Small businesses get help to tap into financiers

BANK lending to small businesses has been almost flat since 2008, and the government’s Small Enterprise Finance Agency plans to cut back on lending because of escalating defaults.

But FinFindeasy CEO Darlene Menzies says there is no shortage of money available.

FinFindeasy, which launched in October 2015, helps guide entrepreneurs through the steps needed to access finance, and puts them in touch with business advisers and lenders to assist them further.

Menzies says there are more than 350 finance options for small businesses. The problem is that few small businesses meet financiers’ stringent requirements for accessing finance.

About half of the users who have taken the site’s lenders readiness quiz do not have access to the necessary collateral to take out a loan. Only 38% of business owners indicate that their companies are profitable.

Yet business owners could prepare better for financiers. Of those who have taken the quiz, 43% have no financial statements, 39% lack management accounts, 31% have no written budgets, and 24% have no business plan.

The quiz, which helps users determine what they still need to address in order to access finance from lenders, is free for anyone who registers on the site. Menzies says about 10% of the 17,000 unique users who have accessed the site since its launch have opted to complete the quiz.

Two-thirds of users are from Gauteng, with the rest mainly from the Western Cape and KwaZulu-Natal. Menzies attributes the large number of users from Gauteng to the province being the only one so far in which the Small Enterprise Development Agency (Seda) has held a launch of the site.

Menzies says Seda will conduct launch events in other provinces, which should significantly change the geographical user spread.

FINFIND users are supported by Seda branches across the country at no cost to entrepreneurs.

She says that of the entrepreneurs who complete the “Find Lenders” readiness quiz, most indicate they need finance to start a business, followed by finance to buy equipment and to expand their business. Just more than half are looking for finance of less than R500,000, and 11% want finance of more than R5m. In all, 77% of the businesses have an annual turnover of less than R1m, while 83% have five or fewer employees. Of the site’s users, two-thirds are black, 17% white, 11% coloured and 6% are Indian.

Just more than half are under 35 years old, while 72% are male. Most of the entrepreneurs say they have been in business for a year or less or are still setting up their businesses.

The portal was conceived and developed by USAID during a five-year project started in 2008.

Kirsten Kennedy, a consultant who worked on the portal when it was in the development stage, says the idea emerged following research USAID conducted with focus groups on access to finance.

It became clear that while many business owners were aware of big government funders and banks, few knew about the many smaller lenders.

She says the initial idea was to target