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Why the local SME funding landscape needs to embrace mobile

In recent years much has been made about the important role that small-to-medium enterprises (SME) will play in the revitalisation of South Africa’s economy, with growth in this segment a clear indication of an improving business landscape.

Sadly though SME funding is hard to come by, with access to it through traditional channels in particular proving a hurdle for many organisations.

As such it’s an issue in deed of dire addressing, according to MD of funding at Retail Capital, Miguel Da Silva.

“Even though there are approximately 2.5 million SMEs in the country, the biggest stumbling blocks they encounter still revolve around the risk barriers and red tape associated with traditional funding products,” he explains.

“The underwriting systems and financials required by institutions to finance small business simply do not provide a true reflection of operating conditions,” the MD points out.

“For many, the only apparent path is to obtain funding via banks. By the time the business receives the funding (if ever), it is often too late and beyond the point where it can help the company turn things around,” he notes.

“However, funding entails so many different nuances beyond the traditional, and SME owners need to make themselves aware of what is available, and what will suit their specific requirements,” Da Silva stresses.

To that end the MD says investors need to adapt their digital strategies to engage differently with SMEs. He uses the example of mobile as a platform for funding, which prompts the investor to not only differentiate itself in the market, but the SME to gain access to a real-time solution capable of addressing its unique needs.

“This cannot happen on its own. By partnering with a range of fintech organisations, the mobile-driven funding model provides SMEs with real-time, pre-approved offers based on turnover,” says Da Silva.

“And thanks to the availability of machine learning and artificial intelligence, these solutions will become more common,” he adds.

The Retail Capital exec also advocates for investors to be seen as more than just funders, but partners collaborating with SMEs. The benefit of such an approach is that investors become part of a growing enterprise that has a direct impact on the economy of the country, in his view.

He continues noting that thanks to the ubiquity of mobile, SMEs can apply for funding irrespective of the time of day, using an environment that they are comfortable in. Depending on the funder, it is possible for SMEs to access funding with same-day pay-outs, according to the MD.

That said, it is however important for such a solution to be available to formal and informal businesses, if it intends on being truly inclusive.

“For our part, Retail Capital is driving this mobile focus very strongly to be the first to market with a platform that does exactly all of this. It is about delivering SMEs with an enabling environment to get funding using more innovative methods as quickly and effectively as possible,” concludes Da Silva.

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