Coronavirus Support for South African SMEs: List of Government Funds

Coronavirus Support for South African SMEs: List of Government Funds

Reading Time: 3 minutes

Are you struggling with the impact of COVID-19 on your SME?

You’re not alone.

South African SMEs will be hit hard by the 21-day lockdown needed to curb the country’s coronavirus outbreak.

In response, the government has announced a SME support package to keep businesses going during this difficult time.

Ebrahim Patel, the Minister of Trade, Industry, and Competition, said the government hoped to come through the lockdown with as “little damage” as possible.

“Across the world, more countries are now doing lockdowns and we want to ensure that it is managed in strong partnership with our people, with large and small businesses, with workers and with consumers.”

Different government departments are providing funding.

In this article, we’re covering the key funds you need to know about, including:

  • Department of Small Business Development’s COVID-19 finance relief schemes
  • Department of Tourism’s support for tourism businesses
  • Department of Labour/Unemployment Insurance Funds support for employees

Department of Small Business Development’s coronavirus SME support

The Department of Small Business Development is leading the government’s SME support effort. It is working with the Small Enterprise Finance Agency (Sefa) and the Small Enterprise Development Agency (Seda).

Here’s an infographic outlining the different support you can access:

Business Growth and Resilience Facility

In this briefing, Khumbudzo Ntshavheni, the Minister of Small Business Development, discussed government’s support for SMEs during the 21-day lockdown. (Ntshavheni’s address starts at 1:44’ mark.)

The Business Growth and Resilience Facility seeks to help manufacturing SMEs, with a focus on that those can provide high-demand products during the outbreak.

“(We want to give) Give local manufacturers and suppliers an opportunity to produce the medical and hygiene supplies to respond to the crisis,” said Ntshavheni.

Companies in the agri-processing sector will also be supported, added Ntshavheni.

The fund will provide working capital, bridging finance, equipment finance, and order finance, reports CNBC Africa.

Here’s the criteria:

  • 100% SA owned
  • Employ at least 70% South African staff
  • SARS complaint

If SMEs are not registered and tax compliant, the department will help business owners with that process.

Priority will be given to women, youth, and people with disabilities.

Here is the process:

  1. Register on
  2. Complete application form
  3. Attach supporting documents
  4. Send to

SMME Debt Relief Scheme

If you’re struggling to keep up with your financial obligations, consider the SMME Relief Scheme.

This fund will provide loans so SMEs can buy raw material, pay salaries, and cover operational costs.

Like the Business Growth and Resilience Facility, qualifying SMEs must be 100% South African owned; 70% of the staff must be South African.

You can apply for both the SMME Relief Scheme and the Business Growth and Resilience Facility at

Here is the application process:

  1. Register on
  2. Complete application form
  3. Gather supporting documents
  4. Complete and send to

Support for tourism businesses

Tourism businesses have taken a knock during the COVID-19 outbreak. Even before the shutdown, PwC predicted a R200m reduction in tourism spend.

To support these companies, the Department of Tourism has allocated R200 million to “cushion our society from economic difficulties”, according to this statement.

The qualifying criteria includes:

  • Turnover must not exceed R2.5m
  • Must be trading for at least one year
  • Should be able to show a link between COVID-19 and business distress

Financial support for employees

For companies battling to pay salaries during the lockdown period, staff will be eligible for government support.

The Unemployment Insurance Fund (UIF) has set up the Covid-19 Temporary Employer-Employee Relief Scheme (COVID-19 TERS).

“Caring and responsible employers that are unable to pay the full salaries of the workers they send home for their health and safety due to the lockdown are encouraged to apply for the Covid-19 TERS  Benefit from the UIF,” reads a statement a joint statement from the UIF and the Department of Labour.

Send an email to to apply.

Here is a document on COVID-19 TERS from the Department of Labour, which explains:

  • Background of the scheme
  • Submission process
  • Supporting documents required

Application guidelines for coronavirus assistance to South African SMEs

Here is a breakdown of the supporting documents you need to apply for government funding.

