Once upon a time, SMEs would go to a bank and have to fill reams of paperwork to get a loan and possibly be rejected based on restrictive minimum criteria or an outdated credit scorecard. When businesses rely so heavily on working capital to grow and scale, this traditional lending system is no longer fit for purpose.
Enter new-age business credit facilities: online, on time, and on your side
Cash is the lifeblood of any business. That’s a line you’ve heard before. In fact, it has become one of those cliches that many of us repeat without stopping to think about what it means. But it’s an extremely accurate metaphor: cash isn’t simply essential to the health of a business, it needs to keep circulating or the whole enterprise grinds to a halt. SMEs are especially at risk of a liquidity mismatch, especially in unpredictable times.
Smaller businesses deserve a credit provider designed to meet their urgent cash flow needs. For precisely that reason, a new generation of alternative credit providers has emerged, to address the gap between SMEs wanting to grow and banks simply saying ‘no’.
For businesses themselves, the advantages of working with a forward-thinking credit provider are clear and considerable. These include:
- It’s easy and online: No need to visit a physical bank or office. And no reams of paperwork. In fact, the whole application process only takes a couple of minutes.
- It’s lightning-fast: traditional funders are grindingly slow and bureaucratic. But with the new way of lending, you can have the funds you need in your account literally within hours.
- No hidden costs: Know all the costs upfront and only pay for what you use. Plus, there are no once-off application fees, ongoing monthly fees or hidden costs.
- Flexibility: You choose how much to draw on when you need it. And built-in rewards mean you benefit if you repay early.
A cash flow infusion for the South African businesses that need it most
Most businesses need to access funding at some point. But some industries are particularly sensitive to seasonal fluctuations in demand, or simply need funding to drive growth and innovation.
Professional services
Professional services may not involve acquiring expensive equipment such as machinery, but the less tangible tools of the trade may be surprisingly costly. Salaries, contractors and rent recur monthly and tend to be the largest expenses. This can cause problems during quieter seasons and holiday periods, especially when employees expect annual bonuses.
Services businesses tend to have fewer assets that can be used as collateral to obtain a bank loan. Then there’s the opportunity cost of not being able to take on new projects due to a lack of staff. In such cases, you need cash to hire the right talent precisely when you need it. Given the mismatch between client payment terms and capital costs, many professional services need alternative sources of funding in order to grow.
Manufacturers and Wholesalers
Manufacturing and wholesale companies have an obvious and very urgent need for cash: if you can’t pay for the raw material, equipment or inventory you need to fulfil a project or delivery, you could lose a customer or contract. Of course, even once you’ve secured the order, there is usually a considerable delay before the cusomter ultimately pays you. During this period you need to pay your own suppliers and bills.
Access to funding can also produce efficiency gains, enabling you to secure upfront payment discounts, as well as bulk discounts. If there’s a disruption in your supply chain, this may impact your ability to deliver on orders and ultimately to get paid. A short term credit facility can help bridge the gap over months of slower sales.
Retail & ecommerce
Retail is especially sensitive to changes in seasonal demand. At the same time, as the popular new brands change, you need to restore your inventory. Retailers need a solution to bridge the gap.
Buying the right stock at the right time is the retail specialist’s art, and you need the cash to pay your suppliers in order to make it happen. But we also realise demand doesn’t just happen. Cash on hand enables you to invest in a successful marketing campaign and expand product lines.
Software development, IT and Tech
Good tech staff are worth their weight in gold. Access to funding lets you build your team and retain your top talent. That means never turning down a project because you lack the manpower. Access to cash also enables tech businesses to cover those expensive software licences and fees.
The rise of small business in South Africa
According to Statistics South Africa, smaller businesses have slowly but surely increased their contribution to the economy. In 2013, small businesses contributed just 16% of the turnover in the formal sector. By 2019, this had increased to 22%. That’s highly encouraging, as SMMEs are critical drivers of overall economic growth.
But without access to funding fast, they’re cut off at the knees before they can even join the race. Fast, accessible business loans give a company a competitive advantage and allow South African businesses to not only compete within South Africa but to compete on an international level.
About Bridgement
Bridgement offers fast and flexible business funding with near-instant decisions on applications and removes the need for lengthy forms and long-term commitments.
With a Bridgement facility, you can spend less time managing cash flow and more time growing your business. Apply online in 2 minutes, and access funds within hours.