Access to finance is one of the biggest challenges facing SMMEs in the tourism sector. Daniella Di Gaspero rounds up places to apply for financing.
Banks
First National Bank
FNB provides funding for tourism businesses in any of the following categories: guest houses, lodges, hotels, conference venues, tour operators, travel agents, catering, attractions, restaurants and tour guides.
Business Loans
FNB Business Loan provides loans of up to R400 000 for an active business account holder in good standing, who has been operating for 15 months or more and has annual turnover of R500 000 or more. FNB also provides insurance for tourism businesses.
For more information, click here.
Business Flexi Loan
Business owners who have a current business account with FNB can apply for a flexi business loan for either less than R300 000 or over R300 000. Business owners who do not have an account with FNB can still apply by submitting six months’ bank statements; annual financial statements and year-to-date management accounts; projections; and a business plan.
For more information, or to apply, click here.
Standard Bank
Standard Bank offers loans for start-up businesses. There is no limit on the loan amount granted if the business plan and financial background are in good standing.
To enquire, click here.
Angel Investor Programme
Standard Bank also offers funding in the form of Angel Investors. Angel Investors invest their own money in smaller, high-risk businesses with the hopes of gaining high returns within five to 10 years. Angel capital fills the gap in start-up financing between friends and family and large venture capital investment.
For more information, click here.
Absa
Absa has three funding options for tourism businesses, namely the Enterprise Development Credit Portfolio and Empowerment Funds.
Absa SME Fund
The SME Fund aids previously disadvantaged individuals and 100% black-owned businesses, including start-ups and existing businesses. Absa will grant a loan of between R5 000 and R3 million with a maximum loan term of five years to business owners that are involved in the day-to-day operations.
For more information, click here.
Absa Development Credit Fund
This fund offers alternative funding options for SMEs, including start-ups, existing businesses, franchises and businesses switching from other banks. A loan of between R50 000 and R3 million with a maximum loan term of five years of monthly reducible overdrafts is available to businesses whose major shareholder holds over 66% and is fully involved in daily operations.
For more information, or to download the application form, click here.
Nedbank
Nedbank offers businesses various options in terms of funding, such as loans, structured solutions, property finance and vehicle and asset finance. Businesses that are looking for funding can apply for a start-up loan; business growth loan; overdraft and short term loans; financial assistance; and debt management. The start-up loan provides capital to finance a business venture, expansion of a business or vehicles, property and assets. A business growth loan offers small business owners a structured loan of up to 10 years for business expansion or upgrades.
For more information, click here or email business@nedbank.co.za
Government grants
Department of Small Business Development
The Department of Small Business Development promotes and develops small businesses and cooperatives through economic funding.
The Black Business Supplier Development Programme (BBSDP)
This is a grant that encourages black businesses to grow by acquiring assets and operational capacity. The R800 000 grant stipulates that R400 000 will be contributed by the DTI and the remaining amount to be contributed by the entity.
For more information, click here or contact sbdinfo@dsbd.gov.za
Co-operative Incentives Scheme (CIS)
The CIS is a 100% grant for registered primary co-operative, consisting of five or more members, that aims to promote co-operative through provision of a matching grant and provides financing to meet start-up requirements. The maximum amount that the scheme offers is R350 000.
For more information, click here or contact sbdinfo@dsbd.gov.za
Department of Trade and Industry (DTI)
The Department of Trade and Industry has various programmes and grants in place to encourage and support new business SMMs.
Seda Technology Programme (STP)
This programme provides a maximum grant of R1 million. Of this, R800 000 must be used for equipment, of which 35% will be contributed by DTI. The remaining R200 000 is to be used in a business development programme on a 50:50 basis.
For more information, click here or contact tbreytenbach@seda.org.za
Critical Infrastructure Programme
The grant covers the development cost from 10%-30% towards the improvement of critical infrastructure. The mount is capped at R30 million.