FundsSupporting documents Key contacts
Debt relief finance scheme Company statutory Documents;
FICA documents (e.g. municipal accounts)
Certified ID copies of Directors;
3 months bank statements;
Latest annual financial statements / Latest management accounts;
Business profile;
6 months cash flow projections (where applicable);
Copy of lease agreement or proof of ownership if applying for rental relief
Employee details (bank details and UIF) for help paying salaries
Business Growth and Resilience Facility CIPC registration documents;
FICA documents (e.g. municipal accounts);
ID Copies of directors/ members;
3 months bank statements;
Latest annual financial statements /management accounts;
Business profile;
6 months cash flow projections (where applicable);
Industry certification (where applicable);
Estimations for funding requested
COVID-19 TERSLetter of authority: letter on a company letterhead giving an individual permission to lodge claim
Agreement between the employer, bargaining council, and UIF
Template from the UIF with relevant information from employer
Last three months payroll
Certified latest bank statements
012 337 1997 /

8 Cost-Reduction Strategies to Improve Your SME’s Cashflow

8 Cost-Reduction Strategies to Improve Your SME’s Cashflow

Reading Time: 4 minutes

As a business owner, you’re always looking for ways to reduce costs.

Of course, cutting costs helps you boost your cash flow. And when you’re running a business, you know cash flow matters. Local business owners tell us steady cash flow means their businesses can thrive. Negative cash flow, on the other hand, causes missed opportunities and immense personal stress.

The good news: there’s quick steps to improve your cash flow and reduce your costs; simple strategies you can start using right away.

In this article, Lulalend’s team of accounting and finance experts shares practical tips to help you take control of your cash flow and better manage your business finances.

Here’s a quick summary:

  1. Review your business finances
  2. Always ask for supplier discounts
  3. Don’t overstock
  4. Compare quotes
  5. Save on your business finance
  6. Reduce advertising costs
  7. Embrace technology and automation 
  8. Pay your taxes on time 

1. Review your business finances

When was the last time you reviewed your business finances?

Research suggests that cash flow management education should be a key priority for SMEs. But studies into newer businesses, in particular, found few processes for financial planning and control. 

Improving your cash flow management begins with an understanding of your business’s financials.

Evaluate your expenses and ask:

  • Do I need all of these services?
  • Are there cheaper alternatives?

Carvin Gordon, Lulalend Financial Accountant, said:

“Review your monthly expenses and negotiate with institutions for a possible reduction in expenses, such as insurance, for example. Insurance institutions are always willing to negotiate better rates.” 

Another option is to consolidate policies or accounts. 

Study retainer or consult fees as well, added Quentin Daniel, Lulalend’s Head of Finance. 

You might find you’re not using—or getting any real business value—from these services. 

2. Always ask for supplier discounts 

Getting a great deal on your supplies makes a massive difference to your bottom line. 

By asking for supplier discounts, you can quickly reduce your costs, said Daniel.

Many suppliers will have a lower per-unit price the more you buy, and others offer early payment discounts. 

Ask your supplier if you’re not sure. If you’re a long-time buyer, your vendor is more likely to consider offering you a discount even if it’s not explicitly stated. 

Even if these savings appear small, they’ll add up in the long term. 

3. Don’t overstock 

Buying in bulk can help you cut costs…but that’s not always the case. 

You could also end up losing money, said Bernice du Toit, Financial Accountant at Lulalend. 

“Some companies tend to over-stock on inventory, not taking into account the storage cost of these goods or the possibility that stock may go obsolete.” 

Du Toit said:

“Inventory is also tied-up cash flow that could have potentially been used more effectively in a different manner. Businesses should try to keep as little stock on hand and only bulk order if a discount is offered and the entity is sure that goods will be sold.”

4. Compare quotes

When you’re shopping for a new supplier, compare quotes.

Putting in the time to do a price comparison might net you a better deal.

Once you receive your invoice, compare it against your initial quote, said Daniel.

“Always double-check invoices from suppliers and price of quote vs billing. Always question items (for clarity).”

5. Save on your business finance 

Another way to reduce costs is to be strategic in your approach to business finance.

You might consider funding to boost your cash flow. But if you want to pay back the loan early, it might end up costing you more. Some funders charge hefty early repayment penalties. 

Look for business funding like Lulalend that lets you settle early, free of charge. 

6. Reduce advertising costs

As an SME, you might not have a huge advertising budget.

Fortunately, you don’t need one to reach your customers.

Here’s some tips small business marketing tips:

  • Clearly define your target audience
  • Understand their pain points
  • Create content and offers that address those pain points
  • Consider a Facebook marketing plan; you’ll get detailed targeting at affordable rates
  • Build your own email list 

Remember to focus your marketing efforts on your ideal customers to get the best results.

