How To Raise Money For A Business - Government Funding (Part 1)

 

Starting a business takes so much courage, discipline and patience that only a few people succeed it’s almost similar to raising a child you need to nurture it, be patient, show love, sacrifice, the works. I’ve always admired people that start business especially from their own pockets. The sacrifice that takes place behind the scenes is unimaginable. But people that start their own businesses, not the Instagram influencer type of business but selling a service or something tangible never tell us how they made it, where they got the funding or how they overcame the hurdles they were faced with. I think to some extent starting a business can be lonely, so lonely that some of the businesspeople hardly share the secrets of the trade and how they eventually got it right. Like do you start the business with your own capital or did get some funding? If so, then where? Did they ask for assistance when starting their businesses or was the intention to do everything solo?

So, I may not know exactly what it takes to start a business even though I may have an idea of what may go on behind the scenes. Quite honestly, I would not want to start a business of my own but I will gladly help fund one. Here are some ways to help ease some of the “stresses” of starting or expanding your business and let me share with you where you can get financial and non-financial assistance to assist your business.

Now, assisting your business can be from the government or from private sector. Some government agencies or enterprises do not only render financial assistance but also non-financial assistance in terms of starting your own business plan, the strategic developments of the business and so on, so it’s not only money that they can help you with. And the assistance can be at the various stages of your businesses, not necessarily as a start-up.

This is part 1 of a 2 part post on assisting/funding your business and here I’ll share with you government assistance and on part 2, I’ll share with you business assistance from private entities.

Seda (Small Enterprise Development Agency) – this is one of the government agencies where you can get help, or if you already have a business, they can assist in other ways to further your business and make it more profitable. Funding from Seda is limited to R10 million for black owned SME’s.

Sefa (Small Enterprise Finance Agency) – focuses on financing SMMEs and Co-operatives. They give direct loans from 50 000 – R 15 million. Their products vary from a bridging loan, to a structured finance solution to asset finance, all this is found on their website. They loan a variety of sectors provided that your business is legit.

NEF (National Empowerment Fund) – NEF is part of the government’s mandate to encourage black enterprises to participate in business and entrepreneurship and one of the criteria includes that the business should be 50.1% black owned. The are subdivisions within this fund program such as Imbewu fund, Umnotho fund, rural and community development fund and strategic projects. So depending on your profile your business will fall under a certain subdivision.

IDC (industrial Development Corporation) – The other popularly known business assistance entity. They provide financial and non-financial support across all sectors. Their funding starts from R 1 million to R 1 billion rand for both start up and existing companies. IDC also offers services such as debt financing, equity amongst a couple and non financial assistance.

 IWF (The Isivande Women’s Fund) – This fund aims at accelerating women’s economic empowerment. The one thing I liked about this fund is the criteria, you need to be operation for 6 months. >50% share owned and managed by women. Business funding ranges from R30 000 and R2 million.

NYDA (National Youth development Agency) – This is the most popular, NYDA awards grants to formal and informal business that are start-ups or at a developmental stage of their businesses. Loans granted range from R1 000 to R 100 000. 

Pssssh… Please note that since some of these agencies or enterprises offer loans, one of the criteria’s that is common is that your business should be able to repay the loan. Naturally the repayment terms and the nitty gritties should be discussed when entering into the contractual agreements. Also I would advise that negotiate payment terms that are best for business and not necessarily what is being offered by the lender, if you can. If not, then shop around. I really would  encourage that you register your business with the CIPC, SARS at the early stages of your business so that when you apply for loan/funding…to the lender it does show that you have been of existence for some time and that you have been funding/sustaining your own business for some time.  Majority of these government agencies give preference to black and female applicants therefore I would urge that if you know a black owned business that is killing it in the market, there is assistance granted to further expand the business. And lastly, there are other government entities that do provide assistance which I have not mentioned above, e.g land bank, funding from local governments. Therefore if you go to one entity and they reject your application, I am most certain you will either be redirected to another entity or the other entities that offer some business assistance will appear in your search. They are all somehow linked.