12 Key Funding Questions

Sourcing government funding and grants can be a worthwhile option for the boost needed to grow one’s business.

Majority of entrepreneurs will tell you that access to finance is their greatest challenge in starting a business. Many small businesses struggle to find start-up capital of financial support to expand their businesses. The South African government is well aware of the importance of developing the economy, creating employment and attracting foreign investment. To make these goals a reality, there are grants and assistance programmes available from the government and associated organisation that assist to get your business off the ground and expanding.

  1. What is the objective behind government funding agencies?

Much needed capital investment for a business can be sourced from government funding opportunities. This opportunity was created to extend finances to previously disadvantage South Africans, to purpose being to develop black entrepreneurs. In addition, this enables enterprises to improve their competitiveness and sustainability, so as to be part of the mainstream economy, thereby reducing unemployment through community job creation.

  1. What are government grants?

This is when a project or initiative is awarded government funding for some or all it’d financial needs. The business grants do not need to be repaid or accrue but have strict guidelines for application. Government funding is linked with efforts such as black economic empowerment, job creation and overall developing the economy.

  1. Are all grants in form of monetary or cash terms?

To the contrary, grants come in form of financial as well as non-financial support. To ensure that the money disbursed is used correctly, the funding programmes also offer services that include entrepreneurship courses, mentoring and coaching, including networking opportunities, as well as financial planning and financial management, assistance with regulatory and legal compliance and links to strategic partners, just to mention a few.

  1. How easy or difficult is the process of applying for the grant?

There are a lot of important things you need to be aware of, such as strict criteria, plenty of paperwork and most likely, a very long wait. But in the end the waiting is worth the while. It is therefore, advisable to check with government funding and grants you qualify for. While the government is one of the best sources of grants, the receiving business is obligated to spend the funds in a manner specified by the provider.

  1. How does one begin the process of looking for the government grant?

There is a pool of funding agencies set up to cater for different sizes and needs of businesses. They are as follows; Department of Trade and Industry, National Empowerment Fund (NEF), National Youth Development Agency (NYDA), Gauteng Enterprise Propeller (GEP), Industrial Development Cooperation, Small Enterprise Finance Agency, Technology Innovation Agency, KZN Growth Fund, Isivande Women’s Fund, KFW Development Bank and Land Bank, just to name a few. All these funding programmes can be accessed through their respective agency websites, social media and press releases.

  1. Are the grants required to be repaid?

It depends on the type of grant. Some are classified as a “non-repayable grant”, other as “reimbursable cash grants”, and in certain circumstances a business is issued with a grant that only covers 50% of the required capital expenditure for the enterprise. So they vary.

  1. What are the similarities and differences among these funding agencies?

The similarity is that they all aim to empower businesses. They differ on the target audience. For instance, the objective of the NYDA Programme is to provide young entrepreneurs with an opportunity to access both the financial and non-financial business development support to establish their survivalist businesses. The programme focuses on young entrepreneurs who are just coming into existence and beginning to display potential but are not yet fully developed. In contrast GEP is an agency of the Provincial Department of Economic Development In Gauteng. Its main objective is small business development, which includes financial and non-financial support to small, medium, and micro enterprises (SMMEs) and co-operatives. NEF grants are targeted at black economic empowerment transactions. Through provision of financial and non-financial support as well as creating a culture of saving and investing. On the other hand, SEFA provides direct funding to businesses in the form of loans from R50 000 up to R5 million in three main ways- directly to business owners, via retail finance intermediaries and through banks using credit guarantee schemes.

  1. What is the underlying factor that determines a business qualifying for a grant?

Meeting all requirements for the grant, whether it is age, gender, supporting documentation, size or nature of business. As  stated earlier, each grant is different as in its targeted beneficiaries, but they have similar criteria in certain cases. For instance, most grants require compliance with relevant laws and regulations, and the business must demonstrate job creation or potential to create new jobs or sustain existing ones. After all, the aim of these grants is to empowerment for the greater good. For candidates to be successful in securing the grant, they must invest time in ensuring they have a well-rounded application that qualifies.

  1. With all these grant opportunities, why is there no magnitude economic growth among small businesses or the youth?

Having access to a funding agency is not always the only success factor in the small business sector. Small businesses need greater access to target and multiple markets in order to succeed. Government’s preferential procurement programmes have not been adequately rolled out to provide the small business sector with that leading edge to unlock the economy.

  1. With these challenges creating a gap in funding small businesses, what has been done to address the issue?

Applicant for funding may be excellent entrepreneurs, but often, they struggle to navigate the necessary application procedures and managing their businesses. Agencies like GEP, Awethu and NEF also offer non-financial assistance to small businesses in the form of funding advice, business planning and general assistance to ensure that applications are of acceptable standard to qualify in the application process. All entrepreneurs have to do is make use of these opportunities.

  1. Apart of funding agencies’ websites, what other platform are there to create awareness for small business grants?

Since the popularity of social media, most government agencies now inform the public through their Facebook or Twitter accounts NEF, GEP and Awethu are some of the agencies that use these platforms. Press releases for funding opportunities are also put out on radio, TV plus print media, so as to ensure nationwide awareness and outreach. In addition, apart from government agencies there are movements like Ekasi entrepreneurs that focus on developing township entrepreneur through mentorship, training and development, as well as access to resources, information and market access. They also host promotional events in their communities.

  1. What is the future of funding agencies in South Africa?

It is every government’s wish to create economic growth and improve the livelihood of its citizens. As long as there is vested interest in this area, economic development incentives like grants, will always have a backbone. The 2017 budget allocated funds over the Medium Tech Expenditure Framework (MTEF) period to support economic growth in various programmes, out of which R3.9 billion is for small, medium, and micro enterprises and cooperatives.

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