To lend money as a business in South Africa you must register with the National Credit Regulator (NCR) as a credit provider. The NCR said in a 2016 media release that from 11 November 2016 the registration threshold is nil, so anyone providing credit must register regardless of how many agreements or how much they lend.
Lending without registering when the law requires it makes the agreement unlawful and void. This page is for the person lending, not borrowing. It rests on the National Credit Act 34 of 2005 (the original 2006 text) and NCR material, so confirm your position with the National Credit Regulator.
Eligibility Requirements at a Glance
- Registration: under section 40 of the Act, a person required to register may not offer, make available or extend credit or enter into a credit agreement until registered.
- Original test: the Act’s original text requires registration if you are the credit provider under at least 100 credit agreements or your total principal debt exceeds a prescribed threshold. The NCR later set that threshold to nil.
- Arm’s-length agreements: the Act applies to credit agreements between parties dealing at arm’s length. Shareholder loans and certain family co-dependent loans are not at arm’s length.
- Exclusions: agreements where the borrower is a company or other juristic person above the Minister’s asset or turnover threshold, the state or an organ of state.
Check the current juristic-person threshold, and whether later amendments changed the wording of section 40, with the NCR.
Income and Affordability Requirements
Before entering a credit agreement you must take reasonable steps to assess the borrower’s understanding of the risks, their repayment history, and their existing financial means, prospects and obligations (section 81(2)). Lending without that assessment is the kind of conduct the Act is designed to stop.
The penalty for lending unregistered is severe. Where registration is required and the provider was unregistered when the agreement was made, the agreement is unlawful (section 89(2)(d)). A court must then declare it void from the date it was made, order the provider to refund amounts paid with interest, and cancel or forfeit to the State the provider’s right to recover the money or goods (section 89(5)). The exceptions are a registration application pending for 30 days or a clearance certificate.
Credit and Financial Requirements
The NCR’s sheet on requirements for registration as a credit provider lists what to submit: a signed application form (form 2), proof of CIPC or other legal registration, a share certificate, certified IDs, a resolution, criminal clearance certificates, a bank letter, proof of SARS registration and the fees. The sheet is undated and still describes the older test of 100 agreements or a loan book above R500,000, which conflicts with the 2016 nil-threshold release.
The sheet gives these registration fees: a non-refundable R500 application fee, R250 per branch location, and an initial registration fee of R1,500 where total principal debt is under R1 million (higher tiers apply above that). Confirm current fees with the NCR.
Documents and Verification Required
- The NCR registration documents listed above, if you must register.
- A written credit agreement and, before it, a pre-agreement statement and quotation showing the costs to the borrower.
- A record of your affordability assessment.
- Proof of the money advanced and every repayment received.
The Act, the NCR and the regulations set the exact content of these documents. The prescribed form and the rules on collection, debt collectors and personal-information handling are not covered here, so take advice on those.
How to Apply and Improve Approval Readiness
There is no approval for a private loan, but there is a legal route to lending properly:
- Contact the National Credit Regulator (registrations on 011 554 2600, [email protected]) to confirm whether you must register and what to submit.
- Register as a credit provider before you offer or make any loan.
- Assess the borrower’s affordability and keep a record.
- Give a pre-agreement statement and quotation, then sign a compliant written agreement.
Never rely on the borrower having agreed to the terms. If the Act applies, its protections apply regardless.
Frequently Asked Questions
What are the requirements for lending money in South Africa?
Register with the NCR as a credit provider, assess the borrower’s affordability, and use a compliant agreement with a pre-agreement statement and quotation.
Do I need to register to lend money?
If the National Credit Act applies to your lending, yes. The NCR said the registration threshold is nil from 11 November 2016. See the NCR release.
Can I lend money and charge interest in South Africa?
Yes, but if the Act applies you must be registered, assess affordability and keep within the prescribed maximum interest and fees. The NCR’s January 2018 Borrow Wisely release cited up to 27.75% for unsecured credit. Those caps are tied to the repo rate and revised, so ask the NCR for the current maximums.
How do I legally lend money?
Register with the NCR, assess affordability, give the borrower a pre-agreement statement and quotation, and sign a compliant written agreement. The steps are set out above.
What happens if I lend without registering?
Where registration was required, the agreement is unlawful and a court must declare it void, order you to refund what was paid with interest, and cancel or forfeit your right to recover the money or goods.
Can I lend to a friend?
The Act covers arm’s-length credit agreements, and certain family co-dependent loans are not at arm’s length. Whether your loan falls inside or outside the Act depends on the facts, so confirm it with the NCR before lending repeatedly or at interest.
Confirm current requirements with the National Credit Regulator and take legal advice on your position. See loan requirements and browse all finance and funding requirements.