For SMEs, access to funding can be the key to unlocking growth, covering cash flow gaps, or investing in new opportunities. But without transparency, that funding can quickly become a burden. Confusing terms, hidden fees and unclear repayment structures can trap businesses in cycles of debt rather than empowering them to thrive.
At SASFA, we believe that transparency isn’t just good practice, it’s essential to ethical, sustainable SME financing. In this blog, we explore why transparency matters, how to spot red flags and why working with a SASFA Member makes all the difference.
What Fair Lending Should Look Like
Fair, ethical lending begins with clarity and honesty. SMEs should never be left guessing about the true cost of their funding or what they’re committing to. Here’s what transparent lending looks like in practice:
Clear Terms: Businesses should receive documentation that spells out the loan amount, interest or fees, repayment structure and timelines in plain language.
No Hidden Fees: All costs, from initiation fees to penalties, should be disclosed upfront.
Aligned Repayment Structures: Repayment terms should match the business’s cash flow patterns, allowing them to repay comfortably without jeopardising daily operations.
Support and Responsiveness: A good lender should be accessible, answer questions and provide support throughout the funding relationship.
Fair lending builds trust and trust is the foundation for long-term financial partnerships that fuel real growth.
How to Spot Red Flags
Unfortunately, not all lenders operate with the same level of integrity. Here are some warning signs that a funder may not be transparent or ethical:
Unclear or overly complicated contracts: If you’re unsure what you’re agreeing to, that’s a problem.
Pressure to sign quickly: Ethical lenders will give you time to review the agreement and seek advice.
Hidden or unexpected fees: Charges that appear late in the process or after funding are a major red flag.
Lack of customer support: If the provider disappears once the contract is signed, they’re not in it for your long-term success.
No affordability assessment: A responsible lender will assess your ability to repay before approving funding.
If any of these sound familiar, it’s time to step back and reassess your options.
Why Working with SASFA Members Matters
SASFA’s mission is to promote ethical, transparent and responsible SME financing in South Africa. Every SASFA Member adheres to our Code of Conduct, which is built on principles of:
- Transparency
- Fairness
- Responsible Lending
- Accountability
When you partner with a SASFA Member, you can expect:
- Full disclosure of fees, terms, and repayment expectations.
- Funding tailored to your needs, not one-size-fits-all products.
- Protection from exploitative practices, including loan stacking or over-indebtedness.
- A commitment to your success, not just your signature.
SASFA Members undergo a vetting process and are held to high standards because SMEs deserve funders who put their success first.
In the world of SME finance, transparency is more than a buzzword, it’s a necessity. It protects business owners, fosters trust and lays the groundwork for sustainable success. With clear terms, ethical practices, and a focus on fair treatment, SASFA and its members are setting a new standard in the industry.
Before signing any agreement, ask the tough questions, and make sure your lender is committed to transparency.
