Franchising continues to be an effective avenue for starting and growing successful businesses across various sectors. Through franchising business model, an increasing number of small and medium businesses in South Africa are being established and contributing towards the country’s economic growth. Government has recognised the role that franchising can play in job creation, poverty alleviation and economic growth. Here are some government finance options.
Imbewu Franchise Finance
Imbewu Franchise Finance is designed for black entrepreneurs who wish to get a franchise business as a way of gaining access to economic opportunities whilst reducing investment risk. The funding thresholds for Imbewu is from a minimum of R250,000 to a maximum of R10 million. This fund is charged at prime linked interest rates and a key requirement to access this finance is that there should be BEE shareholding of up to 50.1%.
uMnotho Fund is run through the National Empowerment Fund (NEF).This fund is available to black entrepreneurs who manage or own businesses, new ventures or wish to expand existing business. uMnotho Fund is provided from a minimum amount of R2 million to a maximum of R50 million.
Small Enterprise Finance Agency (SEFA)
SEFA was established after a merger of South African Micro Apex Fund, Khula Enterprise Finance Ltd and the small business activities of IDC. From inception, SEFA has dedicated itself to the development and sustainability of small business enterprises in South Africa. SEFA funding is provided in form of micro enterprise loans between R500 and R50 000, small enterprise loans between R50 000 and R1 million as well as medium enterprise loans between R1 million and R5 million.
Youth Empowerment Fund
This funding programme focuses on youth entrepreneurs who are at early stages of enterprise development. Youth Empowerment Fund is made available from a minimum amount of R1,000 to a maximum of R200,000 with agriculture and technology related projects enjoying an extended maximum threshold of R250,000.
To qualify for this fund, applicants must be between 18-35 years, be South African citizens or residents, have a commercially viable and sustainable business, have relevant qualifications or business and/or technical experience including proven entrepreneurship business experience where applicable. Upon approval of grant, if applicant is employed full time, he/she may be required to resign from employment.
The government finance options listed above should be worth considering by entrepreneurs venturing into franchise business.