Payment delays, uncertain contracts and weak cash flow can leave small businesses struggling to fulfil orders, even when funding is available. Improving access to finance therefore requires attention to both business readiness and the commercial conditions in which SMEs operate.
The OECD's latest South Africa SME financing country note identifies several barriers alongside the estimated R350bn financing gap, including informality, limited credit information and finance readiness. Despite the number of MSME funders growing from 148 to more than 300 between 2018 and 2025, a disconnect remains between the availability of funding and businesses' ability to access it.
A small supplier may have a genuine corporate opportunity but need to pay suppliers and employees weeks before receiving payment. Its funding requirement is shaped partly by the customer's commercial terms, meaning procurement decisions and payment practices deserve a place in the funding conversation.
Corporates can influence suppliers' financing needs through contract certainty, realistic delivery requirements and reliable payment. For Black-owned businesses with limited reserves, these conditions can make a substantial difference. The business environment that creates the need for capital should be examined alongside the entrepreneur's ability to access it.
Funding readiness is about making a business understandable and its performance reasonably predictable. Every business faces uncertainty, but what matters is whether the entrepreneur understands the assumptions behind the plan, can recognise when circumstances change and has the discipline to respond.
A business becomes more credible when its owner can explain both the opportunity and the conditions under which it will work. This requires clarity on customers, margins, cash flow, delivery capacity and the purpose of the funding, supported by regular reviews of performance and follow-through on decisions.
Growth that the entrepreneur cannot fully explain is one warning sign, particularly when turnover increases without corresponding improvements in margins or cash flow. Every new contract may require more borrowing and intervention from the founder, while customer concentration increases and working capital becomes stretched. A business can become larger while becoming more fragile, making it important to look beyond headline growth and examine its quality.
Recurring problems treated as separate emergencies can also indicate that a business is not ready for funding. Repeated late invoicing or unexpected costs suggest patterns that need attention, particularly when every decision must pass through the owner. Funding readiness includes recognising recurring problems and taking responsibility for addressing them.
Before approaching a funder, entrepreneurs should identify the specific constraint preventing the business from creating more value. A manufacturer may believe it needs another machine, but the real constraint could be unreliable production planning, weak demand or slow customer payments. Each would require a different response.
The entrepreneur should explain how the money will change the business's economics: what additional income, cost savings, capacity or stability it will create, and when. They should also examine what must be true for the plan to succeed, including whether customers will place the expected orders and whether sufficient working capital will be available while the investment takes effect.
Taking on funding too early can put pressure on a business that is not equipped to manage it, but the distinction depends on the purpose and scale of the investment. An early-stage business may be ready for a small amount of capital to test demand, while an established business may be poorly prepared for a large expansion loan. Age and turnover alone reveal little about that distinction.
Capital may also be necessary to build capability, whether through equipment purchases or specialist expertise. Clear milestones and oversight can help a business develop that capability as the investment takes effect.
The OECD's finding that around 80% of MSMEs do not use non-financial enterprise development support raises questions about the relevance and practical value of existing programmes.
Support should leave lasting capability behind. One useful test is what happens when a programme ends, a coach steps back or the founder is unavailable. Do financial reviews continue? Does the team know what to do? Are problems identified and addressed without outside intervention? These questions help establish whether learning has become embedded in the business.
Coaching can help entrepreneurs apply tools, make decisions and establish management habits that improve reliability. Corporate sponsors can also play a role by connecting business development support with genuine commercial opportunities.
The value of support should be evident in what a business can sustain independently. This is particularly important for Black-owned businesses seeking to become profitable and resilient over the long term.
Ultimately, the question is whether a business is ready for a particular amount of funding, on specific terms and for a clearly defined purpose.
