Small businesses in SA showing steady recovery post-pandemic, says alternative funder

Despite rising fuel and food prices, interest rate hikes, and loadshedding, small business in South Africa is recovering from the aftermath of the Covid-19 financial crisis, according to fintech company GroWise Capital, a specialist small business funder. In just a year, the spike in demand for its services has seen GroWise expand from a team of four in 2021 to over 40 employees.

Jonti Strimling, GroWise co-founder, and chief risk officer says, “Compared to this time last year, we have seen a steady recovery among clients from all industries based on application data. They seek non-traditional funding to assist not only in business recovery, as one might expect, but also with their growth. Traditional lenders, who themselves are recovering from the financial effects of the pandemic, are tightening the screws on minimum application criteria for business funding. This has left the under-serviced SMME market in more need of alternative funding.

“We have also identified a trend that many businesses applying for funding from GroWise have long-term relationships with their banks and have already qualified for lines of credit with these institutions. In fact, many already make use of significant overdraft facilities and other instruments, yet they are seeking alternative sources of business funding to supplement or replace traditional banking finance so as not be reliant on one source of debt.”

Alternative business funders have a differentiated approach to mitigating risk and understanding the cashflow requirements of small businesses. They can therefore make quick decisions and tailor the funding and repayments to each client’s specific circumstances.

5-minute application process – finance in under 24 hours

“We have honed our model to assess the propensity of a client to make repayments and the sustainability of their cash flow in less than 24 hours – we usually pay out within two hours of approval. This model enables us to viably fund businesses that other funders tend to avoid. Clients get quick and flexible funding, designed around the particular needs of their businesses – and it is available when they most need it,” says Strimling.

Offering cash advances, merchant cash advances, and stock advance funding, GroWise has four payment runs each day to successful applicants. Funding requests span various sectors, including construction, logistics, fuel supply and various verticals of the supply chain within each industry.

GroWise offers funding from R35,000 up to R3 million. To apply, a 5-minute online application is submitted and a dedicated and skilled consultant contacts the entrepreneur immediately.

The business’ suitability for funding is assessed using a variety of financial and non-financial data points such as day-to-day transactional data and social media presence. Gros offers short-term funding solutions, with repayment terms ranging from 6 weeks to a year. There is no upfront fee and repayment methods are split processing through a point-of-sale credit card terminal and debit order. The specific terms of the funding are bespoke to each application.

Says Strimling, “Even the most prosperous businesses need funding and often the need arises due to growth. Reasons include expanding the business to keep up with demand, cash flow for the less busy months for seasonal businesses, and buying or upgrading equipment. We are seeing more entrepreneurs applying for business funding before they need it, which allows them to assess all their options when there is no emergency and so avoid irrational business decisions.”

Qualifying businesses are strong and solvent and seek financing to assist with growth and supplement working capital.

Strimling says that the relationships it builds with business owners are comparable to a private banker, where highly educated and skilled consultants work with each client to find the best solution as well as offer broader business advice. “We support our clients to grow fast. We fuse our advanced underwriting models and customize our funding solutions to specific requirements. We speed up the funding so that our clients speed up their growth,” he says.

The approach is clearly working for GroWise clients. 80% re-apply for further funding due to their positive service experience and the speed of payouts. GroWise Capital is South Africa’s most reviewed business funder on Google.

Client Levi Silverman, CEO of MaxFit, suppliers of high-quality gym equipment, recently reviewed GroWise:, “Our requirements were incredibly time sensitive as we had a 20ft container sitting at the Durban port waiting to be cleared and forwarded. Our full application was processed and our company paid out all before 4pm the same day.”