South African entrepreneurs relying on personal credit to finance their businesses may be hurting their chances of securing larger and more affordable business loans, as growing dependence on multiple small credit facilities weakens their credit profiles.
The Credit Association of South Africa (CASA) warns that consumers are increasingly relying on several small credit commitments instead of a single larger loan, leaving many financially distressed.
CASA chief executive Leonie van Pletzen said both consumers and credit providers have a responsibility to ensure borrowing remains affordable.
“Honesty is very important because the affordability assessment is one of the strongest consumer protection actions that is available to the consumer. But it goes to both sides. So the consumer must really be honest about what they can afford and what they can actually pay ,” said Van Pletzen.
He added that credit provider must make sure that they do a proper affordability check, an NCA affordability check, where they can actually confirm the income and expenses.
Many startups and micro-enterprises depend on personal loans, credit cards and retail credit to fund stock purchases, equipment and day-to-day operating costs before they qualify for formal business finance.
According to the OECD’s Financing SMEs and Entrepreneurs 2026 report, many South African SMEs lack established business credit histories, meaning lenders often rely on the owner’s personal credit profile when assessing finance applications.
Access Bank South Africa chief executive Sandile Shabalala said many entrepreneurs underestimate the importance of their personal credit record.
“Many small-business owners believe their personal credit score is separate from their enterprise journey. In reality, lenders often look at the owner before they look at the business.”
Shabalala said lenders assess more than just a business’s viability, adding that building a clean credit track record early makes funding faster, cheaper and more predictable.
Building a stronger credit profile
Financial experts say entrepreneurs should start preparing for finance long before approaching a lender by paying every account on time, keeping debt levels manageable, avoiding unnecessary credit applications and maintaining accurate financial records.
Shabalala said lenders also consider the entrepreneur behind the business.
“A strong credit score helps the entrepreneur negotiate better pricing, better terms and better partnerships.”
He added that entrepreneurs who consistently demonstrate responsible credit behaviour are more likely to access funding.
Louise Roux, Product Head for SME Lending at FNB Business, said funding readiness should become part of the way entrepreneurs run their businesses.
“Funding readiness should be treated as a discipline, not a once-off event. The easier it is for a lender to understand how the business makes money and manages its obligations, the easier it becomes to make an informed funding decision,” Roux said.
She said lenders increasingly rely on financial information to assess businesses.
“Businesses that build this visibility are often able to access funding faster, secure solutions that are better suited to their needs, and create a stronger foundation for sustainable growth,” she said.
Roux added that entrepreneurs should not overlook their own credit records when preparing to apply for finance.
Separating personal and business finances, maintaining proper bookkeeping and building a consistent business banking record to improve creditworthiness over time are recommended.
“A healthy credit profile can be the difference between securing working capital when you need it or watching a growth opportunity pass you by,”Shabalala said.
