National Empowerment Fund NEF Funding for South Africans

posted in: Business Finance | 0

National Empowerment Fund NEF FundingThe National Empowerment Fund (NEF’s) role is to support Broad-Based Black Economic Empowerment (BB-BEE)

The National Empowerment Fund (NEF) assists individuals, communities and businesses achieve success through their funding programs. Established by the National Empowerment Fund Act No 105 of 1998 (NEF Act), the National Empowerment Fund (the NEF) is a driver and thought-leader in promoting and facilitating black economic participation by providing financial and non-financial support to black empowered businesses, and by promoting a culture of savings and investment among black people. The vision of the National Empowerment Fund (NEF) is to become the leading provider of innovative transformation solutions for an economically inclusive South Africa. National Empowerment Fund NEF Funding includes business loans from R250 000 to R75 million across all industry sectors, for start-ups, expansion and equity acquisition purposes.

In pursuit of its mandate, the NEF provides financial and non-financial support. Financial support is comprised of the provision of innovative financing products to black-empowered businesses via five funds: the uMnotho, iMbewu, Rural and Community Development, Strategic Projects, and Women Empowerment Funds. Non-Financial support provided includes the following services: Pre-Investment Support; Post-Investment Support; Turnaround, Workouts and Restructures; and Socio-Economic Development and Asset Management.

NEF funds include:

iMbewu Fund

This Fund is designed to assist black entrepreneurs who want to start new businesses and existing businesses with expansion capital. The Fund offers debt, quasi-equity and equity finance products with the funding threshold ranging from a minimum of R250 000 to a maximum of R10 million. Funding is delivered in the form of Entrepreneurship Finance, Procurement Finance and Franchise Finance products.

National Empowerment Fund NEF Funding
Mnotho Fund

This Fund is designed to improve access to BEE capital. Funding ranges from R2 million to R50 million and is divided into five products: Acquisition Finance, New Venture Finance, Expansion Capital, Capital Markets, and Liquidity and Warehousing.

Rural and Community Development Fund

This fund was designed to promote sustainable change in social and economic relations and to support the growth and development in the rural economy, by financing sustainable enterprises. This would be achieved through the mobilization of rural communities in legal entities or cooperatives, in order to realize the economic transformation goals in rural South Africa. The fund has three products: Acquisition Finance, Expansion Capital and Project Finance (New Venture/Start-up/Greenfields) with the funding threshold ranging from a minimum of R1 million to R50 million.

The Strategic Project Fund (SPF)

The Strategic Project Fund is at the centre of NEF’s investment strategy when it comes to securing the participation of black people in early stage projects. Its core function is to provide Venture Capital Finance aimed at developing South Africa’s new and strategic industrial capacity within strategic sectors identified by government as key drivers to economic growth.

National Empowerment Fund

Each application for funding is assessed in terms of the following criteria:

  • Commercial viability of the business case being presented;
  • The business must comply with all relevant laws and regulations;
  • There must be operational involvement at the managerial and board levels by black individuals;
  • Minimum percentage of black ownership or interest of 50.1% is a requirement;
  • The business must be able to repay the NEF funding;
  • The business must create a reasonable number of jobs;
  • Geographic location of the business is also important with the focus on rural or economically weak areas encouraged;
  • Meaningful black women participation is viewed more favourably;
  • Rural and Community Development Projects must have meaningful participation by communities; and
  • Possibility of co-funding with private or public sector institutions is encouraged in larger projects.

Qualifiying Critieria for National Empowerment Fund NEF Funding Includes:

  • Be a registered legal entity in South Africa in terms of the Companies Act, 2008 (as amended); the Close Corporations Act, 1984 or the Co-operatives Act, 2005;
  • Be a taxpayer in good standing with a valid tax clearance certificate at assessment as well as before the loan is disbursed;
  •  Be a current and registered supplier with retailers and other institutions in good standing or have a purchase order/ contract/ letter of intent;
  • Require working capital or funds to purchase machinery and equipment;
  • The fund will not service any pre-existing debt or help settle monies owed;
  • Have greater than fifty percent (>50%) Black shareholding and management control. Must be directly involved in the day-to-day running of the operation and must have requisite expertise in the sector. Owned by black South Africans as defined by the Broad-Based Black Economic Empowerment (B-BBEE) Act;
  • In line with the NEF’s transformation mandate, preference will be given to applications that demonstrate meaningful black women ownership, management and control;
  • Have a project with a minimum requirement of R500 000 in working capital, machinery and equipment;
  • Must result in retaining or increasing direct jobs; and
  • Submission of all relevant documents for commercially viable applications.

Supporting Documentation Required for National Empowerment Fund NEF Funding:

  • Declaration on BEE status and size of business;
  • NEF application form;
  • Summary of production in the last 3 months;
  • Copy of the historical financial statements (up to 3 years if available);
  • Signed copy of the contract, purchase order or letter of intent from the applicant’s client/s;
  • Financial forecast for the duration of the contract, order, or letter of intent. The forecast should include income statement, cash flow statement, and balance sheet for the duration of the funding; and
  • Additional information that would be necessary to enhance the application may be requested by the NEF as and when deemed necessary.

At Dream Team Capital, we understand the complexities of the various funding agencies (gauge this by downloading the NEF’s application form below) and the unique application criteria for each. We have assisted thousands of entrepreneurs through the application process to access funding for businesses, and we can assist you with the same.

Contact us for more information on National Empowerment Fund NEF Funding.