How Lulalend plans to use its latest round of funding to help South African SMEs

How Lulalend plans to use its latest round of funding to help South African SMEs

We’re excited to have completed our recent round of funding with IFC and Quona Capital, and are committed to using the funds to help support and grow  SMEs across South Africa via quick and easy access to financing.

Eradicating the challenge of access to capital

We know that access to finance is the single biggest challenge for small business owners.

That’s why we’ll continue to invest in technology to improve our customer experience & increase the speed of our lending decision making –  allowing us to offer even faster and easier access to finance.

“We want to be part of the solution that breaks the cycle of limited access to finance. SMEs should be able to grow and expand without the worry of where and how they are going to get the finances they need to seize new opportunities. This is possible through technology and the right mindset of wanting to help these businesses.” Trevor Gosling, Lulalend co-founder and CEO

Growing our loan book and increasing our lending opportunities is another focus area that the new round of funding has made possible for Lulalend. Being able to offer larger loan sizes to businesses whose affordability allows them to qualify for up to R1 million is part of where we are placing the funds we’ve raised. Over and above this we want to see more businesses taking advantage of our credit facility, so that they can draw down from their funds without the hassle of applying every time they need access.

 

Building on the success achieved so far

Lulalend has already assisted thousands of businesses in South Africa, across all industries, with immediate access to business funding. We’ve been able to put the control back into the hands of business owners by allowing them to use the funding for their specific needs. 

As a result, business owner Noel Ehrenreich from New Earth Recycling has been able to purchase raw materials which allowed him to take advantage of new opportunities.

 

 

Mondisa, founder of The Kids Cooking Club, was also able to get funding so she could she could expand into larger premises business. Without the funds Mondisa would have had to keep turning away new business.

 

 

We want to keep contributing to the success of businesses like these because we believe they are the backbone of the South African economy. We’re looking forward to using our latest round of funding to do just this! We can’t wait to add and highlight more success stories like these. This is what drives us to keep working hard, day in day out, to make the challenge of access to finance a thing of the past.

 

 

Celebrating world MSME Day #MSMEDay19

Celebrating world MSME Day #MSMEDay19

For the last 3 years there has been a greater recognition of Micro, small and medium size businesses around the globe. The United Nations has declared the 27th of June as a day to publicly drive awareness of their contribution to sustainable development worldwide. The annual celebration, known as World MSME Day, is now a regular occurrence across several countries and continents.

Why the recognition of small to medium size businesses?

On a number of fronts SMEs need significant support. Raising awareness for them globally is an initiative to help highlight their contributions as well as their greatest needs. By increasing awareness of their specific challenges we can begin to address them and help drive further business growth and sustainability.

According to researchers it is estimated that in South Africa, SMEs make up 91% of formalised businesses, providing employment to 60% of the labour force and contributing to roughly 34% of the GDP.  These businesses are what drive and foster technology and innovation, positively impact the communities around them through job creation and provide the platform for local growth. 

The greatest challenges facing South African SMEs:

Research into SMEs in South Africa regularly highlights the most significant obstacles to growth businesses of all kinds face are:

  • Securing finance
  • Upskilling and training employees
  • Tax regulations and requirements 

These on-going barriers hinder SMEs from reaching their true potential.  Leaving them vulnerable and susceptible to stunted growth despite them being one of the biggest contributors to job creation and economic development.

What can be done to help our SMEs?

Expanding the options SMEs have to secure funding is essential. 

The primary challenge for SMEs remains access to finance, and this has a ripple effect on other business needs. Access to working capital allows for the other challenges to be met and addressed over time. 

But without this initial access growth can grind to a halt when:

  • equipment can’t be purchased
  • new hires can’t be made
  • businesses can’t promote their products and services
  • inventory can’t be purchased to continue making sales

SMEs are often denied access to finance because traditional lenders see them as too high a risk. These lenders often require collateral that small business owners don’t have to put down as surety. Or the time and red tape required to apply for a loan is just too prohibitive for SMEs that need to move quickly.  

With the growth of alternative lending fintech companies, such as Lulalend, who understand and tailor their services to SME customers we will be able to open up access to business financing.

At Lulalend we cater to the needs of the SME businesses that are the driving force behind our economy. We offer access to finance that is uncomplicated and immediate. Business owners can turn to us for funding to maintain cash flow and access working capital to drive growth. 

Businesses like New Earth Recycling, owned by Noel Ehrenreich, were able to access fast, easy funding of up to R1 million through Lulalend. With this finance Noel was able to expand and grow his business through the purchase of raw materials, hiring new staff and taking on new business opportunities. Noel’s business isn’t the only one that has benefited from access to finance with Lulalend. You can find out more about other businesses we have been able to help sustain and grow on our customer testimonials page.

Because we’ve seen first hand the impact access to finance can have on the businesses we’ve supported, Lulalend is a huge supporter of World MSME Day. We celebrate this initiative along with the local businesses who are making significant contributions to our country. 

We thank them for all their endeavour, ingenuity and on-going persistence under adversity.  

The unforeseen costs of long term loans

The unforeseen costs of long term loans

As you look for business funding you may come across various options for a term loan. Simply put a term loan is a sum of capital that is borrowed and is paid back over time with interest.  

The length of the loan term can differ depending on the financial institution you approach. The length of the loan and the interest rate can have a large impact on the total amount you pay back, so it’s important to shop around and make sure it’s right for your business needs. While lower repayments over longer term loans might seem enticing, they may cost you more in the long run so it’s worth doing a thorough comparison.

Does the term length really have such a big impact?

Doing your due diligence is important. It helps to ensure that you can afford the loan repayments , but will also provide clarity over the total cost of the loan over time. Shorter term loans might require higher monthly repayments but could save you a significant amount in interest costs when compared to a 36 or 48 month loan term. Some business lenders like Lulalend even allow for early settlement without any penalty fees – offering you another opportunity to save money.

