How alternative funders enable small business success. (Image Source: http://africa.techvoize.com/)
Up to 75% of South African small businesses fail within the first year. One of the biggest causes being a lack of funding, or poor financial management. Yet, many small businesses struggle to secure funding, either because they haven’t been in business long enough, or because they don’t understand the intricacies of the lending market.
Alternative lenders are starting to play an important role in small business survival. Marilynn Leonard, co-founder of FundingHub, says matching the business with the right lender will depend on their specific finance requirements.
Speaking in a recent episode of the Sage #SmallBizAfrica podcast, Leonard said some reasons SMEs fail to secure funding include:
- Not having a compelling reason to borrow money;
- Applying for a loan and the value is too high for the business to be able to repay; and
- Not being in business for at least a year with revenue less than R1 million.
“Many small business owners don’t understand that they can only borrow a percentage of their turnover. No lender – whether a bank or an alternative lender – will advance a loan equal to their entire turnover.”
Alternative lenders are not registered with the National Credit Regulator (NCR) and Click here to read entire article
Source:: IT News Africa