Small firms struggle to access funding

Zweli Mokgata

Zweli Mokgata

The inability of small business operators to access financing in South Africa threatens to hamper growth of the small-and-medium-sized enterprise sector.

While government relies on new small businesses to drive economic growth, difficulties in obtaining money for expensive start-ups is an ever-increasing barrier.

According to the latest report by Global Entrepreneurship Monitor, South Africa is rated 25 out of 37 countries in terms of entrepreneurship development.

Head of the Small Business Enterprise Development Agency Benny Chabalala said the major problem with aspirant small business operators was that they did not know where to access financing for their specific needs.

Chabalala said during the difficult economic climate banks would be even more reluctant to grant loans to high-risk business ventures, especially those with little collateral or with business that were not sufficiently liquid.

"There are financing institutions that will provide funding if you show that you have a firm order, but you need to know where to look.

"The Department of Trade and Industry has several agents that provide such funding," Chabalala said.