Below is a basic example of how the term of the loan can impact the repayments and total cost, and what you need to be mindful of.

The differences between short term vs. long term loans

What questions are important to ask?

Here are some important questions you should be asking yourself when looking for business funding:

  1. What are the interest rates? This will affect your monthly repayments and the total amount repaid
  2. What kind of flexibility is there with repayments – is it a monthly repayment or can it be split into bi-weekly payments?
  3. What type of financing is it – there are various types of financing and they each come with their own advantages and disadvantages?
  4. Are there additional fees?ost financial institutes will ask for admin fees, late payment fees or early settlement fees that are added extras.

Find out how short term business funding with Lulalend can give you quick, immediate access to funding that is paid back over 6 – 12 months.Our higher approval rates, versus traditional lenders, for SME’s improve your chances of accessing funding that will not require you to provide high value collateral. With no hidden or early settlement fees you will also be able to reduce the overall cost of the loan compared to other lenders.

Election finished. How do we now move forward with confidence?

Election finished. How do we now move forward with confidence?

The 2019 election results are in! They may have left you encouraged or disheartened, but as a nation we now need to look forward to the future together and hold the government to their promises of bringing about the economic growth and stability we need.

Most economists agree the 2019 election outcome will have significant impact on our long term economic prospects as South Africa continues to walk a tightrope around it’s credit rating status. In the short term though, Senior Economist at the Bureau for Economic Research at the University of Stellenbosch, Hugo Pienaar, believes things are looking up for our economy. Financial institutions are becoming more willing to extend credit and we are seeing a greater focus on building the confidence of foreign investors.

As we settle into the reality of the 2019 election results it’s also important for South Africans to try and build their own confidence in the economy to increase our chances of achieving increased growth and prosperity for all. Much of this confidence can come from the growth and stability of our SME’s, and the fostering of a strong entrepreneurial spirit. Our country is made up of more than just a ruling party. It is made up of millions of individuals that are innovators, forward thinkers and inclusionists, seeking to be the solution and not the problem.

At Lulalend we believe that offering fast and easy access to funding for smaller businesses is a critical factor in helping SMEs maximise their contribution to our economic growth. And according to a recent article in the Business Report, we are not alone. Here are the most common initiatives businesses believe would help instil confidence in the economy and what the elected government should focus on:

Support for the development of small businesses

While there has been some recent progress on this front through the introduction of the Department of Small Business Development 5 years ago, it is widely believed there is still much more to be done in developing  support structures that include financial support, mentorship and access to markets.

Skills development

People want to see tertiary education providing a platform for the development of future skills that can meet the demands of the job market.

Tax incentives and prompt invoice payments

One of the biggest struggles for business owners is cash flow. There is a continued desire for the government to offer small business tax relief that is tangible, as well as more stringent policies and accountability around the 30-day payment rule.

Transformation

Across the board there is a hope that transformation will positively infiltrate all corners of South Africa. This can only come from an inclusive mindset that allows, and provides for, opportunities of fairer education, skills development, entrepreneurship and job creation for all.

Being part of the solution isn’t easy. It is a tireless and continued effort to help everyone move forward. But, it is brave and admirable and what we need above all else.

How are you going to be part of the solution in 2019 and beyond?

 

3 impacts the upcoming elections will have on SMEs

3 impacts the upcoming elections will have on SMEs

The national and municipal elections are around the corner and, as always, are a testament to the democratic transition that South Africa has been through.

It’s not clear what the outcome will be and what the future holds for South Africa as the country takes to the polls on May 8th. What we do know though is that the elections will have an impact, be it positive or negative, on the economy. And that this will have a ripple effect on individuals as well as local businesses.

According to a recent survey conducted by Business Partners around the up-coming elections, 40% of SMEs are expecting the elections to have a positive impact, 35% are uncertain and 25% believe the market will be impacted negatively.

The survey also goes on to show that SME business owners believe that the greatest challenge they expect to face in the next 6 months is cash flow, something that is negatively impacted by a volatile environment with fluctuating operating costs.

Here are a few commonly cited reasons why the up-coming elections are causing business owners anxiety:

 

  • Customer confidence

Customer confidence can take a knock around election time. Based on previous general elections you can expect customer confidence to drop off as we get closer to the 8th of May. Most people pull back on spending and delay their buying decisions until after it’s over. It can take a month or two for the dust to settle and things to fully recover and go back to normal – depending on the results.

 

  • Currency fluctuation

The uncertainty leading up to the elections has an impact on the value of the Rand. This can lead to increasing; prices of goods sourced from overseas, petrol prices and inflation. The particular struggle for SMEs is that they can’t fix their prices, as can larger businesses, without taking too much off their margin.

 

  • Marketing plans

Events like national elections have the media’s full attention for weeks, if not months, both before and after the day is over. This means less airtime, advertising space and overall marketing opportunities for SMEs as the media channels become saturated and prohibitively expensive. As a result SMEs are forced to delay, or drop altogether, vital marketing activities.

The knock on effect of these, and other, trends is often reduced revenue and lower profits – putting SMEs across industries under pressure. On top of this the usual winter seasonality means the next few months can be slower than usual for a range of industries.  Financial support can come in handy with all the on-goings about to take place.

With all this uncertainty, preparation is key. This is why Lulalend is the trusted alternative lender for; Working capital finance, inventory or equipment purchases and bridging finance. We’re here to help, especially if and when new business opportunities come knocking. Get the funding you need, when you need it!

Although you don’t have control over the election and its impact on the economy, one thing you can control is your business finance options. Let Lulalend help you grow and succeed. Find out more about our quick, easy application process so that we can help you when you need it most.