Best Business Loan lenders in South Africa for 2025
- Written by Wesley Vos
- Updated
Business Loans
Lula: Best for fast funding
Pros & cons
Pros
- Fast approval with funds available in 24 hours
- No collateral required, making access easier for SMEs
- Transparent costs with no hidden fees
- Flexible repayment options with no early repayment penalties
- Simple online application process completed in minutes
Cons
- Higher monthly fees for the first few months (2%-6%)
- Limited repayment terms of only 6 or 12 months
- Minimum turnover of R500,000 required for eligibility
Our take
Overview
Lula is a leading digital lender in South Africa, dedicated to supporting small and medium-sized enterprises (SMEs) with accessible and fast business loans. Unlike traditional banks that often require lengthy application processes and extensive collateral, Lula uses an innovative online platform to provide quick funding solutions tailored to the unique needs of SMEs. This approach enables businesses to apply for loans in just a few minutes and receive funding decisions within 24 hours, making Lula an ideal choice for businesses that need immediate access to working capital, whether for managing cash flow, purchasing inventory, or taking advantage of growth opportunities.
What distinguishes Lula from other lenders is its commitment to transparency and flexibility. The company offers unsecured loans, meaning no collateral is required, and repayment terms range from 6 to 12 months, providing businesses with the flexibility to repay on terms that suit their cash flow. Lula also ensures there are no hidden fees, allowing business owners to understand exactly what they are paying for upfront. With competitive interest rates and a focus on personalized customer service, Lula is not just a lender but a partner in helping South African businesses succeed and grow.
Key Facts
- Loan Amount: Lula offers business loans ranging from R10,000 to R5,000,000, providing flexibility for both small and growing businesses.
- Fast Funding: You can get approved in minutes and receive the funds in your account within 24 hours, ideal for businesses needing quick access to capital.
- Flexible Repayment Terms: Lula offers repayment terms of 6 or 12 months, with no early repayment penalties, allowing you to pay off the loan sooner if desired.
- Unsecured Loans: No collateral is required to access Lula’s business loans, making it easier for SMEs to get funding without risking valuable assets.
- Transparent Costs: Lula offers a simple and transparent fee structure, with monthly costs between 2% and 6% of the loan amount, depending on the repayment plan chosen.
- Lula’s loan calculator is a handy tool that lets you easily visualize your repayment amounts based on your selected loan term, providing a clear breakdown of costs.
Known qualification & document requirements
- Business must be operational for 1+ year
- Annual revenue of at least R500,000
- Valid South African business registration
- Recent bank statements required
- Online banking login for fast verification (optional)
Fees
Lula does not charge initiation fees or monthly admin fees, unlike many traditional lenders. Their cost structure is transparent, with fees ranging from 2% to 6% of the loan amount, depending on the loan plan chosen, for the first few months. After that, a fixed 2% fee is charged for the remaining months of the term. Additionally, there are no early repayment penalties, allowing businesses to save on costs if they repay earlier than expected.
Time to receive funds
24h after application approval
Illustrative Example
Loan Amount: R100,000
Repayment Term: 12 months
Monthly Fee (First 4 months): 6%
Monthly Fee (Remaining 8 months): 2%
Monthly Instalment: R10,500.00
Total Cost of Credit: R26,000 (fees over 12 months)
Total Repayment: R126,000
*Please note this is just an illustrative example of what it would cost you. Actual fees and rates may vary based on your specific loan amount and repayment plan. For an accurate quote, we recommend applying directly with Lula.
Business Loans
Genfin: Best for flexible repayment terms
Interest (APR)
3.5-5% per mo
Loan Amount
R100k-R5m
Loan Term
6-24 mo
Apply on partner site
Pros & cons
Pros
- Fast funding, often within 48 to 72 hours
- No hidden fees or early settlement penalties
- Flexible repayment terms with refinancing options after 50% repayment
- Interest charged only on the reducing loan balance
- Tailored solutions with dedicated consultants for support
Cons
- Requires a minimum annual turnover of R1 million
- Short loan terms of 6 to 24 months, which may be limiting
- The application process may take up to three days
Our take
Overview
Genfin is a leading South African financial services provider, offering flexible business loans designed to support the growth and sustainability of small to medium-sized enterprises (SMEs) and mid-corporates. With over a decade of experience, Genfin specializes in providing tailored funding solutions, whether it’s for working capital, expansion, or bridging cash flow gaps. Their loan products range from R100,000 to R5 million, with repayment terms spanning 6 to 24 months. Genfin stands out for its simplified application process, which can be completed online or via phone, and its commitment to fast funding—businesses can typically access their funds within 48 to 72 hours of approval.
