Finfind’s inaugural ‘SA SMME Access to Finance Report’ was launched on 10 July 2018 in Johannesburg.
The report analyses a unique data set, provided by Finfind, of SMME funders and SMMEs seeking finance. It was sponsored by the SA SME Fund and identifies access to finances challenges, gaps and potential solutions. The Finfind 2017 cleaned data sample of 11 033 SMME funding requests is larger than the South African GEM report and is one of the most comprehensive studies on access to finance in the SMME sector in this country.
SA SME Fund
“The SA SME Fund has sponsored the research study to help provide an additional fact base on the availability, or lack of credit and debt financing for SMMEs. Whilst the SME Fund’s focus is primarily on equity investments, we recognize that multiple funding options are required for the needs of SMEs at different growth stages. This report will augment our understanding of these needs,” comments Lisa Klein, Interim CEO of the SA SME Fund.
Key Findings of the Report
Some of the key findings in the report include the need for funders to develop new credit scoring models to address the large credit gap. Currently banks struggle to fund SMMEs. This is often due to a one-size-fits all approach to this market segment and applying traditional lending methods that rely on collateral and conventional financing scorecards, the report also highlights the significance of the SMME credit gap, which is estimated to be as large as R346 billion.
Some of the findings of the data analysis include the fact that high-growth businesses in the sample generated 86% of new jobs, even though they only represented 11% of total businesses, and that 44% of funding requests received are for amounts less than R250 000.
The report provides valuable insights into the supply and demand for SMME funding, and profiles the SMMEs seeking finance; by geographic location, turnover, age of business, sector, job creation, financial need and amount of finance required. It also profiles the funders and finance products, and then looks at how the supply and demand compare.
SMME Funding Landscape
“The report provides important information about the SMME funding landscape which is needed, as data on SMME access to finance in South Africa is limited. While many countries have transparent data on a number of SMMEs applying for loans, the reasons they are applying, financing terms, rejection reasons and rates, interest rates, non-performing loans and factoring volumes, this information does not exist in the public domain in South Africa, despite this information being crucial for policy making,” says Darlene Menzies, CEO of Finfind. “Finfind is excited to launch this ground-breaking report and we look forward to helping more SMMEs secure funding and see more jobs being created.”
Download the SA SMME Access to Finance Report here.