FINANCIAL SOLUTIONS
SAFI members can explore a range of financial assistance opportunities tailored to support and empower businesses within the furniture industry. From funding opportunities to financial advisory services, this section provides valuable resources to help members navigate financial challenges, access capital for growth initiatives, and optimise their financial management strategies.
SMALL ENTERPRISE FINANCE AGENCY
The Small Enterprise Finance Agency (SOC) Limited (sefa) provides financial products and services to qualifying SMMEs and cooperatives, as defined in the National Small Business Act of 1996 and amended in 2004, through a hybrid of wholesale and direct lending channels within the furniture manufacturing sector.
A. DIRECT LENDING PRODUCTS (LOANS)
Direct Lending Products to small and medium-sized enterprises (SME’s), operating in, inter alia, the furniture manufacturing industry. The facilities range from a minimum of R50,000 to a maximum of R15 million.
Asset Finance:
To finance business moveable assets (machinery and equipment). The assets must be identifiable by means of serial numbers.
The maximum term is the earlier of 60 months or the economic life of the asset.
Benefits: a. Acquire or lease equipment without affecting your bank balance. b. Assets acquired can be used by sefa as security for the loan.
Term Loan:
To purchase other forms of moveable assets e.g. not identifiable by means of serial numbers, such as office furniture.
Benefits: a. Purchase fixed assets, such as equipment used in the production process. b. Assets acquired can be used by sefa as security for the loan.
Bridging Loan:
Short-term loan to finance working capital e.g. stock or operating overheads.
Mainly suitable for businesses that have secured contracts (purchase orders) with other businesses.
Benefit: a. Allows the business to meet short-term financial obligations by providing immediate cash flow.
Revolving Loan:
A line of credit where the borrower is allowed to use the funds when they are needed.
Given in advance to sefa’s existing clients with a satisfactory credit record, who have contracts with a predetermined lifespan and monetary value.
Mainly used for operating purposes and the loan amount varies from month to month, depending on the client’s current cash flow needs.
The maximum term is 12 months or dependent on the duration of the contract.
Benefit: a. Repayments are structured in relation to the business’s cash flow projections.
C. YOUTH CHALLENGE FUND (YCF)
The YCF provides support to eligible youth businesses/enterprises.
Eligibility criteria:
Are between the ages of 18 to 35 years.
Registered with CIPC and be prepared to register with SARS & UIF.
100% South African owned.
Are adequately involved in the day-to-day operation and management of the business with at least one or more of the members being a full-time employee of the company, especially the majority shareholder or essential personnel/applicant.
Prepared to participate in Business Development Support and mentorship (pre and post).
Commercially viable, sustainable and feasible business idea.
Exclusions:
Funding towards a debt owed by the applicant with another lending institution (existing debt).
Activities that have already been funded by other government departments or parastatals (double-dipping).
Government and SOE officials.
Fall within the gambling, pyramid sales scheme, loan shark and operates illegal activities etc., as guided by credit policy and grant policies.
Have a record of fraud and corruption.
Where the owner/applicant is an unrehabilitated insolvent.
B. DIRECT LENDING PROGRAMMES
The Small Enterprise Manufacturing Support Programme (SEMSP)
Targeted at growing townships, rural towns and villages’ economies, by providing support to, inter alia, small-scale furniture manufacturers.
Financial support:
Funding to purchase machinery and equipment for the various manufacturing sub-sectors that will be supported.
Working capital for the various manufacturing sub-sectors that will be supported.
Funding for product accreditation, certification and testing.
Funding terms:
Funding of up to a maximum of R15million per small enterprise, up to 20% of the amount may be provided as a grant were necessary.
The term of the funding will be determined by the business’s cash flows, a repayment period of up to 84 months per small enterprise, and a capital and interest moratorium period of up to 6 months.
The loan will be repayable at prime lending rate.
Funding criteria used in assessing each application:
Company statutory documents
FICA documents
Certified copies of ID of directors/members
6 months’ bank statements
Latest AFS and/or Management Accounts not older than 3 months from date of application (Statement of Financial Performance and Statement of Financial Position) – where applicable
Business profile
Project Execution Plan
12 months’ cash flow projections (with clear assumptions) – where applicable
Copy of Lease Agreement or proof of ownership
Relevant industry certification – where applicable
Copy of Contract or Purchase Order
Facility statements of other funders – where applicable
Quotations for applied funding – where applicable
Qualifying Criteria applicable to each application:
Be a registered legal entity in South Africa in terms of the Companies Act, 1973 (as amended).
Close Corporations Act, 1984 (as amended); and the Cooperatives Act, 2005 (as amended).
Be 100% owned by South African citizens.
Have been in operation for at least two years.
Be predominantly black-owned (51%).
Have a predominantly black management team (51%).
Be registered and compliant with the South African Revenue Service (where applicable).
Must be registered on the National SMME Database – https://smmesa.gov.za.