3/14/2016 AttentionBlackEntrepreneurs:StartUpFundingFromGovernmentGrants&Funds|Entrepreneur

AttentionBlackEntrepreneurs:
StartUpFundingFrom
GovernmentGrants&Funds
By Nicole Crampton

Governmentgrantsandfundingareagreatsourceoffinanceswhenyouretryingtoget
yourbusinessoffthegroundorexpandtonewhorizons.

Asmallbusinesscanonaverageemploy12people.
Thedropinentrepreneurialactivityoverthepastfive
yearshasequalledto2.3millionpossiblejob
opportunitieslost.Smallandmicrobusinesssectors
arethemainsourceofrealemploymentinthe
economy.

SouthAfricaseconomyneedstoinspire
entrepreneurshipinorderforittogrow.By
creatinganenvironmentthatisfriendlierto
smallbusinessesandactivelyencouragingthe
sector,thecountryisinabetterpositionto
createjobs.

Twosimplemeasuresthatwouldgoalongwaytosupportanddevelopentrepreneursis
accesstofinanceandimprovementoflogistics.

Contentinthisguide
1.NationalEmpowermentFund(NEF)
2.IndustrialDevelopmentCorporation(IDC)Funding
3.SmallEnterpriseFinanceAgency(SEFA)
4.TheIsivandeWomensFund(IWF)
5.KhulaSMEFund
6.GovernmentGrants
7.BlackBusinessSupplierDevelopmentProgramme(BBSDP)
8.IncubationSupportProgramme(ISP)
9.NationalYouthDevelopmentAgency(NYDA)

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GovernmentFunds
Thegovernmentcreatedgovernmentfunding
toextendfinancestothepreviously
disadvantagedSouthAfricansinorderto
developblackeconomicdevelopment.Your
muchneededcapitalinvestmentcouldcome
fromgovernmentfundingopportunities.

Financingasmallbusiness,whetheryoure
startinguportryingtoexpand,isachallenge
allentrepreneursgothrough.Hereareafew
examplesofgovernmentfundingthatfocuses
onblackentrepreneurs:

1 NationalEmpowermentFund(NEF)
TheNEFis,apartofthegovernmentsdevelopment
mandatetoencourageblackparticipationinbusinessand
entrepreneurship.Ithelpstoassistblackentrepreneursin
achievingfunding.Thisfundaimstoassistblackyouth,
womenandmen,communitiesandbusinessestoachieve
sustainablesuccess.

TypesofNEFFunding
TheNEFhasfourmainchannelsoffundingthatconsistofsubdivisions.Theseare:

1.iMbewuFund:

Thisconsistsofsubdivisionisentrepreneurfinance,procurementfinanceandfranchise
finance.
Thisfundsupportsblackentrepreneurswhoarestartingupanewbusinessor
expandinganexistingone.
Thiscontributiontakestheformofofferingdebt,quasiequityandequityfinance
products.
ThefundscontributionrangesfromR250000toamaximumofR10million

2.uMnothoFund:

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ThisNEFfundinghassubdivisionsinfinance,newventurefinance,expansioncapital,
capitalmarkets,andliquidityandwarehousing.
Thisfundisavailabletoblackentrepreneurswhomanageorownbusinesses,new
ventures,expandingexistingbusiness.Itisalsoavailabletoblackentrepreneurswho
wanttobuyashareofequityinblackandwhiteownedbusinesses.
ThecontributionsfromthisfundrangefromR2milliontoR75million.

3.RuralandCommunityDevelopmentFund:

ThisNEFfundhassubdivisionsinacquisition,newventurecapital,expansioncapital
andstartup/greencategories.
Thecreationofthisgovernmentfundistopromotesustainablechangeinsocialand
economicrelationsalongwithsupportinganddevelopingtheruraleconomybyfinancing
sustainableenterprisesandcooperatives.
ThisNEFfundingrangesfromR1milliontoR50million.

3.StrategicProjects:

ThisNEFfundhassubdivisionsofempowermentobjectives.
Theaimofthegovernmentfundistoincreaseblackparticipationinearlystage
projects.
Theseprojectsneedtohaveeconomicmeritandtheabilitytodeliveronthe
governmentsdevelopmentmandate.

HowCanYouApplyforNEFFunding?
NEFfundingisavailableforstartupandexistingbusinesses.Itwillconductthefollowing
processeswhenevaluatingyourbusiness:

1.Itwillconducta,selfneedsanalysistodeterminehowtheNEFfundingcanassistyour
businessesneedsandwhichofferisbestsuited.
2.Youwillneedtoprovideanapplicationformandacomprehensiveproposalwith
evidencethatsupportsthecommercialviabilityandfinancialpositionofyourbusiness.
3.AfteryouvesubmittedyourapplicationtotheNEF,itwillassessyourinformationfor
finalapprovalandreceivingoffunds.
4.TheNEFwebsiteoffersthefollowingchecklisttoensureyouincludeeverything
neededwhenapplyingforfunding.
5.Youllneedtomeetalltherequirementsmustoryourapplicationwontbesuccessful.
6.Thisprocesscantakeuptosixweeks.
7.Ifyourapplicationissuccessful,itcouldtakeuptothreetofourmonthstoreceiveNEF
funding.
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ContactDetailsforNEFFunding
FormoreinformationabouttheNEFfund,visitwww.nefcorp.co.za.
Emailgeneralenquiriestoinfo@nefcorp.co.za
Orcallthefollowingnumbers+27(0)113058000or0861843633(callcentre).

ReadmoreonNEFFundinghere.