Genfin places a strong emphasis on transparency and flexibility, offering businesses the ability to settle loans early without penalties and the option to refinance once 50% of the loan is repaid. They cater primarily to businesses with an annual turnover of at least R1 million and a trading history of one year or more. With no initiation fees and competitive interest rates applied on the reducing balance of the loan, Genfin provides a cost-effective alternative to traditional lenders, making them a trusted financial partner for growing South African businesses.
Key Facts
- Loan Amount: Genfin offers business loans ranging from R100,000 to R5 million, catering to both small and large businesses.
- Flexible Repayment Terms: Loan repayment terms range from 6 to 24 months, with the option for early repayment without penalties.
- Fast Approval: Genfin aims to provide a funding offer within 24 hours of application approval, with funds disbursed within 48 to 72 hours.
- No Hidden Fees: Genfin prides itself on transparency, with no initiation fees or hidden costs.
- Refinancing Options: Businesses can refinance after repaying 50% of their loan and access additional funds as needed
Known qualification & document requirements
- Minimum 1-year trading history
- Annual turnover of at least R1 million
- Recent 12-month bank statements
- Management accounts (if applicable)
- Latest annual financial statements (if applicable)
- SARS statement of account for VAT & PAYE (if applicable)
Fees
Genfin does not charge any initiation fees or monthly admin fees for its business loans. They are transparent with their costs, and interest is only charged on the outstanding balance of the loan. Additionally, there are no penalties for early repayment, making their offering more cost-effective compared to many traditional lenders.
Time to receive funds
48-72h after application approval
Illustrative Example
Loan Amount: R100,000
Repayment Terms: 12 months
Monthly Interest Rate: 3.5%
Monthly Instalment: R10,710.59
Total Cost of Credit: R28,527.08
Total Repayment: R128,527.08
*Please note this is just an illustrative example. Your interest rate and total repayment may vary depending on your credit profile and loan terms. To get an accurate quote, we recommend applying directly with Genfin.
Business Loans
Cash Flow Capital: Best for short-term working capital
Interest (APR)
2.5-4% per mo
Loan Amount
R50k-R2m
Loan Term
4 to 12 mo
Apply on partner site
Pros & cons
Pros
- Fast approval and funding, typically within 24 to 48 hours.
- No collateral required, making loans easier to access.
- Flexible repayment options, with daily or weekly payments available.
- Early settlement discounts, helping you save on costs.
- Applications take less than 5 minutes to complete.
Cons
- Higher starting interest rates, from 32% (2.5-4% per month), compared to some competitors.
- Loan terms are shorter, with a maximum of 12 months.
- Minimum monthly turnover requirement of R300,000 may limit eligibility.
Our take
Overview
Founded in 2014, Cash Flow Capital provides alternative financing solutions tailored specifically for small and medium-sized enterprises (SMEs) in South Africa. They specialize in offering fast and flexible business loans, including working capital and asset finance, designed to meet the cash flow needs of growing businesses. Unlike traditional lenders, Cash Flow Capital simplifies the lending process with a quick, 5-minute online application, and funds can be disbursed within 24 hours of approval. Their primary focus is supporting SMEs across industries like retail, FMCG, and hospitality, helping them scale without the long delays or complexities often associated with traditional bank loans.
Cash Flow Capital has made significant strides in the SME lending market by providing more than R2 billion in funding to over 3,700 businesses since its inception. Their proprietary credit model ensures fast pre-approvals, with repayment terms ranging from 4 to 12 months. The company offers daily or weekly repayment options, providing greater flexibility to businesses with fluctuating cash flow needs. Cash Flow Capital’s mission is to empower small businesses by providing accessible capital to fuel growth, helping entrepreneurs achieve their next level of success.
Key Facts
- Loan Amount: Cash Flow Capital offers business loans ranging from R50,000 to R2 million, tailored to your business needs.
- Repayment Terms: Flexible repayment terms ranging from 4 to 12 months, with daily or weekly options.
- Fast Funding: Get approved within hours and receive funding within 24 to 48 hours after approval.
- No Collateral Required: Loans are unsecured, so no collateral is needed to access funding.
- Early Settlement Discounts: Cash Flow Capital offers discounts for early settlement, helping you save on overall costs.
- Quick Application Process: Applications take less than 5 minutes to complete, streamlining the process.