For more information, click here or contact kmojela@thedti.gov.za
SIZWE/FABCOST
This loan funding is provided to BEE SMMEs that are incorporated and working within South Africa. The funding offered ranges from R10 000-R3 million. SIZWE/FABCOST will contribute 90% and the remaining 10% is the entity’s contribution. This is payable over a period of five years at a rate of prime plus 3%.
For more information, click here.
Business Partners
Loans and equity investments from R500 000-R10 million are available to the public on request. Business Partners offers to obtain a shareholding and retain it for five years, while participating in shareholder and director meetings. During these five years, Business Partners will advise how to use surplus cash to pay other shareholders loans. After the five years, Business Partners will either sell its shares to a third party or to the existing shareholders.
For more information, click here.
Department of Economic Development and Tourism (Western Cape Government)
Through its Enterprise Development Fund, the department offers services and support programmes to develop and grow small businesses in the Western Cape. The fund provides financial assistance in the form of a low-cost loan ranging between R250 000 and R75 000 000 to qualifying entities.
To enquire or apply, click here.
Cape Town Tourism
Cape Town Tourism has developed the Board Development Fund Programme to further develop and grow existing SMME businesses. The chosen businesses will each receive R50 000 in support of their business’s growth as well as non-financial support by Cape Town Tourism via coaching, mentoring and complimentary membership, etc. The programme will run until August 31.
To enquire, click here.
Gauteng Tourism Authority
The Tourism Development Fund administered by the Gauteng Tourism Authority offers funding to be used to develop and empower previously disadvantaged persons or communities in the tourism industry. To apply, projects must be based in Gauteng and must contribute towards the empowerment of Non-Governmental Organisations or Community Based Structures. Funding will be provided to projects whose management costs do not exceed 7-10% of the total costs.
For more information, call (011) 340 9000.
Ithala Development Finance Corporation
Ithala is the tourism development facilitator for KwaZulu Natal and offers building finance at up to 60% of the value or cost of the building; equipment financing for a redemption period of three to 10 years; and working capital loans that do not exceed five years.
For more information, email gsimmonds@ithala.co.za
Northern Cape CISP/DEAT Scheme
The Northern Cape Department of Economic Affairs and Tourism provides financial support to local businesses in the Northern Cape and promotes SMME development with the aim of reducing the existing gap between the need to develop the micro business sector and the lack of adequate services and training opportunities for micro and small entrepreneurs. Loans are available from R1 000-R20 000.
For more information, email cisp@met.ncape.gov.za
Eastern Cape Development Corporation (ECDC)
ECDC offers new and existing tourism businesses financing in the form or a loan or structured finance from R100 000 to R3 million. Applicants must be based in the Eastern Cape, have a comprehensive business plan and proof of management capability in tourism or a tourism-related field.
For more information, click here. www.ecdc.co.za
Financial Institutions
Proserv
ProServ, a professional services company that offers sustainable skills development solutions in Southern Africa, is funded by various government initiatives to implement development programmes for unemployed learners as well as assist organisations in incorporating unemployed learners into their businesses. Proserv is currently providing training and stipend funds up to R2 000 per learner per month to 400 learners.
To enquire or for more information, click here.
Industrial Development Corporation (IDC)
The IDC’s Tourism Business Unit finances capital expenditure in tourism businesses. This finance focuses on businesses offering accommodation to tourists but also extends to other capital-intensive tourism projects with the potential to significantly impact on the growth of the tourism industry. IDC offers a loan amount of over R1 million.
For more information or to apply, email benn@idc.co.za.
National Empowerment Fund (NEF)
The NEF offers four funding options for businesses. For more information click here.
Imbewu Fund
This fund offers debt, quasi-entity and equity finance of up to R20 million, comprising: entrepreneurship finance up to R5 million; procurement finance limited to R10 million; franchise finance limited to R5 million; and rural and community development projects limited to R20 million.
