Reinventing SME Funding

Funding is the lifeblood of an SME. In these challenging market conditions, this multi-product approach is reflective of how digital is changing access to working capital in more exciting ways. 

Miguel Da Silva
Miguel Da Silva, MD of Funding at Retail Capital

by Miguel Da Silva

Despite the important contribution small-to-medium enterprises (SMEs) make to the economic growth of South Africa, the sector battles to access funding using traditional means.

The biggest stumbling blocks are the risk barriers and red tape associated with traditional funding products. The underwriting systems and financials required by institutions to finance small business simply do not provide a true reflection of operating conditions.

This has seen the emergence of FinTech solutions and alternative funding products that have been steadily gaining momentum.

Yet most local SMEs are unaware of how and where to gain access to funding. For many, the only apparent path is to obtain funding via banks. By the time the business receives the funding (if ever), it’s often too late and beyond the point where it can help the company turn things around.

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.

It is within this environment that Retail Capital has adapted its digital strategy to engage differently with SMEs by leveraging mobile as a platform for funding.

More impressively, the firm is the first to launch a real-time digital mobile-based funding solution for the SME sector.

Startup. Gajus /

By partnering with a range of FinTech organisations, the mobile-driven funding model provides SMEs with real-time, pre-approved offers based on turnover. And it’s done without requiring any documentation.

It is simply a matter of selecting the amount of funding required and then signing a contract electronically.

This is made possible thanks to the power of machine learning and an electro-neural network that enables the use of a sophisticated decision-making methodology that requires no human intervention. This affordability metric is a great way of driving financial inclusion, irrespective of business type or location, all without leaving the SME over-indebted.

Behind-the-scenes, the machine-learning algorithm has a deep understanding of business trading patterns and seasonality. This ensures the SME is unable to access more funding than what the business can afford. This affordability measure is a great way to drive financial inclusion, irrespective of physical location, without leaving the SME over-indebted.

SMEs can apply for funding, irrespective of the time of day, using the mobile-based application platform. Funding requires no collateral, or security, and is completely unrestricted. Additionally, by integrating the existing technology and software platforms of Retail Capital with cloud-based services, access to funding is delivered with same-day pay-outs.

The solution is available to formal and informal businesses, and can also be accessed by those individuals, such as sole proprietors, with no formal company registration. The only requirement is to provide three months’ trading history, which can also be submitted online.

To date, the portfolio has resulted in micro-funding solutions being offered with advances ranging from R2 000 up to R50 000. Additionally, the solution has resulted in high conversions for funding with a 70% repeat rate.

Funding is the lifeblood of an SME. In these challenging market conditions, this multi-product approach is reflective of how digital is changing access to working capital in more exciting ways.

This creates a powerful platform for growth and the betterment of the economy, entrepreneurs and the country’s SME sector.

  • Miguel Da Silva is MD of Funding at Retail Capital


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