. By not giving an exact figure to the lender, they will not know how much you need and your intentions.