Known qualification & document requirements
- Minimum 6 months in business
- Monthly turnover of at least R300,000
- 3 months’ recent bank statements required
- Most recent financial report of the company
- Lease agreement (if applicable)
Fees
Cash Flow Capital does not charge initiation fees or monthly admin fees for their business loans. Instead, they offer a straightforward and transparent cost structure with no hidden fees. The total loan cost is based on your business’s risk profile and repayment plan, and early settlement discounts are available to help save on overall repayment costs.
Time to receive funds
24-48 after application approval
Illustrative Example
Loan Amount: R100,000
Repayment Terms: 6 months
Interest Rate: 3% per month (example rate based on risk profile)
Monthly Instalment: R19,666.67
Total Cost of Credit: R18,000 (interest over 6 months)
Total Repayment: R118,000
*Please note this is just an illustrative example of what it could cost you. Your interest rate and repayment terms may vary based on your business profile. To get an accurate quote, we recommend applying directly with Cash Flow Capital.
Business Loans
GroWise Capital: Best for unsecured small loans
Pros & cons
Pros
- Fast funding, with approval and disbursement in hours
- No collateral required for loans, making them accessible to more SMEs
- Flexible repayment options tailored to business cash flow
- Early settlement with no penalties and potential discounts
Cons
- Short loan terms, limited to 6 weeks to 12 months
- Limited funding options focused on merchant cash and stock advances
- Fixed finance fee structure may result in higher overall costs
Our take
Overview
GroWise Capital is a tech-enabled, alternative business lender based in South Africa, specializing in providing fast, flexible funding solutions to small and medium-sized enterprises (SMEs). Established in 2019, GroWise Capital aims to address the funding gaps faced by SMEs by offering tailored financial support that can be accessed quickly, often within hours. Their products range from cash advances to merchant stock advances, with funding amounts between R15,000 and R5 million, and repayment terms of up to 12 months. The company’s use of technology ensures a smooth application process with minimal paperwork, making it a convenient option for businesses looking for fast, no-nonsense funding.
What sets GroWise Capital apart is its focus on financial inclusion and the empowerment of entrepreneurs. The company provides funding without requiring collateral and offers flexible repayment options, including daily, weekly, or monthly payments based on the business’s cash flow. GroWise Capital is committed to helping businesses grow by offering financing that is customized to their specific needs, ensuring that entrepreneurs can access the resources they need to thrive in a competitive market.
Key Facts
- Loan Amounts: Growise Capital offers business loans ranging from R15,000 to R5 million.
- Repayment Terms: The repayment periods vary between 6 weeks and 12 months.
- Interest Rates: Growise Capital uses a fixed finance fee model, tailored to your business’s risk profile and repayment terms, meaning no traditional interest rates apply.
- Unsecured Funding: Growise provides unsecured business loans, meaning no collateral is required.
- Fast Funding: Loan approvals and disbursals are typically completed within hours.
- Tailored Repayment Options: You can choose flexible repayment options, with payments scheduled daily, weekly, or monthly based on your cash flow.
- Simple Application Process: The online application process takes under 4 minutes and requires minimal paperwork.
Known qualification & document requirements
- Minimum 6 months in operation
- CIPC registered business
- Average monthly turnover of at least R50,000
- Submit 6 months’ bank statements
- Valid ID of business owner(s)
Fees
Growise Capital does not charge initiation fees or monthly admin fees for their business loans. Instead, they apply a fixed finance fee, which is added to the cash advance amount and repaid over the loan term. This fee is determined based on the business’s risk profile, and there are no early settlement penalties. This transparent fee structure eliminates hidden costs, making it easier for businesses to manage their repayments.
Time to receive funds
Within hours of application approval
Illustrative Example
Loan Amount: R100,000
Repayment Term: 6 months
Fixed Finance Fee: 10% of loan amount (approximate)
Monthly Instalment: R18,333.33
Total Cost of Credit: R10,000 (finance fee)
Total Repayment: R110,000
*Please note this is just an illustrative example of what it could cost you. The actual finance fee and repayment terms may vary based on your business profile and risk assessment. To get an accurate quote, we recommend applying directly with Growise Capital.
