Your guide to business loans in South Africa

So, you’ve got a business idea that you’re ready to execute on. But, you need cash. What do you do? Enter: the business loan.

Business loans offer a way to finance both new and existing businesses in South Africa. Available through a number of lenders, from banks to specialised loan companies, this type of loan may seem like a quick and easy way to get enough financing to start your business. But, remember to do your research.

Getting started with your business loan 👔

First things first, how do you even begin to apply for a business loan in South Africa?

In reality, it can be challenging to go through the process of seeking a loan, let alone getting your loan approved. Many businesses are desperate for help and, rather than waiting for loan approval, they end up taking chances by going to a fast loan provider. 

When you get your loan through a reputable lender, you can expect to go through a formal application process that can be slow. This is because lenders often need various documents and verification to make sure that you are who you say you are and that you’re not a liability. Even though you might really need the money, rather go through a company you’ve read a lot about, on Platforms like Hellopeter.

What type of business loans are usually available?

The type of loan you get will depend on where you’re getting it from – a bank, or another lender. The type of business loan you might apply for could include:

• Bank finance such as an overdraft (added to your business account when you are able to provide a business plan and some sort of asset)
• Debtor finance (ideal for growing businesses that meet a specified turnover) 
• Asset finance (puts the loan against assets such as equipment and vehicles) 

You could also consider asset funding from a loan specialist, using assets to secure your loan. Some lenders also offer unsecured loans that use interest rates instead of assets.

Who can apply for a small business loan? 🏢

Small business loans are designed for those who are starting or operating a small business. According to Wikipedia, a small business is defined as:

“An SME in South Africa is any enterprise with one or more of the following characteristics: Fewer than 200 employees. Annual turnover of less than R64 million. Capital assets of less than R10 million.”

Along with meeting the above requirements, your business also needs to have been operating long enough to show a proven track record. You’ll also need to have a detailed business plan that outlines your:

1. Financial projections. 
2. Clear record of your income and expenses (and how much you’ll need as a salary).
3. Your start-up costs
4. Running costs for the first five years
5. Any other requirements requested by the lender

Where can you get a business loan? 🏦

Now that you’re ready to start looking at getting your business loan, where do you go to get the best loan with the best payment terms, interest and customer service? 

Banks

South Africa’s major banks all offer loans for businesses of all sizes. You could speak to your bank first to see what they’re able to offer, or you could do some research to determine the bank that has the best overall rating. 

One simple way to get an idea of how banks are rated is to use a tool such as Hellopeter to view consumer reviews. Our banking category lists all major banks within South Africa, giving a total rating as well as a trust rating. 

Asset finance houses

These lenders usually form part of major banking groups. For example, Bankfin forms part of Absa, Stannic forms part of Standard Bank and Wesbank forms part of FNB. 

These lenders are often a lot more flexible compared to banks, which can make it easier to get a loan. Often, loans taken out with these lenders are smaller. 

Specialised lenders

Then we have specialised lenders, who focus on small business loans. These types of lenders include direct lenders, who lend funds directly to businesses. If you don’t qualify for a bank loan, you might apply to this type of lender, such as an online loan company. 

These lenders finance people even when there is a high risk or bad credit record. They are typically far more expensive in terms of interest rates.

It’s loan time ✍️

Starting a new business is exhilarating. Watching your business grow is equally exciting. Getting finances for your business can help open doors, making it possible to purchase equipment, invest in your first office or factory, hire more employees, and achieve your goals. When you take the time to plan and prepare, you will find business finance far less stressful. 

Platforms such as Hellopeter and Google help you get all the information you need to make educated decisions that are based on fact, rather than guesses. Your business is important enough to warrant careful decisions. Approach business loans carefully and you’ll get the financial help you need to take your venture to the next level.

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