With the increased fuel price, another concerning virus spreading, and our own President in deep trouble, there is a prevailing sense of doom that is hard to ignore.
However, today we bring you good, hopeful news from GroWise Capital, a small business funder that is laser-focused on stimulating growth in South Africa’s SME sector. There are between 2.4 million and 3.5 million small businesses in South Africa, which account for the majority of businesses. These businesses also employ up to 60 percent of the South African workforce, contributing greatly to the country’s gross domestic product.
SMEs have had a hard run of it over the years, but things are looking up, according to Jonti Strimling, co-founder and chief risk officer of GroWise Capital.
According to Strimling, repayment performance across its portfolio has improved over the past 12 months, even in high-risk credit segments. Applications have increased and GroWise Capital is seeing businesses with more robust credit profiles approach it for funding.
This is partly thanks to interest rate cuts, making it easier to service debt. Added to that, consumer spending is up and as such, applications for funding and performance across GroWise Capital’s portfolio are improving.
GroWise reports that the average amount advanced per deal has grown by 15 percent over the last six months. Average terms are longer, and overall, approval rates are increasing. Refinanced clients are qualifying for larger facilities, and stable refinance approval numbers point to sustained repayment performance over time. GroWise has also seen a notable uptick in return business from clients who were previously funded, took a break, and have now returned with stronger financials.
What is most interesting is that businesses in healthcare, professional services, construction, manufacturing, logistics and energy supply, are increasingly turning to GroWise Capital.
“Businesses in these sectors are thinking strategically about their funding mix. Industries exposed to commodity and import/export price volatility need a funder that can respond when market conditions shift,” Strimling says.
“We can see through GroWise Capital data that South Africa’s business owners are resilient. Improved macroeconomic conditions, combined with a maturing approach to alternative funding, are creating a new generation of well-capitalised, growth-focused SMEs,” he adds.
This is great news for SMEs who have struggled to keep their heads above water over the last few years. As such, alternative funding that isn’t from a bank has become more popular over the years.
Just last month, Ozow and Lula teamed up to offer funding to SMEs. These services are essential for SMEs who are looking to grow but struggle to secure funding through traditional channels.
Being able to access funding through a provider that understands the complexity of operations is a boon. IT also seems that businesses are thriving these days given the improved repayment rates and the upper limit of funding provided.
There is work to be done yet for sure, but it’s good to hear that the SME market is improving.
Original article by Hypertext. Read the full article by clicking here.