A majority of small businesses do not survive their first five years because they can't access the type of funding that understands their operations and clientele, says Christina Mooki, head of medical partnership operations at Merchant Capital.
“A hairdresser and their buying cycle is different from a hardware business, and different from a doctor. You need to be able to partner as an SME with the right kind of lender to understand the businesses and not put pressure on you. Access to the right kind of funding is important,” she said.
“In KwaZulu-Natal, we helped one of our doctors get dialysis machines, which have helped patients facing kidney failure. It's the kind of impact we have. It is real-life stories,” she said.
Mooki, who joined the lender in 2019, said Merchant Capital — which offers SMEs asset-free cash advances and has shareholders that include Standard Bank, RMI, and Opus18 — has provided more than R15bn in working capital to more than 65,000 SMEs since it was founded in 2012.
This alternative space is growing because there is no need for assets to access funding
— Christina Mooki, head of medical partnership operations at Merchant Capital
Qualifying SMEs should generate R50,000 in monthly revenue in sectors including retail, business-to-business, manufacturing, distribution, wholesale and professional sectors including doctors, lawyers, and accountants.
Mooki said their unsecured facility does not require a qualifying SME seeking a loan to pledge an asset upfront — a key requirement for traditional banks. It offers facilities of between R50,000 and R5m, with repayment plans of between three to 18 months.
“Access to traditional funding is a stumbling block. I think sometimes you find our traditional banks are not as attracted to SMEs, especially those that are starting out and may not have [collateral] to take a facility against. But this alternative space is growing because there is no need for assets to access funding. You can access it if you are a business,” she said.
A report by the Small Business Growth Index — a new collaborative survey developed by Absa, the Chamber of Commerce and Industry and the Bureau of Market Research at Unisa — warned that more than half the surveyed SMEs may not survive the next 12 months without some form of intervention.
Mooki advises SMEs to carefully monitor their financial activities, such as managing credit and paying suppliers on time, which often affects their overall credit profiles. She believes innovation can help SMEs pivot. Most should take a leaf from hardware store businesses that have innovated since a slump in DIY demand during the Covid pandemic.
“Hardware stores have seen a bit of a downturn in recent times. They are now innovating and are starting to bring coffee shops into their businesses or bringing in nurseries selling plants. They are seeing that as a way of generating revenue. Ask yourself as an SME business owner, how can I innovate? How can I create something new to bring in more clients?”
Her message for female business owners and those who want to climb the corporate ladder is to be brave if they want to thrive: “We need to be less harsh on ourselves and give ourselves grace, I think that is important. You are doing the best you can.”
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