For more on marketing tips, check out our series here

Probably one of the most effective ways to drum up new business is keep your existing customers happy, adds Gordon.

“Business owners should focus on quality over quantity. A lot of the time you push to get jobs done at the expense of quality. Quality will ensure repeat customers, brand building, and word-of-mouth referrals.”

7. Embrace technology and automation 

There’s some truth to the old saying, “Time is money.”

This is especially relevant for SMEs. 

Consider how much time you and your team spend doing manual, repetitive tasks. 

Try cloud applications to save time on routine tasks, e.g.: 

  • Social media scheduling, like Buffer or Hootsuite 
  • Document management and signatures, with applications like Docusign
  • Accounting, like Quickbooks and Xero

By using technology, you’ll free up more time for meaningful work; the kind of work that will add real value to your business.

And though we’re big believers in the power of these kinds of applications, only pay for what you use. 

“Review annual subscriptions that you don’t use, i.e., you’ve been dragged into subscribing for software but don’t actually use it,” added Daniel.

8. Pay your taxes on time 

Many business owners dread tax season. 

On average, each South African business spends R63 328 and 255 hours annually complying with tax regulations, suggests this international research project.

Still, when it comes to your tax, pay the right amount, on time. 

Here’s more tips on how to save on your SMEs tax bill. 

Boost Your Business Cash flow with Flexible Business Finance

If you’re in a cash flow crunch right now, consider short-term business finance with Lulalend. You apply online in minutes and get the cash in your account 24 hours later. 

Coronavirus: Here’s how South African SMEs are hit

Coronavirus: Here’s how South African SMEs are hit

Reading Time: 3 minutes

South African business owners are bracing for the potentially devastating impact of the coronavirus outbreak.

Carel Hauptfleisch, who runs a successful online retail store out of Cape Town, imports goods from China. He’s been unable to get new products from his usual suppliers since the coronavirus hit.

“Stock has been paid for, but it’s not coming in,” said Hauptfleisch.

A similar story is unfolding across South Africa.

Cash flow is under pressure

Trade links with China run deep: the viral disease is hurting the South African economy, from large firms to SMEs. Since the onset of the coronavirus in December, most Chinese factories have slowed production, or shut down completely.

Prolonged factory closures are a serious concern for SMEs who import goods from China, said Kayla Field, of the Lulalend credit team.

Field has been speaking with South African business owners over the past few weeks.

Local SMEs are struggling, said Field.

“Businesses have placed bulk orders six months in advance. They’ve already paid for these orders. But because of the virus, they can’t access that stock.”

Declining stock means declining sales, said Field.

“Cash flow becomes an issue. Businesses don’t always have capital to purchase new stock from alternative suppliers.”

Most SMEs are on edge.

“All businesses are left with is the stock they have. They’re quickly running out of the materials they need to do business.”

Hauptfleisch tells us he’s tapped into other networks.

“We are sourcing from alternative suppliers. They have limited supply.”

He remains in regular contact with his manufacturers in China.

“Some of my suppliers are getting back to work, but their suppliers are still shut down.”

Even when operations finally return to normal levels, the effects of the outbreak will stay with many businesses for a few months, adds Hauptfleisch.

Epidemic threatens jobs, growth

Many factories did not resume production after the Lunar New Year holiday, reports the Financial Times.

“With many workers…quarantined at home and supply lines affected, many factories are struggling to reopen or regain full capacity,” states the World Economic Forum.

In South Africa, almost no sector remains untouched, explained Field:

  • Mobile sales: cellphones and cellphone accessories.
  • Automotive industry: China is the world’s largest car market, according to Statistia. Wuhan, where the first case of the virus was detected, is known as a “motor city”, because it’s home to several large car manufacturing plants.
  • Retail: like companies across the globe, many SA retailers are reliant on China for stock.
  • Hospitality: around 100 000 Chinese tourists visit South Africa each year. A PwC report estimates the coronavirus will cause losses of R200 million in the tourism industry.
  • Construction: businesses import steel and concrete from China. Construction projects are stalling because of shipment delays, reports IOL.

SMEs in these sectors have been hit hard.

“Many businesses owners I speak to are worried,” said Field.

“There’s no timeline around this. Businesses are taking a knock.”

