When looking for funding to start a business or grow an existing one the first, (and very often the only), place people look is to the bank.
There are however a number of different avenues one can follow.
Government initiatives such as those run by the Department of Small Business Development are there to assist in the development of small business. While these are often tied to a number of terms and conditions they certainly play an active role is establishing and growing small to medium businesses.
NGO and Private Funds
There are a number of these organisations that are either privately fund by Big Business in South Africa or funded in jointly with government. The Small Enterprise Finance Agency is one of the better know organisations, along with Ithala in KZN.
They do also have a set of criteria that have to be met but will often be less onerous than the government initiatives.
While it is more difficult to find companies that will provide funding for small business there are companies that can assist through their Corporate Responsibility Programmes.
There are always people who are looking to invest in new or growing businesses that will offer them good returns. The overriding criteria is that the business offers the potential of a good return. You may have to work with the investor, as they will want to keep an eye on their investment, but they will be prepared to take a bigger risk than the other funders above.
Private investors can be difficult to find but if you have good business put the word out you will find someone.
Crowd funding is still very new to South Africa but it is sure to grow. Here one would raise funds from a large number of individuals through a Crowd Funding organisations. The advantage is that each person is investing a relatively small amount and therefore their risk is less. Secondly, they will not want to get involved in your business and you can run it unhindered. You would of course have to report your progress.
Family and Friends
While family and friends can be a good source of funds be aware of the potential personal and relationship problems that can arise if you do not perform as well as you promised. They may also want to be more involved in the business and thus hinder your running of the business.
Remember that if you have a good business idea that you are convinced will be successful don’t let the lack of funding hold you back. If the first organisation/person you approach doesn’t work out, then try another avenue and you will find the funding that suits you and them best.