Disrupting the SME Finance Space

Retail Capital, a firm that provides working capital to entrepreneurs, is disrupting the SME finance space. It is introducing game-changing technology enabling many small businesses to access funding for the first time.


Retail Capital’s CEO Karl Westvig believes that disruption is changing the lives of both entrepreneurs and small businesses – providing a solution to access finance, a big issue in South Africa. “Smaller businesses find it difficult to raise funding which many need desperately for working capital, stock or to fund expansion and acquisitions,” Westvig says.

“Banks don’t want to do small deals, and these size companies are operating day-to-day or week-to-week, have low levels of governance, no assets to leverage, no strong administrative structures nor up to date books.”

This does not mean, however, that they are not eligible for funding or that they are not in a good position to repay.

Retail Capital has found ways to work around these problems, creating a model which has not only disrupted the SME finance industry, but created a completely new funding avenue for small business.  And it’s the only funder in South Africa that can provide a one-minute turnaround on the viability of a loan. 


“Smaller businesses find it difficult to raise funding which many need for working capital, stock or to fund expansion and acquisitions.”


The company uses credit card sale information to determine how much finance it will extend to businesses, and analyses trading patterns from this data to come up with a flexible repayment schedule.

“The way we get around these challenges is to look at historical trading patterns, specifically sales made via debit and credit card,” explains Westvig. “Businesses just require a mobile point of sale (mPOS) – a smartphone, tablet or wireless device that functions as a cash register.”

The model was originally developed with another disruptive device (iKhokha terminals), but the platform is also available to other mPOS’s that have the necessary data and Retail Capital services them through a mobile app or portal. Using card information, “we review the value, volume and recency of transactions and built a model that assesses them for credit,” he says.

“The beauty of this is that it is all automated behind the scenes, so we can give a prequalified offer to businesses that banks and other lenders are reluctant to finance – from food trucks to informal market traders, hair salons and other micro and small enterprises,” he shares. “The only requirement is that they accept credit cards.”

Once they log on, they can see immediately if they are prequalified for an amount (average loan is R25 000), and they can simply accept the offer, term, and value of loan, lastly sign electronically and Retail Capital makes the funding available on the same day.

Retail Capital can make real time offers because it has access to real-time data, so the offer will change as turnover goes up and down. Any non-qualifiers at that point can come back at any other point and check if there are offers.

“There is no face-to-face, paperwork nor declines, so it takes around 60 seconds to get access to funding,” Westvig says.

“We do all the behind the scenes work – manage the relationship and risk as well as fund the transaction.”


“The beauty of this is that it is all automated behind the scenes.”


The take-up has been exceptional, with one in four who are offered the facility making use of it,” says Westvig. “There is good repayment performance and around 70% of customers repeat,”

About 50% of the businesses Retail Capital is funding are woman-owned, and more than 40% are black-owned. And because it is mobile and online, this funding is also not limited to urban areas.

Although there are similar models internationally, like Iwoca in the UK, Retail Capital’s model is specifically designed for the type of businesses operating in South Africa. But these are based on e-commerce transactions rather than on physical debit and credit card transactions.


  • Karl Westvig is the Chief Executive Officer of Retail Capital, the market leader in South Africa which provides businesses with alternative funding solutions to traditional small business loans. www.retailcapital.co.za