The impact of coronavirus on business finance

In some cases, business owners have been struggling to repay their business loans.

“Here’s where lenders need to be sensitive to what people are going through,” said Field.

Though, SMEs should take a proactive approach when it comes to managing their business finance obligations.

“Once you realise you will struggle to make your repayments, contact your lender immediately to make an arrangement,”, said Field.

By taking this route, business owners can avoid defaults or judgements against their name, added Field.

What’s a good credit score for a business loan?

What’s a good credit score for a business loan?

Reading Time: 4 minutes

Is your credit score holding you back from getting a business loan?

When you apply for business finance, you want to show funders you’re willing—and able—to repay the loan. And they check your credit score, along with other financial information, to determine your risk.

But there’s more to the story when it comes to credit scores and business loans.

In this article, Lulalend’s team of credit risk experts share practical strategies for improving your credit rating right away.

Plus, you’ll learn how to get a business loan, even if you’re a relatively young business with a limited credit history.

Key points:

  • To improve your score, pay your accounts on time and don’t apply for too much credit at once
  • Avoid defaults on your account; make payment arrangements with lenders instead
  • Fintech funders use alternative data, in addition to looking at credit scores
  • Review your rating periodically: you get one free credit report each year

What is a credit score?

Your credit score is a three-digit number that represents your creditworthiness. Lenders use this figure to predict your ability to repay your loan.

As a rule, higher scores mean lower risk.

Your personal credit score is unique to you and is influenced by a few factors, including:

  • Your current debt
  • Your payment history
  • Length of payment history

Of these, paying your debt on time is one of the best things you do to build a strong personal credit rating, said Taryn Crouster, Senior Credit Analyst at Lulalend.

Based on these factors, you will be assigned a score by the credit bureaus.

What’s a good credit score for a business loan?

For business loans, lenders evaluate both your personal and business credit profiles.

Even though your personal credit score is only one of several factors lenders consider, a poor personal credit rating might hurt your business loan application.

(In our business loan guide, we dig into deeper detail about personal and business creditworthiness.)

Each bureau has a different way of calculating your credit score, but here’s a general guide to personal credit ratings:

  • 700+: the best rating you can achieve
  • 660+: a good credit rating
  • 620 to 659: you might struggle to get a business loan
  • Below 620: most lenders will see this kind of score as high-risk

For a long time, your credit score could mean the difference between your business loan application being approved or rejected. Lenders wanted a track record of repayments before approving your application.

But what if you don’t have any, or a limited, credit history?

Garth Rossiter, Chief Risk Officer at Lulalend, said fintech funders reviewed alternative data sources.

“We assess the applicant’s ability to repay and the willingness to repay. And we use a number of data points, in addition to credit scores, to make decisions.”

Tips for improving your credit score when you apply for a business loan

If you want to give yourself the best shot at building a positive credit rating, try these practical tips.

Avoid defaults

You should always aim to make your payments on time, consistently.

But what if you’ve hit a particularly rough patch?

Maybe it’s a seasonal slump. Perhaps your business is struggling because of unexpected threats in the global economy.

At some stage, most SME owners have experienced these kinds of challenges. Those are difficult, stressful situations And it’s tempting to take cover until the storm passes. But late or missed payments will work against you, said Crouster.

However, a proactive approach makes all the difference.

“If you’re in a situation where you can’t make your payments, let the creditor know beforehand. You’ll be able to make an arrangement, which is far better than a default listing on your credit report.”


Unpaid taxes will drag your credit score down, explained Lindiswa Tyhali, Senior Credit Analyst at Lulalend.

And trying to dodge the South African Revenue Service (Sars) could end up damaging your financial profile.

For instance, SARS could issue a court judgement against your name. Once that happens, it’s public information that shows up on your credit profile for years.

Business owners pay a provisional tax twice a year. Here’s an article with tips to save money and time when paying your tax.

Avoid bad debt

Paying off debt establishes a positive credit history. So, some debt is necessary. But there are types of debt to avoid.

Tyhali said short-term loans that fall under the National Loan Register (NLR) are considered bad debt, because they indicate to lenders that you might be having cash flow issues.

Limit credit applications

Each time you apply for credit, you’re giving the lender permission to pull your credit report.

These inquiries stay on your profile. Beyond that, each query reduces your credit score by a single point.

