Small business loan requirements depend on where you borrow. A bank such as Standard Bank asks for a trading record, a business plan, financial statements and at least six months of business bank statements. Development funders such as sefa, the National Empowerment Fund and the IDC can consider younger businesses.
Banks, sefa, the NEF and the IDC each set their own criteria, so check the lender before you apply. If you searched for Federal Bank small business loans, note that this page does not cover a South African lender by that name. Use the South African options covered here.
Eligibility Requirements at a Glance
The Standard Bank Business Term Loan requires the business to have traded for two years or more, with an active business transactional account at any bank.
sefa (now part of the Small Enterprise Development and Finance Agency, SEDFA) lends directly to small and medium enterprises and cooperatives in all sectors. SEDFA’s site now shows a R50 000 to R15 million range only for its Amavulandlela scheme for entrepreneurs with disabilities, so confirm the current loan limits with SEDFA. The National Empowerment Fund offers business loans from R250 000 to R75 million for start-up, expansion and equity acquisition, and requires at least 50.1% black ownership. The IDC funds start-up and existing businesses from R1 million to R1 billion.
sefa excludes, among others, persons under debt review, un-rehabilitated insolvent shareholders or directors of the applicant, and primary agriculture.
Income and Affordability Requirements
Lenders want to see that the business can repay. sefa expects a cash flow forecast that shows your ability to repay, and expects the business to be owner-managed with your own contribution.
Where the National Credit Act applies, the credit provider must assess your existing financial means, prospects and obligations, and for a commercial purpose whether there is a reasonable basis to conclude the purpose may succeed. It may not enter a reckless credit agreement. See the Act.
Credit and Financial Requirements
Standard Bank asks for credit reports with no arrears or judgements. Check your credit record and clear any judgements before you apply.
The National Credit Act does not cover every business borrower. It excludes juristic persons whose combined turnover or asset value, with related juristic persons, is at or above the prescribed threshold, though large agreements below the threshold are still covered. The 2006 notice set that threshold at R1 000 000, so confirm the current position and ask your lender in writing whether the agreement is regulated. You can confirm a credit provider is registered on the NCR register.
Documents and Verification Required
Standard Bank’s checklist includes at least six months of bank statements from the business’s accounts, a business plan, a cash flow forecast, financial statements, personal asset and liability statements for all partners, members or directors, and credit reports. Development funders such as the NEF and IDC require a business plan, and the NEF asks for five-year projections. Ask each funder for its current checklist.
How to Apply and Improve Approval Readiness
At Standard Bank, private companies, partnerships and CCs apply in branch and complete a suretyship form. For development finance, start on the funder’s own site: sefa, the NEF or the IDC.
Keep your financial statements current, keep business and personal money separate, and show what the funding will be used for and how it will be repaid.
Frequently Asked Questions
Can I get a loan for a business that has not started trading?
Standard Bank’s Business Term Loan needs two or more years of trading, so a bank loan is unlikely. Development funders such as the NEF and IDC fund start-ups with a business plan, subject to their own minimum amounts and criteria.
Do I need a business plan?
Standard Bank, the NEF and the IDC all ask for one. The NEF wants five-year projections.
Is personal surety avoidable?
Standard Bank requires private companies, partnerships and CCs to complete a suretyship form. Read it carefully, and ask any lender whether surety is required.
Are there Federal Bank small business loans in South Africa?
This page does not cover a South African small business lender by that name, so check any lender is registered on the NCR register of credit providers before you apply. South African small businesses can look at Standard Bank, sefa, the NEF or the IDC.
Confirm current criteria with each lender before you apply. See loan requirements and browse all finance and funding requirements.