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SA Fintech cracks silver for breaking SME funding barriers

Fintech company Retail Capital has won a silver award at the Global SME Finance Awards for its innovation in funding SMEs.

The funding is aimed at both formal and informal customers with a trading track record of three months or more. Customers receive same-day payments accessed remotely via mobile phone. No paperwork or face-to-face verification is required.

The product is a first in South Africa.

The awards celebrate the outstanding achievements of financial institutions and fintech companies in delivering exceptional products and services to their SME clients.

Winners were selected from a competitive pool of 144 global applicants by a panel of independent judges who chose the winners based on their reach, uniqueness and innovation, effectiveness and impact, dynamism and scalability.

“Access to funding is the most critical component of SMME growth, it is also the most challenging to address and is why so many early-stage entrepreneurs battle to survive past two years in operation.” – Karl Westvig, Retail Capital

The awards are organised by International Finance Corporation, a member of the World Bank Group, and the SME Finance Forum. They are endorsed by the G20’s Global Partnership for Financial Inclusion (GPFI).

Karl Westvig, CEO or Retail Capital, says: “While it is agreed that access to funding is the most critical component of SMME growth, it is also the most challenging to address and is why so many early-stage entrepreneurs battle to survive past two years in operation.

“Through working with strategic partners, we’ve addressed this gap in the funding value chain by providing an entirely digitised solution to SMMEs that is socially inclusive and removes barriers to entry. It is accessible anywhere, through a mobile phone, and offers instant approval on application and same-day pay-out, where there is no need for physical engagement.

“No data entry or document submission is required either as we assess applicants’ data through APIs, pre-qualifying them for funding. For an SMME that has a track record of just three months, operates in metro and non-metro areas and is turning over R20k a month, this product provides financial support ‘in their pocket’, instantly.”

“For an SMME that has a track record of just three months, operates in metro and non-metro areas and is turning over R20k a month, this product provides financial support ‘in their pocket’, instantly.” – Karl Westvig, Retail Capital

Paulo de Bolle, senior director: financial markets, global financial institutions group at the International Finance Corporation, says: “The Global SME Finance Awards recognise and reward innovation in small business lending that can improve financing for SMEs, helping small businesses grow and create jobs. Innovations in lending technology and business models, can significantly reduce the cost of serving SMEs.”

While it’s common knowledge that SMMEs are considered the lifeblood of an economy, contributing to wage growth, increases in consumer spend and higher employment, according to Basa’s (Banking Association of South Africa) head of financial inclusion, Khulekani Mathe, the local SME pipeline has pretty much been stagnant for the past decade, with access to finance remaining one of the key inhibitors.

Stimulating this sector requires a much-needed rethink and is why there is a strong demand for alternative funders among early-stage South African SMMEs who are looking for start-up or working capital, finance to buy equipment or scale and expand their businesses.

“It is estimated that there is between an R86-billion and R346-billion credit gap in South Africa. This points to why innovative lending models and risk assessment tools that are tailored to address the challenges of the South African entrepreneur are sorely needed.

“We are very proud to have been recognised by such an esteemed international organisation that awards winners on their contribution to growing their respective SME sectors through technological innovation and accessible funding solutions,” Westvig adds.

To date, Retail Capital has financed more than 15 000 SMES and disbursed R2,5-billion in funding.