Business Loans
betterbanc: Best for flat-fee pricing
Pros & cons
Pros
- Fast approval process with funds accessible within 24 hours
- Flat fee structure, providing full transparency on costs upfront
- No collateral required, making it easier for SMEs to qualify
- Flexible repayment terms of 6 to 12 months
- Handy calculator to help understand monthly repayments
Cons
- Minimum revenue requirement of R1 million may exclude smaller businesses
- Loan amounts are capped at R1.5 million, limiting large-scale projects
Our take
Overview
Betterbanc is a South African-based alternative lender that offers fast, flexible funding solutions to small and medium-sized businesses. Founded in 2019, Betterbanc provides working capital loans aimed at helping businesses improve cash flow, fund growth opportunities, and manage day-to-day operations. With loans ranging from R20,000 to R1.5 million, Betterbanc offers a streamlined online application process, allowing businesses to apply and receive approval within hours. The platform uses secure banking and accounting data to assess eligibility, eliminating the need for complex paperwork. Once approved, funds can be accessed within 24 hours, making it an ideal solution for businesses needing quick, accessible funding.
One of Betterbanc’s standout features is its transparent, flat-fee pricing model—no interest rates or hidden costs are involved. This straightforward approach means businesses know exactly what they will repay upfront, with no surprises or penalties for early repayment. Betterbanc’s flexible loan terms, typically between 6 and 12 months, make it easier for businesses to manage repayments in alignment with their cash flow needs. Whether you’re looking to increase your marketing budget, fund new products, or simply stabilize cash flow, Betterbanc’s solution is designed to help SMEs grow without sacrificing ownership or control.
Key Facts
- Loan Amounts: Betterbanc offers business loans ranging from R20,000 to R1.5 million, providing flexible funding solutions for growing businesses.
- Fast Approval: Applications are typically approved within a few hours, with funds accessible within 24 hours.
- Flat Fee Structure: Instead of traditional interest rates, Betterbanc uses a flat fee model, so businesses know their total cost upfront.
- Repayment Terms: Loans come with flexible repayment terms of 6 to 12 months, allowing businesses to align repayments with their cash flow.
- No Collateral Required: Betterbanc provides unsecured funding, meaning no collateral is needed to qualify.
- Simple Application Process: The entire application can be completed online in less than 5 minutes.
- Calculator: Betterbanc offers a handy calculator to help you understand your monthly repayment amounts.
Known qualification & document requirements
- Business must be operational for at least 12 months
- Annual revenue of at least R1 million
- Minimum monthly turnover of R83,000
- Registered with the Companies and Intellectual Property Commission (CIPC)
- Submit 6 months’ bank statements and financial statements
- Personal identification documents (ID) of business owners
Fees
Betterbanc does not charge initiation fees or monthly admin fees. Instead, they use a flat fee model, which means businesses pay a fixed fee based on the loan amount and repayment terms, with no hidden charges or ongoing administrative fees.
Time to receive funds
Within 24 after application approval
Illustrative Example
Loan Amount: R100,000
Repayment Terms: 12 months
Flat Fee (no interest rate): 8% of loan amount
Monthly Instalment: R9,000 (approximate)
Total Cost of Credit: R8,000 (flat fee)
Total Repayment: R108,000
*Please note this is just an illustrative example of what it might cost. Your actual fee and repayment terms may vary depending on your business profile. For an accurate quote, we recommend applying directly with Betterbanc.
Business Loans
Bridgement: Best for transparent fee structure
Interest (APR)
From 1.7% per mo
Loan Amount
R20k-R5m
Loan Term
1-12 mo
Apply on partner site
Pros & cons
Pros
- Fast funding, with approvals within 24 hours
- No hidden fees, with a single transparent fee structure
- Discounts for early repayment, helping reduce the overall cost
- No collateral required, making loans accessible to more businesses
Cons
- Annual turnover requirement of R500,000 may limit smaller businesses
- Loan terms are capped at 12 months, which may not suit all business needs
Our take
Overview
Bridgement is a South African fintech lender that offers fast, flexible business funding solutions for small and medium-sized enterprises (SMEs). Established in 2017, Bridgement provides various financing options, including business loans, revolving lines of credit, and invoice financing. Their goal is to help businesses improve cash flow, seize growth opportunities, and cover operational costs with minimal hassle. What sets Bridgement apart is their use of technology and data science to offer near-instant decisions on loan applications, with funding available within 24 hours. With loan amounts ranging from R20,000 to R5 million, Bridgement is focused on providing easy access to funding without requiring collateral, making them a popular alternative to traditional banks.
Bridgement’s application process is streamlined and entirely online, allowing businesses to apply and get approved within minutes. Once approved, businesses can manage their funds through an online dashboard, where they can withdraw what they need and even benefit from discounts for early settlement. With fixed rates starting at 1.7% per month, Bridgement emphasizes transparency—no hidden fees, no early settlement penalties, and simple pricing. Their financing solutions are particularly useful for businesses that need to bridge cash flow gaps or invest in growth.
