Access to finance is key to the survival of SMEs in South Africa

At the start of the pandemic, the government launched a number of relief funds with the intention of supporting SMEs with access to capital during the period when economic activity was negatively affected by Covid-19. But with more requests for help than funding available, or slow approvals of requests, many businesses found themselves in dire financial straits.

“Most SMEs don’t have large funding reserves to get through prolonged periods of low revenue and low cash flow. Without the necessary funds, many companies have struggled to meet their payment obligations, including staff payroll, rent, essential support services, as well as inventory and supply chain payments, ” says Trevor Gosling, co-founder and CEO of Lulalend – a financial partner of small and medium-sized enterprises (SMEs) in South Africa.

Gosling explains that weak or interrupted trading and limited access to finance during the foreclosure period had an aggravating effect on many businesses. In addition, many SMEs are now preparing for the peak summer trading period. “Now more than ever, this is the time when a healthy cash flow is vital for being in a strong position to grow. Significantly reduced liquidity impacts the ability of SMEs to make the investments necessary to take advantage of opportunities and plan for growth.

Government financial assistance to the SME sector should be complemented by decisive measures taken in the SME landscape, he adds.

“The R 1.4 billion aid package is not enough to save a sector that contributes R 1.5 trillion to the economy. Yes, financial assistance is welcome, but it is crucial that SMEs take action to ensure that they are able to recover from the economic hardships that the last year has inflicted on them, ”said Gosling.

It may sound counterintuitive, but Gosling explains that capital borrowing plays an important role in any business growth strategy. It is often mistakenly thought that all debt is bad or that it is only used by struggling businesses. “In fact, the opposite is often the case. Some of the most successful companies in the world, including Apple and Google, regularly seek capital injections and take on debt to finance their expansion and drive short-term growth, ” he adds.

Lulalend is keenly aware that lack of access to real-time finance is a critical problem that needs a solution. We were founded with the aim of giving SMEs quick and easy access to the working capital they need to grow. Our unique online solution enables SMEs to obtain short-term financing of up to R 2 million within 24 hours. We believe that enabling business owners to access funds quickly will not only help them achieve their goals, but also boost the country’s overall economic growth.

Lulalend has provided access to essential financing to thousands of local businesses across the country, spanning all sectors of the economy. They were recognized by the FNB as one of South Africa’s most innovative financial companies and partner with the likes of NSBC (National Chamber of Small Businesses).

Access to finance is key to the survival of SMEs in South Africa

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