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How easy is it for SMEs to get Business Loans from Commercial Banks?

Commercial banks hate giving business loans to small businesses. Indeed, it’s almost impossible for a start-ups and micro businesses to get funded by commercial banks. That’s because banks avoid giving money to what they perceive as ‘risky’ business…

How so? Dr. Paul Smith, Lead Researcher of the “Inaugural South African SMME Access to Finance Report 2017”, found that startups and micro businesses are the most undeserved in the formal business market and therefore represent the largest funding gap.

Start-ups and small businesses mostly do not need large amounts of money to get their business going. Sadly, this may be a major obstacle for them to get funded…

In fact, according to Dr. Smith’s report, is the appetite of funders to loan smaller amounts significantly less than the appetite for them to approve larger loan sizes. Yet 44% of the total SMEs funding requests are for amounts less than R250 000. As a result, whilst many funders claim to offer funding for requests under R1 million, most SMEs battle to raise funding in this range Dr. Smith concludes.

So, what can SMEs do to get business loans from commercial banks?

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