Small medium entities (SMEs) are the building blocks of an economy. According to research performed in 2010, 91% of the entities in South Africa are SMEs, of which 61% contribute to the country's employment statistics. Of the 91%, 52-57% contributes to the country's GDP. This study emphasises the importance of SMEs to any country's growth. The economic boom in many countries has been due to their SME market

Mind-Set
Entrepreneurship in South Africa is sometimes defined as unique ideas, inventions and technologies. This definition is terrifying to the average entrepreneur. Consider China where entrepreneurship is simple ... make anything as long as you are cheaper than the next guy.
The South African government has benchmarked against the global economy and understands the importance of providing fertile ground for all types of SMEs to spawn and grow. Many government and private sector initiatives are under way but perhaps we are not aware of them. Our government has attempted to provide such support via a few mechanisms, namely:
• Preferential procurement and BEE codes
• Tax incentives for entrepreneurs and big business who work with entrepreneurs
• Provision of grant funding and soft loans
However, be aware of the tax benefits for small business and those that partner with small business. Also note that an offshoot funding structure has emerged due to the Enterprise Development requirement in the BEE codes.
Private organisations provide soft funding for BEE companies in order to obtain their enterprise development points. One of the four main ingredients required for an SME to spawn is cash flow. In our country as with other countries there exist entrepreneurs in our wider population. Unfortunately most tend to lack capital or the awareness of the sources of soft capital. Our history has exacerbated the lack of capital within a community. Hence the private sector invisible hand of Adam Smith cannot work to support entrepreneurs as there is little soft capital in the community. However, there is a lack of awareness of some sources of soft capital. These are discussed below.

The Department of Trade and Industry (the dti)
Tel: 0861 843 384
contactus@thedti.gov.za
http://www.thedti.gov.za

Various grants are available to SMEs in various different sectors. The dti has various programmes and grants in place to encourage new SMEs and to create employment in our country. These are summarised below, please visit the dti website for full details.

The Black Business Supplier Development Programme (BBSDP)
This is a grant that encourages black businesses to grow by acquiring assets and operational capacity. The BBSDP allows for a maximum of R1 million investment to a 51% black owned entity of which 50% of management must be black, as defined. Of the R1 million:
• R800 000, of which R400 000 is contributed by the dti and the remaining amount is to be contributed by the entity, is to be used for machinery and equipment.
• The remaining R200 000 is to be used to develop the business contributed in the ratio 80:20 between the dti and the recipient.

Co-operative Incentive Scheme (CIS)
This scheme aims to promote co-operatives in the Republic of South Africa (RSA) on a 90:10 cash basis grant by assisting cooperatives to meet their start-up requirements. The maximum amount that this scheme offers is R350 000.This scheme is biased towards woman, youth and disabled individuals.

Technology and Human Resources for Industry Programme (THRIP)
THRIP is a project between the dti and the NRF (National Research Foundation).This scheme was implemented to increase the high level technical skills for the industry and improve South Africa's competitive edge through the development of technology. This grant is primarily aimed at engineering graduates. The THRIP fund capacity is R150 million. THRIP aims to develop these SMEs into large companies, expanding the networks and allowing these SMEs access to scientific expertise, equipment and facilities at partner research entities.

Incubation Support Programme (ISP)
This grant is aimed at initiating entities to allow them to develop incubator programmes and thereby create employment within the communities and in turn strengthen the economy.
The programme is aimed at encouraging partnerships between the private sector, SMEs and Government in order to create sustainable growth within the economy by creating these incubator programmes. The ISP is available on a 50:50 cost-sharing basis between the government and the private sector. The ISP must offer the SME a cost-sharing ratio of 60:40.

Capital Projects Feasibility Programme (CPFP)
This project is aimed at RSA enterprises in the capital goods sector that have the potential to
boost expansion and employment within the country by attracting foreign investment. Feasibility studies in the capital goods sector play an important role in opening contract and project opportunities. This project is a cost-sharing (55:45) programme and includes the costs of the feasibility (50:50) that will increase local exports and stimulate the market for RSA goods and services. The grant is capped at R8 million. The scheme pays the full cost
of the feasibility study and the rest will be paid as per milestone achieved.

