Fintech ‘overlooked’ when seeking working capital
CAPITAL Connect yesterday advised small businesses in South Africa to look into fintech solutions instead of traditional lenders to access capital because fintech processes were easier.
Group chief executive Steven Heilbron said there was still a perception in the market that a bank was the only safe and credible option for businesses that needed access to working capital.
Heilbron said many retailers were not aware that fintech platforms made it easy for them to access capital via the internet or a mobile app.
He said the growth-funding picture had changed in South Africa over the past few years as new financial technology players had come to market to address the financing gap.
Heilbron said these new players were able to offer business finance without fuss, reducing the amount of information required, the time taken for capital to be approved, and the amount of complex paperwork.
“There are agile, technology-enabled lenders who enable merchants to access funding fast when they can’t spend hours filling in forms or wait for weeks for their application to be granted,” Heilbron said.
“Today’s fintech solutions are designed for the fast-paced retail industry, where getting finance within 24 hours, rather than a week or more, could spell the difference between seizing or losing a valuable trading opportunity. They are also hassle-free, with no need to submit audited financials or other documentation.”
Capital Connect provides small and medium retailers within the fast-moving consumer goods, property and hospitality sectors with fintech solutions that connect them to cash, capital, card and virtual value-added products and services.
Heilbron said the Covid-19 pandemic had caused much disruption to businesses and their ease of access to working capital.
Although it has been extended by three months to July 11, the government’s R200 billion Loan Guarantee Scheme has largely been rendered moribund because small business owners have been reluctant to take on more debt in a weak and uncertain business environment. As at March 27, commercial banks had approved only 14 827 loans to the value of R18.16bn from the available R200bn.
However, a 2020 survey by PwC found that 22 percent of business owners ranked access to funding as their biggest challenge.
“Covid-19 has disrupted business as usual, and it has become more important than ever for businesses to be flexible and innovative,” Heilbron said. “With access to the right financing solutions, retailers can stay ahead of the game and navigate a dynamic market.”