Unlocking economic growth through SME Financing
It is quite widely known that the SME sector contributes up to 60% towards the Gross Domestic Product and labour force – which is why it is viewed as a lever for increasing economic growth.
You’d think with SMEs providing that much benefit traditional lenders, such as banks, would see the importance of making access to credit more easily accessible for SMEs, and work to find a suitable solution. The reality, however, is that 89% of SME’s that apply for funding through a bank don’t get financing that they went in for. There are various reasons why but often the process becomes too tedious and time-consuming or those that see it all the way through land up being declined.
This might sound quite discouraging if you’re a business owner, but the good news is that alternative lenders have started to take action and are addressing the need to assist SMEs. Not only that but they are holding each other accountable for responsible lending practices by driving industry standards through an organization called SASFA (South African SME Finance Association) to ensure SME customers are fairly treated and the reputation and sustainability of this SME Finance sector is maintained.