Key Facts
- Loan Amounts: Bridgement offers loans ranging from R20,000 to R5 million, catering to both small and medium businesses.
- Fast Funding: Approvals are completed within 24 hours, with funds typically available soon after.
- Flexible Repayment Terms: Repayments can be made over 1 to 12 months, with discounts available for early settlement.
- No Hidden Fees: Bridgement uses a simple fee structure with no origination, monthly admin, or hidden fees, providing full transparency.
- Interest Rates: Rates start from 1.7% per month, based on your business’s financial performance.
- Pay-as-You-Use Facility: Bridgement offers a pay-as-you-use facility, where you only pay for the funds you draw, making it highly flexible for ongoing funding needs.
Known qualification & document requirements
- Registered business in South Africa
- Annual turnover of at least R500,000
- Trading history of at least 6 months
- Connect accounting software or provide bank statements
- Valid business registration documents
Fees
No, Bridgement does not charge initiation fees or monthly admin fees. Instead, they operate with a simple fee structure where a single fixed fee is charged on the amount advanced, with no hidden costs. You are only charged if you use the facility, and there are no penalties for early repayment, meaning you can save by paying off your loan early.
Time to receive funds
24-48h after application approval
Illustrative Example
Loan Amount: R100,000
Repayment Terms: 6 months
Interest Rate: 1.7% per month (fixed fee)
Monthly Instalment: R18,333.33
Total Cost of Credit: R10,000 (fixed fee)
Total Repayment: R110,000
*Please note this is just an illustrative example of what it could cost you. Your interest rate and repayment terms may vary based on your business profile and risk assessment. For an accurate quote, we recommend applying directly with Bridgement.
Business Loans
ProfitShare Partners: Best for contract financing
Pros & cons
Pros
- No collateral, financials, or trading history required to qualify for funding
- Fast approvals and funding, typically within 24 to 48 hours
- 100% of capital provided for purchase orders and contracts
- Repayments are tied to project completion and profit share, offering flexibility
Cons
- Funding is only available for specific projects or contracts, limiting general use
- May require working with credible entities in the public or private sector
Our take
Overview
ProfitShare Partners is a South African-based fintech lender that specializes in short-term capital solutions for small and medium-sized enterprises (SMEs). Founded in 2017, the company aims to offer alternative financing options for businesses that often struggle to secure traditional bank loans. ProfitShare Partners’ unique model involves funding SMEs by covering 100% of the capital needed to fulfill purchase orders or contracts with credible companies. Once the business completes the project and receives payment, the loan and a pre-agreed portion of the profits are repaid. This innovative profit-sharing approach is ideal for SMEs in need of quick capital to seize growth opportunities without the need for collateral or financial history.
What makes ProfitShare Partners stand out is their ability to process and approve applications within 48 hours, providing rapid access to funding. Loan amounts range from R250,000 to R5 million, offering significant flexibility for SMEs involved in large contracts. The company’s primary focus is to empower businesses to grow sustainably by bridging the gap between securing lucrative contracts and managing cash flow. Through this model, ProfitShare Partners ensures that businesses have the financial support to complete projects, driving economic growth and job creation in South Africa.
Key Facts
- Loan Amounts: ProfitShare Partners offers funding ranging from R250,000 to R5 million, providing businesses with significant capital to complete large contracts.
- No Traditional Loan Structure: Instead of charging interest, ProfitShare Partners operates as a short-term joint venture partner, sharing in the profit of the transaction.
- Fast Funding: Applications are processed and approved within 24 to 48 hours, giving businesses quick access to funds.
- No Financials or Security Required: Businesses do not need to provide financial statements or collateral to qualify for funding, which is ideal for younger companies without established credit histories.
- Focus on Contract Financing: ProfitShare Partners specializes in purchase order, contract, and invoice financing, helping businesses manage cash flow while waiting for client payments.
Known qualification & document requirements
- South African-registered business with the Companies and Intellectual Property Commission (CIPC)
- Valid purchase order or contract from a credible corporate or government entity
- Personal surety and a pledge of project proceeds
- Additional security or notarial bond may be required in some cases
Fees
ProfitShare Partners does not charge initiation fees or monthly admin fees. Instead, they operate on a profit-sharing model, where the repayment is based on a percentage of profits made from the funded project. This structure helps businesses avoid the burden of traditional loan interest and fees.