Umnotho Fund
This fund is designed to improve access to BEE capital and offers the following: acquisition finance from R2 million to R75 million; new venture financing from R5 million to R75 million; expansion capital from R5 million to R75 million; capital markets funding from R5 million to R75 million; and liquidity and warehousing funding from R5 million to R75 million.
iMbewu Fund
This fund is designed to support black entrepreneurs wishing to start new businesses as well as support existing black-owned enterprises with expansion capital. The fund supports these entities by offering debt, quasi-equity and equity finance products with the funding threshold ranging from a minimum of R250 000 to a maximum of R10 million.
Rural and Community Development Fund
The Rural and Community Development Fund was designed to promote sustainable change in social and economic relations and supporting the goals of growth and development in the rural economy through financing of sustainable enterprises. The funding threshold ranges from a minimum of R1 million to R50 million.
To see a criteria list, click here.
Small Enterprise Finance Agency (Sefa)
Sefa offers various loans from R50 000 to R5 million to owner-managed businesses based in South Africa, where the owner is involved in the day-to-day running of the business on a full-time basis. Sefa demands that business be conducted with a profit motive and be economically viable and where the forecasted cash flow shows the ability to repay the facility. Businesses must also display sufficient entrepreneurship, skills and experience directly related to the nature of the business.
Sefa’s schemes and loans also include the Credit Indemnity Scheme, which offers funding for SMMEs of between R10 000-R3 million for start-ups or for expansion; the Enablis Acceleration Fund, which provides financing from R50 000 to R10 million to SMEs involved in all sectors: transport, tourism, agriculture, and service industry; the Cape Capital Investment and Finance Co Ltd, which provides general finance, asset-based finance, trade, stock financing and related financing; and the Enablis Khula Loan Fund, which provides predominantly Independent Travel Consultant-focused SMEs access to funding to start and or expand businesses.
To enquire or apply, click here.
iKwezi
The iKwezi Tourism Facility (ITF) provides business loans to small businesses in the tourism industry, ranging from a minimum of R10 000 to a maximum of R5 million. A fund of R50 million has been ring-fenced specifically for the iKwezi Tourism Facility, which is managed by a dedicated team at Tourism Enterprise Partnership.
To enquire or apply, click here.
Anglo American
The Anglo American Sebenza Fund provides loan funding to new and existing businesses that wish to start or expand operations. The fund provides post-funding business support services to the entrepreneur and his/her employees in the form of mentorship, skills development and training. The maximum repayment period is five years at a very competitive interest rate.
For more information, contact Portia Zilwa at 021 371 0168 or click here.
Business Partners
This fund offers business financing between R500 000 and R20 million to SMEs in all sectors whose gross assets are under R100 million and where annual turnover does not exceed R200 million and/or employees are fewer than 500 in number.
For more information, phone 021 464 3600 in Cape Town or 044 873 6112in George or click here.
National Youth Development Agency (NYDA)
NYDA provides a maximum loan of R350 000 to SMEs towards purchasing stock or equipment for the business. NYDA also provides micro-financing loans ranging from R1 000-R100 000. NYDA also offers Business Opportunities Support Service (BOSS), which assists youth entrepreneurs by sourcing viable business opportunities, linking youth entrepreneurs to identified business opportunities, providing mentorship, training and business development support.
For more information, click here.
Industrial Development Corporation
The Industrial Development Corporation fund offers financing to businesses in manufacturing, ICT, tourism, agri-processing, media and motion, mining and minerals. A minimum amount of R1 million is available to applications.
To enquire or for more information, click here.
New Business Finance
All business can apply for working capital up to R250 000 from the New Business Finance fund. Businesses can apply for bridging finance and transaction finance from between R10 000-R250 000.
For more information, click here.
Identity Development Fund (IDF)
IDF offers tourism business loans from between R20 000 and R3 million for up to five years. IDF also assist in supplying working capital and sales-backed finance; invoice and purchase order financing and short-term loans from seven days to 12 months.
To enquire, click here.
Blue Financial Services
SMMEs can apply for a loan of between R15 000 and R3 million from Blue Financial Services.
To apply or for more information, click here.