Clothing and Textile Competitiveness Improvement Programme (CTCIP)
This is a grant designed for the clothing and textile manufacturing industry. It is directed at the international market for quality and affordable clothing. This grant is aimed at individual companies or clusters (a group of manufacturing companies). The programme cost-sharing grant ratio entails that investment is given to RSA ordinary clusters in the ratio of incentives given of 75:25. The grant cannot be used for machinery, equipment, commercial vehicles, land or buildings. The grant is capped at R25 million over the period of the programme implementation.

Manufacturing Competitiveness Enhancement Programme (MCEP)
The purpose of this grant is to improve manufacturing competitiveness in the South African manufacturing and services support market. The feasibility study is done on a cost-sharing ratio of 50% for applicants with total assets with a historical cost of at least R30 million and for applicants with less than R30 million in historical cost of total assets is 70%. To get this grant applicants need to submit a pre-feasibility study that shows projections of a minimum of R30 million. The feasibility cost is capped at R7, 5 million.

Enterprise Investment Programme (EIP)
This programme is for the manufacturing sector. This investment grant is between 15% and 30% towards machinery, equipment, plant, and customised vehicles. The incentive is capped at R200 million per application. For less than R5 million of investment, the benefit is up to 30% payable over three years. If the investment is between R5 million to R200 million, the benefit will be 15% over two years. Foreign investment projects include the cost of transporting the qualifying machinery and equipment to RSA as part of the grant. Qualifying expenditure includes machinery and equipment, land and buildings acquired as part of the investment projects and commercial vehicles.
This programme has two parts to it:
• Manufacturing investment programme (MIP): This grant is for the promotion of manufacturing in metal fabrication, chemicals, plastic fabrication, pharmaceuticals, furniture, automotive and components.
• Tourism support programme (TSP): This is for the creation of jobs outside the main tourism destinations (Cape Town, Durban and Johannesburg). The government understands the importance of this sector in its economy. The TSP offers grants of +30% of qualifying capital investment by enterprises investing less than R200 million.

Product Incentive (PI)
This grant is also for the clothing, footwear, textiles and leather goods industries. The benefits are limited to a maximum of 10% of MVA (sales-materials input costs). The grant is payable on proof of qualifying expenditure.

Sector Specific Assistance Scheme (SASS )
This grant is a re-imbursable grant and is re-imbursed in the ratio of 80:20. The grant comprises two parts:
• SSAS generic funding: Funding of a non-profit organisation that grants R50,000 for establishment of an export council. There is a matching grant of up to R1 million based on membership income of 2:1 for operational costs.
• SSAS project funding: This is a re-imbursable grant that is given in an 80:20 cost sharing to export councils, joint action groups (JAGS). It is for SMEs, woman, youth and disabled persons.
• SSAS: Project funding for emerging exporters: This project compensates an entity in respect of activities aimed at the development of South African exporters. This fund benefits a person by paying for a return fare economy class as well as accommodation and transport as well as exhibition costs and marketing materials. The amount per project is capped at R1,5 million.

Export Marketing and Investment Assistance (EMIA)
The dti assists South African exporters by organising events in which local products can be showcased to international traders. The dti bears all costs of these exhibitions.
• Group outward-selling missions: This is aimed at foreign buyers wanting to conclude orders with South African exporters.
• Group outward-investment missions: This is aimed at foreign investors wanting to invest in the South Africa.

Both of these grants assist with investment/export seminars and conferences, market research missions and lobbying missions. Exporters are compensated for the following: return economy airfare, subsistence allowance per day, transport of samples, and marketing materials to a maximum of R100 000 a year. Under this grant, 50% of patent registration costs in a foreign jurisdiction are covered. Film and television incentive:
SA film and TV production and co-production.
The incentive is available to qualifying South African productions with a total budget of R2,5 million. The rebate is calculated at 35% of the first R6 million of QSAPE and 25% of the QSAPE on amounts above R6 million.

Seda Technology Programme (STP)
http://www.seda.org.za/MYBUSINESS/STP/Pages/AboutSTP.aspx

This programme provides for a maximum grant of R1 million. Of this R1 million, R800 000 is to be used for tools, machinery and equipment of which 35% is contributed by the dti. The
remaining R200 000 is to be used in the business development programme on a 50:50 basis.

