By Noko Mashilo
Business owners who struggle with cash flow while waiting for invoices to be paid could benefit from an initiative created to address the unique challenges faced by South Africa’s SMMEs, which are often overlooked by traditional lenders. Sourcefin offers customised financial solutions that enable businesses to fulfill large purchase orders without the burden of upfront capital.
Built on a deep understanding of the obstacles confronting small businesses, Sourcefin empowers entrepreneurs to capitalise on growth opportunities, secure their orders, and redefine success within their industries. According to the Small Enterprise Development Agency, the number of SMME owners rose by 11.6% to 2.68 million in the third quarter of 2023.
Sourcefin chief strategy officer Jedd Harris said a funding gap of approximately R300 billion was hindering the growth of South African SMMEs. “The Sourcefin founding team observed that many SMMEs were unable to fulfill large orders due to cash flow constraints. Beyond funding access, these businesses also needed a partner that supports their growth journey,” said
Harris.
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To apply for Sourcefin funding, businesses must meet several criteria, including being a registered South African private company or close corporation, having a valid purchase order issued by a registered South African entity, and requiring at least R250,000 to deliver on the order. The application process begins with a simple online form, which connects applicants with a Sourcefin sales agent. From there, businesses will need to provide additional documents, such as tax certificates, supplier quotes, proof of registration, and other relevant documents. “A dedicated sales agent guides clients step by step through the process.”
Harris explained.
When asked about sector preferences, Harris noted that Sourcefin prioritised supply and delivery purchase orders. However, the company also offered an invoice discounting solution for service-related or construction orders. “This allows businesses to convert their invoices into cash without waiting 30, 60, or even 90 days for payment. Sourcefin can fund up to 75% of the invoice value,” he said.
Harris emphasised that Sourcefin did not impose restrictions on the age of an SMME. “Any registered business with a valid purchase order issued by a South African entity can apply, whether it’s a start-up or an established company,” he said. The approval process is swift, taking approximately 48 hours from application to funding, provided all documentation is submitted promptly. For returning clients, payments can be advanced on the same day. “The 48 hours is not only conditional upon us receiving the correct documents timeously but also receiving the necessary approvals and confirmations from suppliers, end buyers, and our credit committee,” said Harris.
Sourcefin funds up to 100% of the purchase order cost, with no strict cap on the funding amount. Final funding decisions are made on a case-by-case basis. Additionally, the company provides end-to-end logistical support, with funds disbursed directly to suppliers to ensure compliance with purchase order specifications. Repayment terms are straightforward. Sourcefin is reimbursed once the purchasing entity pays for the completed order. “Comprehensive terms and conditions are detailed in our loan agreements,” Harris noted.
To further support SMMEs, Sourcefin has secured R150 million in backing from Futuregrowth Asset Management, enabling the company to continue bridging the funding gap and fostering the growth of South Africa’s entrepreneurial ecosystem. Raymond Molele, director of construction company Ngwana wa Ngwako in Atteridgeville, Pretoria, said the initiative would benefit small businesses. “I feel excited because access to funding is often one of the biggest challenges for small businesses. Sourcefin’s purchase order funding can provide the financial support we need to complete projects without worrying about cash flow constraints,” said Molele.
