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SMME's short of funding options
City Press reports that 60% of emerging entrepreneurs have lost faith in banks and state-owned financing institutions and are financing expansion from their own pockets rather than incur debt according to a study conducted by research company SBP.
It says that access to finance is not a critical barrier to job creation or the expansion of employment in small-, micro- and medium-sized businesses warns that emerging entrepreneurs find that formal sector banks are unwilling to lend to the SMME sector.
It says state-owned organisations such as the Industrial Development Corporation are administratively too complex and burdensome for emerging entrepreneurs.
Kerri McDonald, research manager at SBP says that for these reasons, if businesses experience cash flow problems it is hard or impossible for them so survive.
Neren Rau, chief executive of the South African Chamber of Commerce and Industry says that banks need to change their models when assessing applications for finance from small businesses.
For more:
- City Press: SMMEs lose faith in finance houses
- SBP: SBP homepage