Don’t open too many new accounts

Racking up large amounts of credit quickly is a red flag, said Crouster:

“Taking too much debt over a short period of time might be a sign you’re struggling financially.”

How to get your free credit score

Are you ready to improve your credit score?

If you haven’t already checked your credit rating this year, that’s a great place to start.

You get one free credit report per year.

Here are popular credit bureaus :

If you’re after fast, easy business funding, consider a fintech funder like Lulalend. We base our credit decisions on the real-time performance of your business, instead of relying mainly on credit scores.



Business Loan Application: Getting a Business Loan in South Africa

Business Loan Application: Getting a Business Loan in South Africa

Reading Time: 9 minutes

Teboho Nkwanyana is a successful South African business owner who makes a significant contribution to the economy. His business, the Salad Bar, doubled turnover from one year to the next, hiring more employees as it leaps from surge after surge of growth.

But when it came to getting a business loan, none of that was enough.


Request a callback from our Funding Specialists


When Nkwanyana approached his bank for a business loan, the application process was difficult and drawn-out.

“I applied for a business loan to my bank several times. Each time there was either no response or a decline with no reasons.”

Nkwanyana’s story reflects a struggle shared by many SMEs.

South African business owners say there’s been little improvement in access to SME finance, according to a 2018 study by the South African Banking Association.

For many SMEs, part of the problem is finding the right information.

We’ve pulled together this compact guide to cover the most common questions around applying for a business loan to South African banks and alternative funders.

Our guide covers:

  • How to select the best business loan for your SME
  • How to qualify for a business loan
  • How to apply for a business loan
  • How to pay back your business loan

If you’re in a rush, here’s a summary of the key steps in the business loan application process:

  1. Decide on what you need from a business loan
  2. Determine the minimum requirements to see if you qualify, e.g., collateral, credit score
  3. Gather all the relevant documents
  4. Study the repayment terms
  5. Apply

Decide on what you need from a business loan

So, you need a business loan. If you’re battling to find the right one, you’re not alone.

In South Africa, SMEs can choose from 146 funders offering 328 different types of business loans and funding, report this study.

You might think all that choice makes getting a business loan easy.

In truth, it’s even harder.

Too many businesses are rejected because they’re applying for the wrong type of finance, suggests research.

Figuring out your funding need is the first step in the business loan application process, explains Garth Rossiter, Lulalend’s Chief Risk Officer.

“You want to use your business loan for the right reasons: to grow your SME. Start by understanding your business’s financial needs.”

Begin with the following questions, said Rossiter.

  • When do I need cash flow?

Timing is key; for instance, if you need a business loan to cover late payments, unexpected expenses, or to service a new contract.

As Nkwanyana tells us:

“In some cases, you need an overnight facility. You’re waiting for the invoice to be released, and you only need funds for a few hours.”

Are there spikes and dips in business activity? Perhaps, your business is seasonal. Study the forces that influence when you’d need business finance.

  • Why do I need cash flow?

Let’s take a closer look at the common reasons SMEs seek business loans. Aside from startup costs, most requests are for equipment finance and business expansion, according to a FinFind study.

  • List the eligible business loan providers

Take the insights you gain during the first two steps and start listing the financial institutions who offer the business loans you need.

Each of these steps will help you clarify your goals, assess your business’s financial health, and manage any shortcomings.

How to qualify for a business loan

If you search for a business loan online, you’ll be confronted by a staggering number of results: 1.5 billion, to be exact.

And though banks still dominate as finance sources for SMEs, the International Finance Corporation (IFC) finds other business loan providers have started to appeal to business owners who are searching for fast, easy ways to access finance. (The IFC, a member of the World Bank Group, works with the private sector in developed countries to expand access to economic opportunities. They are a Lulalend investor.)

As you’ll see later in this guide, business loan requirements depend on the lender. To speed up the process, speak to the funder before you apply, recommends the South African Enterprise Development Agency (SEDA).

“Before you make an application for finance, talk to the lender about exactly what sort of information they require – so that you can get a response to your application as quickly as possible.”

We’ll go through the key requirements here.

Credit score

What’s your credit score? Understanding your business credit worthiness is a great practice in general. But it’s especially important if you’re planning to take out a business loan.

Lenders will base their decisions, in part, on your credit rating.

Once you submit your business loan application, lenders will access data about your credit history from the credit bureaus.

