Why is business finance hard to find? This is the question i hear almost weekly when speaking to business owners and entrepreneurs across Africa. If you’re trying to grow your small business, and are finding that getting business finance for your growth plans is a lot harder than you thought it would be, you’re probably frustrated. However, there are a few good reasons why business finance is so hard to find, and in this article, we look at what they are.
Why is business finance hard to find?
The Economy
Unfortunately, as you probably know, the world is in the proccess of merging from the Covid-19 pandemic. Not only that, however, but there’s been a global credit crisis, with many banks, financial institutions and even countries declaring bankruptcy. That has meant that traditional lenders around the world have had to tighten up their lending policies, and that’s one of the main reasons that business finance through traditional lenders has become so hard to access.
Stiff Competition
Of course, there’s also always been a lot of competition among potential entrepreneurs and small business owners, and the fact that there’s now less finance available means that it’s even more competitive.
Add to that the fact that many people who were laid off during the recession are also trying to start small businesses, and you begin to understand why you’re competing against so many other entrepreneurs!
Typical sources of business finance in South Africa
Changes in Business Lending
Even though there are more and more people seeking business finance these days, fewer of them are seeking traditional financing for their business. More are turning to venture capital and other types of business finance, but they have very different criteria.
In fact, because venture capitalists want to make a lot of money, quickly, they rarely look at companies looking for anything less than several million dollars. This means that if you’re just looking to start a small family business, you won’t be able to access that type of finance.
Stricter Requirements and More Sophisticated Lenders
There probably was a time when getting business finance was a simple matter, of having a good idea, and visiting your bank manager.
These days, however, lenders are far more sophisticated, and you’ll have to have, at the very least, a professional business plan. You’ll probably also need to have a registered company, existing marketing materials, a team of whiz kids, and a whole lot more if you want to impress today’s lender.
It’s exactly because of that that so many potential small business owners decide they don’t have what it takes to apply for business finance, and shelve their business ideas.
The final hurdle you will have to face, as a potential entrepreneur seeking business finance, is learning to distinguish between genuine financiers, and the people out there who are looking to take you for a ride.
As the world moves closer towards being a true global village, fraudsters from around the world are able to target more people than ever. Because those unscrupulous people know that people seeking business finance are usually desperate to get it, there are plenty of individuals and organisations that are targeting them. You will need to learn to identify those people and organisations, and avoid them. A good rule of thumb is to avoid any business finance offers that require you to pay an ‘administration fee’ upfront. They’re usually just people who will take your money, and disappear.
Reading this article, you could be forgiven for thinking that finding business finance for your company is impossible. It’s not, however, and entrepreneurs that have what it takes to succeed in business (a great idea, creativity, and determination) will almost certainly find some way to start their business – whether it’s business finance through traditional means, or bootstrapping their company into being. Stick to it, and you will find a way!
How To Find Business Finance in South Africa
For entrepreneurs in South Africa, securing business finance is a pivotal step toward growth and sustainability. This essay outlines a strategic approach to finding business finance, emphasizing key principles such as understanding the financial landscape, researching potential funding sources, and considering the services provided by Caban Capital and Caban.co.za.
- Understand the Financial Landscape:
Before embarking on the journey to secure business finance, entrepreneurs must have a comprehensive understanding of the financial landscape in South Africa. Factors such as interest rates, lending criteria, and available funding sources vary, requiring entrepreneurs to tailor their approach based on this understanding.
- Research Potential Funding Sources:
Conduct thorough research on potential funding sources available in South Africa. Traditional banks, government grants, and alternative lenders each have unique advantages and considerations. Caban Capital and Caban.co.za are notable players in the financial landscape, with Caban Capital providing corporate finance advisory services and Caban.co.za offering a platform for business finance.
- Explore Caban.co.za’s Platform:
Caban.co.za, as a platform for business finance in South Africa, offers a streamlined approach for entrepreneurs. Explore the platform to understand the types of financing available, application processes, and eligibility criteria. Online platforms like Caban.co.za can provide efficient access to various funding options for small and medium-sized enterprises (SMEs).
- Research Caban Capital’s Corporate Finance Advisory Services:
Caban Capital’s corporate finance advisory services offer entrepreneurs strategic guidance on financial matters. Research the services provided, including financial structuring, mergers and acquisitions advice, and strategic planning. Leveraging such advisory services can enhance entrepreneurs’ financial acumen and decision-making capabilities.
- Align Finance Needs with Business Goals:
Entrepreneurs should align their finance needs with their business goals. Whether seeking working capital, expansion funds, or investment for innovation, a clear understanding of how the funds will contribute to business objectives enhances the likelihood of finding the right financial solution.
- Network with Financial Institutions:
Actively network with traditional banks and financial institutions. Establishing relationships with financial institutions can provide insights into available loan products, interest rates, and terms. Entrepreneurs should leverage these connections to explore tailored financing options.
- Consider Alternative Funding Options:
In addition to traditional financing, entrepreneurs should consider alternative funding options such as angel investors, venture capital, or crowdfunding. Understanding the pros and cons of each option and aligning them with business needs is crucial for diversifying funding sources.
- Prepare a Comprehensive Business Plan:
A well-prepared business plan is a crucial tool for securing business finance. It should articulate the business’s vision, mission, financial projections, and the specific use of funds. A comprehensive business plan enhances the credibility of entrepreneurs when approaching potential lenders or investors.
- Explore Government Grants and Incentives:
South Africa offers various government grants and incentives to support businesses. Entrepreneurs should explore available programs related to their industry or business focus. Government support can provide a valuable injection of funds with favorable terms.
- Engage with Caban Capital for Strategic Advice:
Entrepreneurs seeking strategic financial advice can engage with Caban Capital. Their corporate finance advisory services can provide insights into financial structuring, growth strategies, and navigating complex financial landscapes, contributing to informed decision-making.
Finding business finance in South Africa requires a strategic and well-informed approach. By understanding the financial landscape, researching potential funding sources, exploring Caban.co.za’s platform, considering Caban Capital’s advisory services, aligning finance needs with business goals, networking with financial institutions, exploring alternative funding options, preparing a comprehensive business plan, and exploring government grants, entrepreneurs can navigate the financial landscape with confidence. The collaboration between entrepreneurs and financial institutions, coupled with strategic advice from experts like Caban Capital, is crucial for unlocking the financial support needed to drive business success in the dynamic South African market.
The Caban Group have built ups significant infrastructure of service providers who support entrepreneurs with access to business finance, support with restructuring, access to grant funding and support in improving cashflow challenges. Contact the team at Caban through the contact form on the website or by emailing Info @ Caban.co.za
