A Limpopo business owner was able to complete a big contract as a result of R600 000 in funding from the Small Enterprise Finance Agency (Sefa)
A product of a merger between the South African Micro Apex Fund, Khula Enterprise Finance Limited and the small business division of the Industrial Development Corporation (IDC), Sefa provides loans ranging from R50 000 to R5 million through direct lending, wholesale and credit guarantees with banks.
Sefa has approved R272 million worth of funding and about half of this amount has already been disbursed.
Dumetshe Masha, who started manufacturing business On Point Manufacturing in November 2012, says the business only “really became operational” in February this year after landing a big contract with a local mining company.
He was reluctant to divulge the rand value of the contract, since he felt that this could hamper his chances of landing future big contracts.
“I landed a contract to supply the Two Rivers Platinum mine with components but then needed more time to purchase the material which cost about R700 000,” says Masha.
An employee at the mine then recommended he call Sefa where he completed an application form before meeting with them.
“I needed to complete the forms as well as provided a tax clearance certificate, my wife and my identity documents and proof of residence,” says Masha.
He says after applying for the finance at the end of February, the money was paid out in May.
Masha says that although the funding assisted him in completing the work and keeping the contract, he learnt a crucial lesson.
“I paid off the money in two months instead of six and as a result my cash-flow suffered. I am still somewhat recovering now,” says Masha.
If he could do things over, he would probably pay the loan off over a longer period of time.
However, he says he would not have learnt this important lesson.
“On the one hand, I would have saved money and on the other hand, I would not have learnt how to manage my cash-flow,” says Masha.
This, together with the stiff competition in the area and the unwillingness of suppliers to allow him to get his material on credit, has had a detrimental effect on his business.
Masha says this is because his business is less than a year old and have resulted in him having to lay off seven of his 10 employees.
He says that other manufacturers can decrease their selling price because they receive discounts on their material and are able to buy on credit from their suppliers.
But Masha remains optimistic and says he is expecting business to pick up over the December period as the mines close and need to stock up for January.
- Business owners requiring more information or who want to apply for finance from Sefa can go to www.sefa.org.za or call 0860 007 332.
How to apply
Up to R5 million is available to business owners from the Small Enterprise Finance Agency (Sefa) with a turnaround time of around 20 business days.
Business owners can apply online for Sefa finance, go to a regional Sefa center. or contact one of the regional development agencies in the provinces.
There is a cost involved in applying in the form of a once-off initiation fee.
Sefa requires the following to process an application:
- Surety forms.
- Certified copies of identity documents and marriage certificate if this is applicable to you.
- Short CVs of the key personnel.
- Proof of residence in the form of an utility bill or sworn affidavit which is not older than three months.
- Valid tax clearance certificate.
- Business registration documents.