SIZWE/FABCOS
+27 (0) 87 095 0272
http://www.fabcos.org

This loan funding is provided to BEE SMEs that are incorporated and working within South Africa. The funding offered can be from R10 000 to R3 million. SIZWE/ FABCOS will contribute 90% and the remaining 10% is the entity's contribution. This is repayable over a period of five years at a rate of prime +3%. This fund is operated in conjunction with
Sefa/Khula.

Business Partners
0861 SMEFIN (0861 763 346)
enquiries@businesspartners.co.za
http://www.businesspartners.co.za

Loans and equity investments are available to the public on researched and tested products.
Business Partners offer two options:
• They obtain a shareholding and retain it for five years whilst participating in shareholder and director meetings. They also offer guidance in management matters. During these five years if surplus cash is available they advise to pay the other shareholders' loans. After five years they either sell to a third party or to the existing shareholder.
• This option is a normal loan in which they provide a term loan, usually five years. Loans can be from R500 000 up to R10 million. Small Enterprise Finance Agency
(Sefa)
Call Centre: 012 748 9600 (sefa)
helpline@sefa.org.za
http://www.sefa.org.za

Small Enterprise Finance Agency (SOC) Ltd commonly known as Sefa was established on 1st April 2012 as a result of the merger of South African Micro Apex Fund, Khula Enterprise Finance Ltd and the small business activities of IDC. Sefa's mandate is to foster the establishment, survival and growth of SMMEs and contribute towards poverty alleviation and job creation. Sefa provides the following loan products:
• Start-loans: Loans offered through direct-lending to survivalist non-financial cooperatives for working capital e.g. for small orders from government departments, municipalities and private sector.
• Business Loans: Loans offered through direct-lending to all types of co-operatives for funding enterprise projects e.g. purchasing production machinery etc. and working capital.
• On-lending loans: Loans offered through wholesale lending to financial co-operatives and cooperative banks to on-lend to their members.

Industrial Development Corporation (IDC)
Call 0860 693 888 or
callcentre@idc.co.za
http://www.idc.co.za

The Industrial Development Corporation of South Africa Ltd (IDC) is a self-financing, national
development finance institution that promotes economic growth and industrial development in South Africa. Gro-E Scheme: The IDC is investing R10-billion over the
next five years through its Gro-E Scheme. It offers financial support to start-up businesses, including funding for buildings, equipment and working capital. It also funds companies wanting to expand provided that they show an ability to create jobs and operate in sectors supported by the IDC Women Entrepreneurial Fund.
http://www.idc.co.za/development-funds/women-entrepreneurial-fund

The IDC has set aside funds to finance women-owned enterprises through the Women Entrepreneurial Fund (WEF). Finance is provided to businesses with a total asset base of up to R80 million and the maximum amount we will finance under this fund is R40 million per transaction, minimum R1 million.

Isivande Women's Fund (IWF)
Isivande Women's Fund is an exclusive fund that aims to accelerate women's economic empowerment by providing more affordable, usable and responsive finance than is currently available. The IWF assists with support services to enhance the success of businesses. It pursues deals involving start-up funding, business expansion, business rehabilitation, franchising and bridging finance.
The Fund is managed by the Industrial Development Corporation (IDC) on behalf of the dti through a development fund manager.

Zimele / Enterprise Development
http://southafrica.angloamerican.com/our-difference/zimele-enterprise-development.aspx
Zimele is recognised internationally as an example of best practice in the development of successful SMEs as it enables them to operate within the mainstream economy through a combination of financial support and mentorship. Zimele is also helping us to transform and secure our supply chain. Over the past seven years, Zimele has supported 1885 companies, employing over 38,000 people, with a combined turnover of R6.1bn. Zimele operates six funds through which it provides funding and support to entrepreneurs. To apply to any of these funds please contact 0860 946 353.

Godisa Supplier Development Fund
southafrica.angloamerican.com/.../godisa-supplier-development-fund

The focus of this fund is the development of BEE-owned companies (SMEs) in Transnet's procurement chain with focus on rail and port business. The fund amounts to approximately R165 million of which an average of R5 million will be granted per project.