There are indicators that influence your credit rating, and these include:

  • Your current levels of debt
  • Your payment history

Rossiter explained how a positive payment history influenced your credit rating.

“It’s important to maintain a good repayment history on long-standing accounts”

But, not all debt was good for your credit rating.

“High-risk personal funding negatively impacts your credit rating.”

In short: credit scores matter, but they’re not the only indicators lenders use to assess risk.

Alternative lenders use several data sources to make a credit judgement.

“Because fintech uses scoring technology to make an assessment, they use several data sources to assess a business owner’s eligibility,” said Rossiter.

What’s a good credit score to get a business loan?

There’s a lot of focus on personal credit scores when it comes to business loans.

Truth is, these personal credit scores are usually only one of several factors considered when lenders determine your business credit score.

However, a poor personal credit score will work against you.

Typically, between 640 to 700 is a good personal credit score. And higher scores mean lower risk.

Here’s a quick guide to personal credit ratings (ranges will vary depending on credit bureaus):

  • 700+: the best rating you can achieve. This is considered a very good to excellent rating.
  • 660+: a good credit rating, where you can access a wide range of deals
  • 620 to 659: you might struggle to get finance if you are in this range, but getting a business loan is still possible
  • Below 620: this is a score most lenders would see as high-risk. It might be worth rebuilding your credit score before you apply for a business loan

Here’s the caveat: your personal credit score and your business credit score are not one and the same.

If you’re applying for a business loan, your personal credit score may be considered along with several other assessment criteria. Lenders are rating your business. And your personal score is just a single data point they might take into account when they model your risk.


Has your business loan been rejected because of a lack of physical collateral?

A lack of collateral is among the most common problems facing SMEs on the hunt for a business loan, writes Marek Dubovec and Louise Gullifer in Secured Transactions Law Reform in Africa. 

Collateral is required by the bank to guarantee they will recover the money if you can’t pay back a business loan. Once you put up an asset as collateral, you’re giving the lender permission to claim that asset via the courts.

FinFind provides an overview of the legal obligations that come with collateral for business loans.

“…you CANNOT sell that asset without the written consent of the lender. Once the loan has been repaid in full, the lender no longer has a claim to the asset and you are free to sell it if you wish.”

Examples of physical collateral include:

  • Equipment
  • Real estate
  • Vehicles
  • Stock

A study into business lending in Africa found because SMEs were perceived as a higher credit risk, banks typically demanded valuable assets as collateral.

Plus, the lender will often value your assets for far less than they’re actually worth. That’s because the funder will be saddled with the costs of selling the assets, reports FinFind. These costs include:

  • Administration costs, e.g., determining which assets need to be sold and the interest fees
  • Finding a buyer, e.g., auction costs or advertising costs
  • Transfer of ownership, e.g., depending on the asset, there’s administration involved in the sale

The problem with this approach is obvious, explains Rossiter:

“Many SMEs don’t have access to physical collateral. But they have good cash flow.”

No collateral? You still have options.

More and more funders are offering unsecured business loans.

Some banks will waive the need for collateral if you have a purchase order. And most fintechs lenders don’t require collateral.

Time of operating

Nearly every type of business loan provider cites time in business as a critical requirement.

Typically, this excludes business owners who have only been operating for a few years. Fintech providers usually have less stringent requirements. If you have a trading history of one year, you’ll meet the minimum requirements.

Annual revenue

Most business loan providers will have set minimum revenue requirements. This differs from lender to lender.

Business loan minimum requirements

We contacted the banks to learn about the minimum requirements.

FNB business loan requirements

  • 12-months turnover in a business account
  • No unpaid debits on your account
  • Good personal credit rating

ABSA business loan requirements

  • Minimum affordability to be determined based on your financial statements
  • Additional security might be required depending your credit assessment

Nedbank cash advance requirements

  • Two years operating history
  • Nedbank merchant for at least three months
  • Business turnover of R1m and above
  • One-year transactional history


  • Earn a monthly salary from your business
  • Sole traders not eligible


You only need one year trading history and R500 000 annual turnover.

Once you’ve met the minimum requirements, it’s time to submit your application.

Financial documents

For this next step, you need to gather the right documents.

And while this sounds like the easy part, it’s one of the biggest reasons business owners get declined.

We’ve broken down the documents you need, by a business loan provider.

