It is a well-known fact that SMMEs contribute to 40% of the South African GDP, and are responsible for 80% of jobs created. Yet, among these small businesses, almost 80% of fail due to a lack of funding. What makes this problem even more complicated is that it isn’t as simple as ‘entrepreneurs need funding, so give them funding’, and it is this complex issue that the SME Funding Summit attempts to address.
SMMEs and funders often refer to the funding gap. But what does it mean? In essence, it can be likened to two people standing on opposite sides of a big river. One person has a business, but needs money to expand operations. The other has the money and wants to help. The space between them is the ‘gap’ that prevents them from reaching each other.
In this analogy, funding readiness is the bridge that connects the funder and the lender with each other, but as more and more people need funds, the more pressure is on the bridge. The result is that funders need to scrutinise which businesses should be funded, often those that have the lowest risks.
The added complication to this is that the businesses that often fall behind are the established, growth-oriented small businesses with annual turnovers between R1 million and R100 million that are too large for microfinance, yet too small or risky for traditional bank loans and venture capital.
Additionally, SMMEs who have previously applied for funding and were rejected cited the reasons as:
- Poor or a lack of understanding of funding requirements
- Lenders want too much collateral
- High (and escalating) interest rates
- Business is not in operation long enough or lacks experience
- Weak business model or cash flow
- Poor credit
- Too much legislative and compliance red tape
The result: the R350 billion disconnect that entrepreneurs need.
Why The SME Funding Summit is Valuable
“We understand how vital funding is to SME growth. Without access to finance, entrepreneurs struggle to succeed, which limits their ability to create jobs and contribute meaningfully to the economy,” said Velly Bosega, CEO of SME South Africa, in a previous statement.
The clear gap that exists raises questions about the amount of available funds through the existing funders, access to funding or information about funding, how SMMEs can find the right lender, ensure they are compliant and how to accurately complete their financial documents.
Key roleplayers such as SME South Africa and other industry stakeholders need to understand why SMEs borrow, why and how the process works, and understand why entrepreneurs are rejected to better fix the existing shortcomings. Furthermore, entrepreneurs need to understand how much they can borrow, how often, what type of funding is at their disposal and from which types of institutions.
The SME Funding Summit has been designed to address these questions. It brings together entrepreneurs who are growth-oriënted and looking for funding opportunities, and funders who have a variety of funding instruments.
Traditional and non-traditional funders exhibiting at the SME Funding Summit have the opportunity to showcase their different products and services and connect with business owners in person. Attendees, in turn, can ask exhibitors their burning questions, allowing them to better understand their own business’s funding readiness and application pitfalls.
In addition to this, attendees have access to expert speakers who will share their knowledge about the funding landscape in South Africa, how to improve their funding readiness and how to understand the various types of funding that is available to them.
Lastly, the event promises to create a space for dialogue between SMEs and industry stakeholders, an opportunity to engage with SMEs to understand their needs better.
It will also touch on compliance, knowing when and where to scale, and how to navigate the complexities of the funding environment.
More About the Event
The topics are relevant to businesses from all industries across South Africa, and although it is hosted at the Empire, Conference and events venue in Johannesburg, SMMEs from across the country are invited.
On the speaker list is keynote speaker Darlene Menzies, founder and CEO of Finfind. Joining the SME Funding Summit this year are Lornelle Jonas, CEO and Founder of E’lique Advisory, Lilah Clark, SME Development Manager at Johannesburg Stock Exchange, Kgomotso Ndungane, COO at Finfin, and Zibusiso Mkhwanazi, CEO and Founder of Avatar Agency Group. Returning to the stage are Jameel Khan and Hiten Keshave, co-founders from Unconvensional CA, as well as Mokgome Mogoba, Founder and Managing Partner at Kholo Capital.
The day is jam-packed with panel discussions, networking opportunities and exploring a range of funders – all in one place. Starting at 9:00 on the 11th of June, attendees will have access to safe, covered parking, breakfast and lunch, as well as a programme full of curated presentations and panels.
If you haven’t booked your seat yet, don’t miss your opportunity. Grab it before it’s gone!