Identity Development Fund (IDF)
Tel: 011 772 7900 / 7910
http://www.idf.co.za
Identity Development Fund (IDF) is an en commandite partnership between Khula Enterprise Limited (Khula) and Identity Development Fund (Pty) Ltd ("IDF"). The fund provides a combination of loan and equity funding targeted at black and women owned business enterprises and focuses on start-up and early expansion. The fund is managed by Identity Development Fund Managers (Pty) Ltd.

National Empowerment Fund:
Call Centre 0861 843 633
http://www.nefcorp.co.za

The NEF provides funds to black entrepreneurs and groups with the aim of facilitating access to finance in support of Broad-Based BEE in terms of government legislation. The investment activities of the NEF are guided by an investment policy that seeks to ensure that investments create real economic empowerment for black people without deviating from sound economic principles.

iMbewu Fund
This Fund is designed to support black entrepreneurs wishing to start new businesses as well support existing black-owned enterprises with expansion capital. The Fund supports these entities by offering debt, quasi-equity and equity finance products with the funding threshold ranging from a minimum of R250 000 to a maximum of R10 million.

uMnotho Fund
This Fund is designed to improve access to BEE capital and has five products: Acquisition Finance, Project Finance, Expansion Finance, Capital Markets Fund, and Liquidity and Warehousing. These products provide capital to black owned and managed enterprises, black entrepreneurs who are buying equity shares in established black and white owned enterprises, starting new ventures, expanding existing businesses and BEE businesses that are or wish to be listed on the JSE. Funding ranges from R2 million to R50 million.

Rural and Community Development Fund
Designed to promote sustainable change in social and economic relations and supporting the goals of growth and development in the rural economy, through financing of sustainable enterprises. This would be achieved through the mobilisation of rural communities in legal entities or cooperatives, in order to participate in the broader economic activities and realise the economic transformation goals in rural South Africa. The fund has three products: Acquisition Finance, Expansion Capital and Project Finance (New Venture/ Start-up/Greenfields) with the funding threshold ranging from a minimum of R1 million to R50
million. Sectors to be funded:
• Agro Processing and Manufacturing
• Eco-Tourism
• Forestry and Fisheries
• Commercial Property
• Aqua and Marine Culture
• Non - Farm Activities (rural based)

Strategic Projects Fund
A unit of the NEF established with a mandate to increase the participation of black people in early-stage projects that are: Aligned to national Government policy, Seeks competitive opportunity for the South African economy and the inclusion of black participation in opportunities at the outset of projects, as opposed to doing so during equity closure.

Pre-Investment Unit (PIU)
(Non-financial business support)
The NEF assists with funding advice, business planning and general assistance to help ensure that applications are of sufficient quality to complete all steps in the application  process.

NYDA/IDC/Sefa Youth Fund
Contact 0800 52 52 52
http://www.nyda.gov.za
Or visit your nearest NYDA branch.

The National Youth Development Agency (NYDA), Industrial Development Corporation (IDC) and Small Enterprise Finance Agency (Sefa) have partnered together to provide financial support. A cooperation agreement was entered into by the NYDA, IDC and Sefa in response to the signing of the Youth Employment Accord of April 2013 where Government and its social partners made a commitment to prioritise youth employment and skills development.
A R2.7 billion fund has been set aside to kick start young entrepreneurs like you who are willing to make their dreams a reality. This fund provides loans at prime less 3% to businesses that operate in industries falling within the IDC and Sefa mandates. From NYDA, the youth-owned businesses can access grant funding from R1 000.00 up to R100 000.00.
The funding is available to South African citizens.
Grants will be issued to the following:
• Individuals
• Co-operatives
• Community Development
• Facilitation Projects
The types of businesses that will be assisted through the grant programme include but are not limited to; motor mechanics/ panel beaters, electricians, plumbers, domestic appliance repair services, beauticians, hair dressers, cleaning companies, small scale recycling companies, street vendors, car washes and others.

Afzal Khan
http://www.raft.co.za


stephanie@superfecta.info
www.superfecta.co.za