The South African economy relies on small businesses to stimulate economic growth, create jobs and generate innovation. This is a view supported by the National Development Plan, which predicts that by 2030, small, medium and micro enterprises (SMMEs) will generate up to 90% of new jobs.
With this in mind, Ecsponent, through the Ecsponent Development Fund (EDF), offers disruptive solutions to fund SMMEs. These funding solutions help to develop sustainable businesses and to promote economic inclusion.
The EDF provides funding to SMME businesses who are unable to raise finance to supply valid purchase orders. To do this, the EDF takes a different view on credit than what is traditionally used by financiers. Instead, it mitigates risk by considering the credibility of the transaction and the business issuing the purchase order. The EDF further secures the transaction with a unique securitisation model, which protects all parties.
This means it can fund SMMEs with no financial history, security or other requirements that traditional funding institutions usually impose. This is, if the transaction they wish to fund is with credible corporate and government institutions.
Through this approach, the EDF helps businesses from the start-up phase, even with their first order. Over time, this funding support, combined with the EDF’s business advisory allows the SMME to develop the transactional and financial history it needs to graduate to more traditional banking and financing channels. Additionally, the EDF gives advice and access to information to help these businesses source more reliable supplies, quote more profitably and deliver their goods on time and meeting specifications.
The SMME will enjoy more sustainable client and supplier relations with the funding and business advisory support from EDF. Additionally, they can expect improved cash flow and a greater probability of receiving repeat business orders.
Corporate and government organisations will be more confident to source supplies from BEE-accredited, SMME vendors knowing that with the EDF’s support and oversight, the SMMEs will deliver the goods to their specifications and within set frameworks. This improves the supplier’s own BEE score, while contributing to stimulating small businesses growth and broad economic inclusion.
The Ecsponent Development Fund provides funding to:
- Newly-formed small, medium or micro-enterprises with established business agreements in place;
- Established businesses, intent on growth or expansion, but lacking working capital;
- Businesses without the balance sheet, business history or collateral required by traditional financial institutions;
- Specifically, Greenfield businesses, Black Youth Organisations (BYOs), Black Women Organisations (BWOs), Black Empowerment Enterprises (BBE) and, other businesses aligned with Ecsponent’s responsible lending criteria and investment strategies.
Find out more about the Ecsponent Development Fund’s purchase order funding solutions.