A start up business loan pertains to the funding a business needs to get it operating from scratch. Examples of these include mortgage payments, taxes, rentals, employee payroll, and so forth.
Startup finance can be used to purchase equipment, office furniture, software installations, and initial supplies and inventory stock items. The money can also be used to obtain permits and business licences.
Banks and other financial institutions can provide debt financing. The money borrowed must be repaid in installments plus interest. The repayment period can be short-, medium- or long-term, depending on your agreement with the lender.
Although most creditors require some form of security to be presented in exchange for the loan, there are still some who can provide start-up business loans with no need for collateral.
Angel investment is still a fairly new option for obtaining startup finance in South Africa. However, it’s starting to gain traction, especially with the rise of startups opening to help the economy overcome the financial obstacles it’s facing.
The South African Venture Capital Association (SAVCA) is a good starting point in looking for lenders who can provide startup finance without capital.
Although very popular in other countries, crowdfunding is yet to draw attention in South Africa. This type of funding platform allows you to raise money with the help of people who sympathise with your campaign goals. In exchange for their contributions, you offer them your products or services.
The government encourages people to put up their own businesses by offering startup loans and grants. They offer to fund those who are building their company from scratch and those who are established but are looking for extra money to expand their business. As part of their commitment to helping entrepreneurs face the challenge of succeeding in their respective industries, the government has launched several programmes to aid them:
- National Empowerment Fund (NEF);
- Industrial Development Corporation (IDC);
- Small Enterprise Development Agency (SEDA);
- Isivande Women’s Fund (IWF);
- Khula SME Fund;
- Incubation Support Programme (ISP);
- National Youth Development Agency (NYDA); and
- Technology Innovation Agency (TIA).
Contact us for assistance with obtaining a start up business loan for your company.
