For entrepreneurs looking to launch businesses this year, here is a list of funding options for small businesses, including business loans, crowdfunding and venture capital investors that back start-ups.
Bootstrapping
Fund your business through your salary from a 9 – 5 or by generating an additional income stream from a side hustle.
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Business Loans and Financing
Traditional banks are no longer the only ones offering business loans and financing; many fintech companies offer finance instruments to help increase the working capital in your business. Short-term loans can be used to finance a business’s everyday operations. Each finance instrument has its benefits and criteria. An example of a type of specialist financing is purchase order funding which can be used to service an approved tender or purchase order.
Find the right finance product for your business – Compare the top lenders for the following:
Short-term Business Loan
Competitions
Business competitions or contests can get you in front of potential investors and have you win large amounts of prize money for your business. Depending on the competition, you might be asked to pitch your business idea and/or to provide a prototype.
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Crowdfunding
This alternative funding option is a good way for small business owners to raise capital as it offers a low barrier to entry. You can choose a crowdfunding platform to set up a campaign and raise capital in exchange for rewards, equity-based, or debt.
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Enterprise Supplier Development (ESD) programme
These types of programmes offer small business owners both financial and non-financial support. The Masisizane Fund by Old Mutual is an example of an ESD programme, it has a specific focus on black-owned businesses.
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Grants
Grants provide both financial and non-financial business development support. The majority of grants are industry-specific and/or focus on a particular group of people such as women, youth, disabled, Black business owners, or co-operatives.
During the COVID-19 pandemic, there were also opportunities for small business owners to apply for relief funding.
Government Funding (South Africa)
The different types of government funding include cost-sharing grants, incentives, tax incentives and equity funding.
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Venture Capital and Angel Investment
There are many venture capital funds and private investors like angel investors from both abroad and locally that invest in South African start-ups. It is important to do your research on an investor before applying for funding as each investor has their requirements. Some may only make investments for specific industries and/ or have a focus on women-owned businesses, youth-owned start-ups, or Black-owned businesses.