Business loan types vary from bank to bank, so we focused on the loans marketed specifically to SMEs. For instance, we looked at Nedbank’s unsecured loans, which is based on your turnover.


  • South African ID
  • Three-months salary slips (only SMEs who get a salary from their business are eligible)
  • Three months bank statement


  • 6 months bank statements
  • Annual financial statements
  • Year-to-date management accounts
  • Cash flow statements
  • Income statements
  • Balance sheets
  • Business plan


  • South African ID
  • Notice of incorporation
  • Registration certificate
  • Shareholder certificate
  • 6 months bank statements (if you’re not an ABSA client)
  • All directors to be present to sign application


  • One-year transactional history
  • Pro forma invoice demonstrating intended use of funds, up to 70% of the advance value


  • Only three months bank statements or management accounts

Is it hard to get a business loan?

By this time, you might be thinking it’s close to impossible to obtain a business loan.

We’re going to tackle this question on two fronts:

  1. Ease of application
  2. Likelihood of approval

To start, we contacted each of the banks to assess the ease of application.

Depending on whether or not you have an existing business or personal account with the bank, you’ll have different application options.

  • ABSA

The virtual banker will send the application forms to you. Plus, a banker will help you with the application telephonically.

  • Capitec

Apply in-branch

  • FNB

Apply online if you’re an existing customer. Request a call back or apply in-branch if you have no relationship with the bank.

  • Nedbank

If you have an existing account with Nedbank, your relationship manager will help you with the application. If not, you’ll need to visit the branch.

  • Lulalend

Applications with fintechs like Lulalend take just minutes. The process is fully online and you get an instant decision.

Now, how likely is it you’ll get that business loan?

We’re going to be honest, it’s not easy.

Let’s take a look at this statistic:

75% of credit applications by SMEs are rejected, according to an estimate cited by the IFC. 

It’s why there’s a funding gap—the shortfall between SMEs request and the finance approved—

of between R86 billion to R386 billion.

SMEs battle to get business loans from traditional funders in particular, according to research gathered by the Small Enterprise Finance Agency (Sefa):

“Given their highly conservative nature, South African banks and lenders are more inclined to put resources in small businesses in their later stages of development. They are less likely to lend to start-up SMMEs…”

For Nkwanyana, accessing quick working capital was a struggle even when he was growing fast.

“Banks aren’t cut out for SME funding. They’re not looking at what your business really needs. They’re scoring you, but you don’t know much about the scorecard.”

Rossiter added:

“Traditional funders assess risk in a way that is not always designed for SMEs. It’s why approval rates are far lower. Alternative funders are meeting this gap, because their risk model is built specifically for SMEs.”

Paying back your business loan

Before you submit your application, read the terms and conditions, advises Rossiter.

Think about this question: for how long will you need the money?

If you think you might want to pay your loan quickly, prioritise funding that doesn’t come with early settlement charges.

“Ask about early settlement or prepayment costs. You need your funding to be as flexible as your business. Can you settle early? What if you only need the funding for a day or two?”

Others, like Standard Bank for instance, will require three months written notice if you want to settle early. And you’ll still have to cover the interest due.

What is the business loan interest rate in South Africa?

The current prime lending rate, as of February 2020, is 9.75%.

What this means is that the amount your pay usually fluctuates along with that interest rate. The interest rate is determined by the South African Reserve Bank’s Monetary Policy Committee.

Some business loan providers charged a fixed cost for business funding.

Applying for a business loan

It’s easy to see the business loan application process as an obstacle: a barrier between you and achieving your goals.

But, it doesn’t need to be that way.

Start by gaining insight into your business. When and why do you need cash flow? Once you’ve successfully answered those questions, you’ll be in the best position to secure a business loan that propels your SME forward.

Considering alternative finance?

At Lulalend, we’re on a mission to make it easy to get funding to grow.

Today, Nkwanyana looks forward to achieving new milestones in his business.

“Getting funding from Lulalend was straightforward. That’s the difference. They look at what your business needs.”

Get a free quote within minutes today. It’s the easiest way to access up to R2 million in business finance.


2 Mistakes SMEs Make When Applying to Banks for Business Loans

2 Mistakes SMEs Make When Applying to Banks for Business Loans

Reading Time: 4 minutes

Banks reject more than 70% of business loan applications.

This estimate, cited by the International Finance Corporation (IFC), underscores the problem many SMEs face when they try to access finance.

