Small and Medium Enterprises are the cornerstone of the global economy. The 2024 United Nations General Assembly designated June 27 as “Micro, Small, and Medium-sized Enterprises (MSMEs) Day” to raise awareness of their contributions toward achieving the United Nations Sustainable Development Goals (SDGs) – specifically SDG 8 (decent work and economic growth) and SDG 9 (industry, innovation, and infrastructure). According to UN statistics, SMEs account for 90% of businesses, more than 70% of employment, and 50% of GDP worldwide, thereby remaining core to the economy.

Small and Medium Enterprises (SMEs) in South Africa are vital to the economy as their operations drive job creation, innovation, and economic growth. Despite their relevance, SMEs face a range of constraints that hinder their ability to thrive. To expand and sustain their businesses, entrepreneurs need to understand and overcome these challenges, employing potential solutions and effective financial management strategies. Old Mutual SMEgo is a multifaceted platform that acts as a one stop shop for small to medium enterprises offering Business Administrative Tools, Funding, Access to Markets and Insurance all housed in one subscription-based platform.

While there is a consensus on the macro, micro, and environmental factors that influence the efficiency and growth of SMEs, these factors include access to finance, infrastructure, governance, and market access. Additionally, aspects such as gross domestic product (GDP), unemployment rates, spending patterns, inflation, monetary and fiscal policy also form part of the broader financial ecosystem affecting SME operations. Understanding these obstacles enables businesses to develop strategies tailored to their specific needs and capabilities, regardless of their size.

According to a 2024 International Finance Corporation (IFC) analysis, the financing gap among Micro, Small, and Medium Enterprises (MSMEs) in developing countries is $5.2 trillion annually. Governance, small budgets, financial acumen, brand recognition, and skills are significant challenges for small businesses scaling up. Old Mutual SMEgo offers a unique proposition of an aggregation of various SME lending experts onto one platform where the system matches you to your most suitable funders that can be applied to with a single application with the average response time of 72 hours. Further to this, the platform provides credit scoring capabilities that allow businesses to understand their credit score and get an indication of the amount of funding their business can take.

The loans available include:

• Business Funding (Secured and Unsecured): Up to R50million.
• Trade Finance: Up to R20million to fund Local and Trade Purchases.
• Asset Finance: Up to R50million to buy new assets to use in Business Operations.
• Contract Finance: Up to R20million to fund approved customer contracts.
• Purchase Order/Tender Finance: Up to R10million to fund approved customer purchase order/ tenders.
• Supply Chain Finance: Accessible cash flow solutions for Businesses up to R10million.
• Personal Loan: Up to R250,000 to finance your business.

Basic qualifying criteria include the business being a registered business in South Africa operating for a minimum of 6 months with an annual turnover of R500,000 and above.

In conclusion, while SMEs face a range of financial challenges, leveraging appropriate financial solutions and services such as Old Mutual SMEgo can significantly alter the trajectory of SME operations. Old Mutual SMEgo has flexible subscription options to suit different budget needs and business requirements. The monthly subscription options are the Premium Plan for R99 and the Premium Plus Plan for R299. The platform is available on www.smego.co.za. Also available on Android and iOS.

Old Mutual FOR SME is offered by Old Mutual Corporate Ventures, a company in the Old Mutual Group. Ts & Cs apply.

Related FAQs: SME financing options

Q: What are the main financing options available for SMEs in South Africa?

A: SMEs in South Africa can explore various financing options including traditional bank loans, venture capital, asset finance, invoice finance and alternative financing solutions. These options help businesses unlock capital for growth and operational needs.

Q: How can Old Mutual SMEgo support the growth of SMEs?

A: Old Mutual SMEgo provides tailored finance solutions for SMEs, aiming to support growth through effective financial management and access to funding solutions that meet the unique needs of small and medium enterprises.

Q: What role does effective financial management play in SME development?

A: Effective financial management is crucial for SME development as it helps businesses manage their financial records, optimise cash flow and make informed decisions that support growth and sustainability in a competitive business landscape.

Q: How can SMEs leverage invoice finance to improve cash flow?

A: SMEs can leverage invoice finance by using their outstanding invoices as collateral to secure immediate working capital. This allows businesses to unlock funds that can be reinvested into operations and growth initiatives.

Q: What are some common constraints to SME growth in South Africa?

A: Common constraints to SME growth include limited access to funding options, lack of understanding of business finance, high operational costs and inadequate support from financial institutions. Addressing these constraints is essential for fostering a thriving SME sector.

Q: What is the importance of exploring alternative financing for SMEs?

A: Exploring alternative financing options allows SMEs to access funding solutions beyond traditional banks, which can be crucial for those with limited credit history or those looking for more flexible repayment terms. This can significantly enhance their ability to grow and enter new markets.

Q: How can SMEs in South Africa access growth capital?

A: SMEs in South Africa can access growth capital through various means such as venture capital, private equity, government grants and specialised financial institutions that focus on providing funding solutions for SMEs.

Q: What advice can you give to SMEs regarding business finance?

A: SMEs should prioritise understanding business finance by keeping accurate financial records, exploring various funding options and seeking advice from financial experts. This knowledge will empower them to make strategic decisions that drive business growth.

Q: What are some effective strategies for managing working capital in an SME?

A: Effective strategies for managing working capital in an SME include diligent cash flow forecasting, timely invoicing, negotiating favorable payment terms with suppliers and utilising financing options like invoice finance to enhance liquidity.

Q: How can Old Mutual SMEgo’s solutions for SMEs help in business growth?

A: Old Mutual SMEgo’s solutions for SMEs are designed to provide tailored financial support, helping businesses unlock potential for growth capital, improve financial management and ultimately enhance their competitiveness in the market.