Time to receive funds
24-48 hours after application approval
Illustrative Example
Loan Amount: R500,000
Repayment Terms: Linked to the completion of a project (no fixed term)
Profit Share Fee: 10% of project profit (agreed upon upfront)
Total Cost of Loan: R50,000 (profit share fee)
Total Repayment: R550,000 (includes loan and profit share fee)
*Please note this is just an illustrative example. Actual profit share, repayment terms, and loan amount will vary based on the specifics of your project or contract. To get an accurate quote, we recommend applying directly with ProfitShare Partners.
Business Loans
Merchant Capital: Best for competitive pricing
Pros & cons
Pros
- Fast approval and funding, typically within 24 to 48 hours
- No collateral required, making it easier for businesses to qualify
- Flexible repayments based on a percentage of daily card sales
- Refinancing options available once 70% of the loan is repaid
Cons
- The total cost of borrowing can be higher than traditional loans
- Businesses can risk falling into a debt cycle with the re-advance option
Our take
Overview
Merchant Capital is a leading provider of alternative working capital solutions for small and medium-sized enterprises (SMEs) in South Africa. Established in 2012, the company offers fast and flexible financing options, focusing on industries such as retail, medical practices, and legal firms. Merchant Capital’s funding is designed to help businesses grow by providing easy access to cash advances based on monthly card sales. With approvals often completed within 24 to 48 hours, they offer quick funding to manage cash flow, stock purchases, or business expansions. Their tailored repayment structure allows businesses to repay a percentage of daily card sales, offering flexibility during both busy and slow seasons.
One of the standout features of Merchant Capital is its personalized service and flexible payment terms. Businesses repay the advance as a percentage of their future card sales, meaning repayments scale with turnover. This helps minimize the financial burden during periods of slower sales. Merchant Capital also does not require collateral, making it easier for SMEs to access the funds they need. With over 40,000 South African businesses served, the company has proven to be a reliable partner for businesses seeking fast, accessible funding without the complexities of traditional bank loans.
Key Facts
- Loan Amounts: Merchant Capital provides funding based on your monthly credit/debit card sales, allowing businesses to access up to 100% of their card turnover.
- Fast Funding: Approvals are completed within 24 to 48 hours, and funds are typically available shortly after.
- Flexible Repayment: Repayments are automatically deducted as a small percentage of your daily card sales, so you pay less when business is slow and more when sales are high, making it easier to manage cash flow.
- No Collateral Required: Merchant Capital offers unsecured loans, meaning you do not need to pledge assets to qualify.
- Re-Advance Option: Businesses can qualify for a re-advance once 70% of the initial loan has been repaid, providing ongoing access to funding.
Known qualification & document requirements
- Business must be operational for at least 12 months
- Minimum monthly turnover of R30,000 in card sales
- 12 months of card transaction or bank statements required
- Business registration documents from CIPC
- ID copies of business directors
- Lease agreement and business insurance schedule (if applicable)
Fees
Merchant Capital does not charge initiation fees or monthly admin fees. Instead, they offer a transparent fee structure where repayments are based on a fixed percentage of your daily card sales, with no hidden charges. This ensures that you only pay when your business makes sales, helping to manage cash flow effectively.
Time to receive funds
Approvals are completed within 24 to 48 hours, with funds available soon after.
Illustrative Example
Loan Amount: R100,000
Repayment Terms: Flexible (repayment based on daily card sales, no fixed term)
Repayment Rate: 10% of daily card sales
Daily Sales Example: R5,000
Daily Repayment: R500
Total Cost of Credit: Fixed fee of R12,000 (no interest charged)
Total Repayment: R112,000
*Please note this is just an illustrative example of what it could cost you. The actual repayment rate and total cost will depend on your business’s card turnover and specific agreement. For an accurate quote, we recommend applying directly with Merchant Capital.
Compare business loan rates with Fundrate's top picks
Lender | Best For | Est. Apr | Loan Amount | Loan Term |
|---|---|---|---|---|
Lula | Fast funding | 2-6% per month | R10k-R5m | 6-12 months |
Genfin | Flexible repayment terms | 3.5-5% per month | R100k-R5m | 6-24 months |
GroWise Capital | Unsecured small loans | N/A | R15k-R5m | 6 weeks-12 months |
Cash Flow Capital | Short-term working capital | 2.5-4% per month | R50k-R2m | 4-12 months |
Bridgement | Transparent fee structure | From 1.7% per month | R20k-R5m | 1-12 months |
Betterbanc | Flat-fee pricing | N/A | R20k-R1.5m | 6-12 months |
Merchant Capital | Competitive pricing | N/A | R50k Plus | Up to 12 months |
ProfitShare Partners | Contract financing | N/A | R250k-R5m | N/A |
Pros and cons of business loans
While business loans can provide crucial funding, they aren’t ideal for every business. Weigh the pros and cons before committing.