Why are so many business loan applications declined?

We’re uncovering some of the key mistakes SMEs make when applying to banks for business loans.

The reasons banks reject business loan applications

The high rejection rate for business loans is worrying when you consider one of the main reasons SMEs fail is due to lack of funds.

“… access to finance is a key constraint to SME growth, it is the second most cited obstacle facing SMEs to grow their businesses in emerging markets and developing countries,” reports the World Bank.

For too many business owners, capital is the only thing standing in the way of achieving their goals.

So, many businesses use their own cash or they turn to family and friends, according to this SME South Africa assessment.

The problem with this approach is your growth is limited by the capital you can access from your network.

And that’s why business owners turn to other sources of income.

Now, research from the Organisation for Economic Co-operation and Development shows more and more business owners are exploring alternative funders; many business owners, however, still apply to apply to banks for business loans.

But traditional funders like banks have rigorous criteria: requirements that are often not suited to small to medium sized businesses.

“Our banks’ credit products are usually inflexible in their loan requirements and take a long time to process more complicated credit applications,” said Johan Bosini, a partner at Quona Capital, in this Business Tech article.

We’ve gathered the research and discovered the main mistakes SMEs make when applying for business loans include:

  • Not providing enough information
  • Not attaching collateral

Here’s the detail.

1. Not providing enough information

When Imraan Moos, a South African business owner, considered applying for finance to grow his business, he approached his bank.

To complete his application, Moos needed to complete a 30-page document.

It’s a mountain of paperwork most business owners know well.

SMEs in South Africa must endure lengthy application processes and submit tons of financial data.

A FinFind investigation into the obstacles facing SMEs calls out financial documentation as a barrier to obtaining business loans.

“Without these documents, the funder is unable to process the funding application, and the
SMME is unable to secure the funding they need.”

Here’s the caveat, though.

Thorough financial record-keeping isn’t a bad thing for your business. It’s exactly what you need to make the best decisions for your SME’s financial future.

More from the FinFind report:

“Many SMMEs struggle with financial recordkeeping and as a result are unable to produce up-to-date management accounts and other vital financial documents. Without these, they are not only unable to access finance, but they are also ill-equipped to make decisions in their business or properly manage their cash flow.”

At Lulalend, we’re a strong believer in the power of financial record-keeping. When you have financials in order, you always have your finger on the pulse of your business health. You’re in a position to identify weaknesses and act before they pose a threat to growth.

But there’s a difference between the kind of data you need to better run your business and the onerous information banks require to process your application.

Let’s take a look at an example.

Before Standard Bank will consider your business loan application, you’ll need to submit:

  • Business plan
  • Cash flow forecast
  • Sales and purchase budgets
  • Projected income statements
  • Personal statements of assets and liabilities for all partners or directors

It’s why digital funders, like Lulalend, only require your last three months bank statements. Based on the historical financial data of the business, Lulalend can make a judgement on the business health.

Lulalend extracts the data automatically—and securely—from your bank statements, speeding up the approval process. This is why you recieve your business funding in 24 hours, versus weeks or months with a traditional funder.

2. Not attaching collateral

For SMEs seeking business loans to grow, attaching collateral might swing the scales in their favour.

The South African Banking Association report into SME finance found not attaching collateral was one of the main reasons banks reject loans.

Screenshot via South African Banking Association report, Hurdles in SME Financing

Here’s where unsecured loans, where no collateral is required, makes a massive difference.

Unsecured lending is especially useful for SMEs, said Roelof Botha, an economist.

“Unsecured lending is also, as a rule, the only source of financing of working capital for small, medium & micro enterprises (SMMEs),” Botha told Business Tech.

“An expansion of access to unsecured credit by financial institutions holds the obvious potential advantage of assisting the quest for higher economic growth, employment creation and, as an inference, a broadening of the tax base,” adds Botha.

Banks, for their part, ask for collateral because they want a guarantee you will repay the money.

Alternative funders assess your business performance in real-time. By using scoring technology, Lulalend can make a judgement on a business owner’s affordability and risk. This detailed analysis means you don’t need collateral.

Business loans built for SMEs

Alternative funders are meeting the needs of business owners. By designing business loans specifically for SMEs, fintech companies especially have been able to serve South African businesses.

If you want to learn more about how funding with Lulalend works, learn more about how to apply for business finance within minutes here.