- Access to capital for growth
- Loan repayments offer tax benefits
- Improves business credit with repayment
- Flexible loan options available
- Lower interest rates than alternatives
- Collateral may be required
- Potential lengthy approval process
- Strict eligibility criteria for startups
- Early repayment penalties apply
- Risk of overborrowing
What is a Business Loan?
A business loan is a type of financing designed to help business owners access funds to grow or sustain their businesses. In South Africa, business loans can provide capital for various needs, including purchasing equipment, expanding facilities, and managing cash flow. Typically, lenders offer different loan structures tailored to the business’s specific requirements, with flexible terms, repayment options, and interest rates based on the company’s credit profile and financial health.
Business loans are secured or unsecured, depending on the lender and loan amount. Secured loans may require collateral (e.g., equipment or property), while unsecured loans rely on creditworthiness. Both options allow you to access the funds you need while preserving ownership of your business.
Loan Use Cases
Common scenarios for using a business loan:
- Working Capital: Cover everyday operational expenses, ensuring smooth cash flow during low-revenue periods.
- Equipment Purchases: Finance essential equipment like machinery, vehicles, or office technology without impacting cash flow.
- Inventory Financing: Secure funds to stock up on inventory, especially during peak seasons or high-demand periods.
- Expansion Projects: Fund expansion efforts such as new locations, larger facilities, or renovations.
- Debt Refinancing: Consolidate existing debt into a single loan to potentially reduce interest rates and simplify payments.
Loan Eligibility Factors
What do lenders typically require to qualify for a business loan?
To apply for a business loan, you’ll need to meet specific criteria:
- Minimum Revenue Requirements: Lenders usually require a certain level of monthly or annual revenue to ensure the business can manage repayments.
- Time in Business: A minimum operational period of 6–24 months is often needed, though some lenders may consider newer businesses.
- Credit Score: Lenders look at both personal and business credit scores to assess financial reliability. A stronger score can lead to better terms.
- Industry Requirements: Certain industries may face stricter requirements; lenders may prefer stable sectors with lower risk.
Credit Score Impact and How to Improve It
How does credit score affect your business loan terms?
Both your personal and business credit scores can impact your loan eligibility, interest rates, and loan amounts. A higher credit score usually translates to better terms, while a lower score may limit your options or increase interest rates.
Tips to Improve Your Credit Score:
- Keep Up with Payments: Pay all bills and debts on time to build a positive credit history.
- Reduce Outstanding Debt: Lowering your debt-to-income ratio strengthens your financial profile.
- Monitor Credit Reports: Regularly check credit reports for errors and address any discrepancies.
- Limit New Credit Applications: Avoid applying for multiple loans at once, as frequent credit checks can impact your score.
Interest Rates Breakdown
Understanding interest rates for business loans in South Africa:
Interest rates vary widely depending on the lender, loan amount, and term. Here’s what to keep in mind:
- Typical Interest Rates: Business loan rates in South Africa generally range from 20% to 80% APR, with rates influenced by your credit score, loan term, and business stability.
- Fixed vs. Variable Rates: Some loans offer fixed rates, providing payment stability. Variable rates may fluctuate, potentially lowering or raising your monthly payments.
- Factors Affecting Rates: Revenue, credit history, loan size, and repayment term can all impact the rate offered by the lender.
APR (Annual Percentage Rate): The APR represents the full cost of the loan over one year, including interest and fees. This gives you a clearer understanding of the total cost and helps you compare offers more accurately.
Repayment Terms and Flexibility
Typical repayment options for business loans:
Business loan repayment terms vary, generally ranging from a few months to several years, depending on the loan’s purpose and structure.
- Early Repayment Options: Some lenders allow early repayments without penalties, which can save you on interest costs.
- Seasonal Payment Plans: If your business experiences seasonal fluctuations, some lenders offer customized repayment schedules to match your cash flow.
- Balloon Payment Structures: Some loans may offer lower monthly payments with a larger final payment at the end of the term, ideal for businesses expecting future growth or larger income events.
Comparison with Other Business Loan Types
How does a standard business loan compare to other financing options?
A business loan is just one type of financing available, and there may be alternatives better suited to specific needs:
- Lines of Credit: Offer flexible access to funds, ideal for ongoing cash flow management without taking on a full loan.
- Invoice Factoring: Provides immediate cash by selling unpaid invoices to a third party, suitable for businesses needing short-term funding.
- Equipment Financing: Specifically used for purchasing business-related equipment, often with the equipment itself as collateral, potentially resulting in lower interest rates.
Regulatory and Legal Considerations in South Africa
What protections and regulations apply to business loans?
In South Africa, business loans are generally governed by the National Credit Act (NCA), which ensures transparency and fairness:
- Affordability Assessments: Lenders are required to assess the business’s ability to repay the loan without causing financial strain.
- Interest Rate Caps: The NCA limits interest rates, ensuring fair lending practices and preventing excessively high costs.
- Transparency Requirements: Lenders must disclose all fees, rates, and repayment terms upfront, allowing you to understand the total cost of the loan.
Alternatives to Business Loans
If a standard business loan doesn’t suit your needs, consider these alternatives:
- Lines of Credit: For flexible, on-demand funding, a line of credit may be ideal.
- Merchant Cash Advances: Advance funds against future sales, particularly useful for businesses with daily revenue.
- Crowdfunding: Raise funds through contributions from supporters, often used by startups or innovative ventures.
- Government Grants: Certain South African grants support small businesses, particularly in targeted industries like agriculture and technology.
How to Apply for a Business Loan
Step-by-Step Guide to Applying for a Business Loan:
- Eligibility Assessment: Check if your business meets the lender’s requirements for revenue, credit score, and operational history.
- Prepare Documentation: Gather essential documents such as financial statements, cash flow projections, and business registration details.
- Research and Compare Offers: Look at different lenders to find the best terms, including interest rates, repayment options, and any hidden fees.
- Submit Your Application: Complete the application process, either online or at a branch, providing all necessary information.
- Approval Process: Once submitted, the lender will assess your application and provide a response, typically within a few days to a week.
- Receive Funds: Upon approval, the lender disburses the loan amount directly to your business account, allowing you to access funds for your intended purpose.
FAQs
What are the basic eligibility criteria for a business loan?
To qualify, your business typically needs to be registered, have been trading for at least 6 to 12 months, and meet a minimum annual revenue requirement, usually around R1 million.
What documentation is required to apply for a business loan?
You’ll generally need financial statements, tax returns, bank statements, and a business plan. Some lenders may also require collateral and personal guarantees.
How long does it take to get approved for a business loan?
Traditional lenders can take several weeks to months for approval, while alternative lenders like the providers mentioned above offer faster approvals, often within 24 hours.
What types of collateral are typically required?
Collateral can include property, equipment, or other assets. Some loans, like unsecured loans, don’t require collateral but may have higher interest rates.
How is the loan amount determined?
The loan amount is usually based on your business’s financial health, including revenue, profitability, and the value of any collateral offered.
Can I repay my business loan early, and are there penalties?
Some lenders charge early repayment fees, but others, like Bridgement, offer discounts for early repayment, depending on the terms.
What is the repayment period for a typical business loan?
Repayment terms vary, usually ranging from 1 month to 2 years, depending on the loan type and lender. Some loan terms can be up to 10 years.
Can I apply for a loan if my business is new?
Many lenders prefer businesses with at least 6 to 12 months of trading history, but there are alternative lenders and funding solutions for startups.
What should I consider before applying for a business loan?
Consider your business’s cash flow, the loan’s interest rate, repayment terms, and whether you can comfortably meet the monthly repayments without affecting operations.
How we choose our best business loan lenders
To select the best loans, Fundrate evaluates the most prominent lenders in South Africa. Each lender was ranked focusing on four main categories:
Affordability
This section of the scoring evaluates interest rates, penalties, and fees. Lower rates and fees, along with fewer penalties, contribute to a higher score. Lenders that offer rate discounts, grace periods, and the option to change the due date receive bonus points.
Availability
This category considers factors such as minimum loan amounts, number of repayment terms, eligibility requirements, the option to apply with a co-borrower or co-signer, and the loan turnaround time.
Customer experience
This category includes customer service hours, the availability of online applications, online account access, and mobile apps.
Transparency
For this factor, we assess how clearly information is presented to borrowers on the lender’s website. This includes details on credit requirements, rates, fees, and the availability of prequalification.