2 IndustrialDevelopmentCorporation(IDC)
Funding
IDCfundingisavailabletothosewhohaveanexisting
businessorwishtostartanewone.Thosethathavethe
visionsofjobcreationalongwithservingpreviously
disadvantagedcommunities.

TheIDCachievesitsgoalsbyprovidingfinancefor
industrialprojects,promotingpartnershipsbetweenandacrossindustrieswithinSAand
internationally.Itfocusesonprojectsthatfinanceandfacilitate,thatleadtothecreationand
innovationofnewindustries.Italsofocusesondiverseexpertisetodrivegrowthinpriority
sectorsandtotakeonhigherriskfundingprojects.

TheIDCsupportsBBBEEandactivelyboostsandpromotesblackownedandmanaged
businessalongwiththosewithemploymentequity.Itaimsatdevelopingtheskillsofblack
employeesandbusinessowners,bysupportinglocal,regional,provincialandnational
governmentprojects.

TheDifferentTypesofIDCFunding
1.DevelopmentFunds.

Thesefundsaimatsupportingprojectsthatwillhavehighlongtermimpactsonthe
economythroughgrowth.
Itsaimistobringprojectsoutoftheinformalsectorandintotheeconomicmainstream.

2.AgroProcessingCompetitivenessFund

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Thisgovernmentfundprovidessupportandhelpsyoutoachieveincreased
competitiveness,businessgrowth,jobcreationanddevelopmentintheagroprocessing
andbeveragesindustries.

3.ProductProcessDevelopmentScheme(PPD)

Theaimofthisfundistoprovidefinancialsupporttomicroandsmallenterprises
wherethetotalassetsarebelowR5million,annualturnoverislessthanR13million,and
thebusinessemployslessthan50people.
Thefundintendstopromoteinnovationandtechnologydevelopmentwithfinancial
support.
Thisenablesthedevelopmentofnewproductsand/orprocesses.

4.RiskCapitalFacilityProgramme

IDCFundingaimedatprovidingriskfinancetobusinessesownedbypreviously
disadvantagedindividualsthatoffersubstantialjobcreationpotential.

Thisprogrammeprovidesthreechannelsoffunding:

1.DirectchanneloperatingalongsideIDCsmainstreambusiness
2.Throughanichefundchannel
3.Thirdpartychannel.

5.TransformationandEntrepreneurshipScheme

ThisfinancemarginalisedgroupsofSouthAfricanssuchaswomenandthedisabled.
Theaimofthefundistogainaccesstofinancethatwillhelptodevelopandgrowyour
businessasastartuporthroughexpansionsoracquisitions.
ThisIDCfundingalsooffersmentorshipandnonfinancialsupportincludingbusiness
planning,trainingandmentorship.

6.GreenEnergyEfficiencyFund

ThefundaimsatimprovingenergyefficiencyandhelpingSouthAfricabecomealow
carboneconomy.
Thisfundsaimistodrivedownenergyrelatedcosts,improveproductioncapacity,
operationaleffectivenessandcompetitiveness,whichwouldaidinjobcreation.

HowCanYouApplyforIDCFunding?

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OneoftheIDCgovernmentfundsaimsisjobcreationpotential,ruraldevelopment,urban
renewalandpovertyalleviation,theemploymentofwomenandyouthaswellasupskilling
ofemployees.AlloftheprojectsthattheIDCfunds,needtoshoweconomicviabilityand
sustainabilityandshouldtargetpreviouslydisadvantagedgroups,women,peoplewith
disabilities,lowincomeworkinggroupsandmarginalisedcommunities.

ContacttheIDCforfunding
Formoreinformationonanyofthefundsvisitwww.idc.co.za.
YoucanalsophonetheIDCcallcentreon0860693888
Oremailcallcentre@idc.co.za.

ReadmoreonIDCfundinghere.

3 SmallEnterpriseFinanceAgency(SEFA)
Doyouhaveanexistingsmallbusinessorwanttostart
one?SEFAarepilotingdirectfinancetoentrepreneurs
wantingtostartorgrowabusiness.

TypesofSEFAFunding
SEFAprovidesdirectfundingtobusinessinloansbetweenR50andR3millioninthree
differentways:Directlytobusinessowners,viaretailfinanceintermediaries,andthrough
banksusingcreditguaranteeschemesincludingKhula.

1.Bridgingloans

Theseareshorttermloans,whichprovideyouwithworkingcapital.
Thetypesofworkingcapitalofferedbythisgovernmentfundincludestockpurchases,
operatingoverheadsthisloanisonlyofferedforoneyear.

2.Termloans

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Thisgovernmentfundisaloanofaspecificamountandhasaspecifiedrepayment
schedule,amountandinterestrate.
ThistypeofSEFAfundingisnormallyusedtofinanceyourassetsthathaveamedium
tolongtermlifespan,forexamplemachinery,vehicles,officeequipment.
YoucanuseTermloanstoexpandyourbusinessorforacquisitions.
Thisloanhasarepaymentrangeofonetofiveyears.

3.Structuredfinance

UsethisSEFAfundingforfundingthatfallsoutsidetheparametersofthetermand
bridgeloans.
Providedbyadebtfacility,itcanberepaidoveraperiodoffiveyearsandtailoredto
youruniquerequirements.
Thefollowingbusinessescantapplyfromthebenefitsofthisfund:Liquor,tobacco,
gambling,sextrade,armaments,speculativerealestate,leveragedbuyoutfunds,and
illegaltrade.
ThisincludesanybusinessactivitythatwouldtarnishSEFAsreputation,political
organisation,entrepreneursunderdebtreview,insolventbusinessownersandbusiness.

HowtoApplyforSEFAFunding?
Yourstartupandexistingsurvivalist,micro,smallandmediumbusinessmustmeetthese
criteria:

1.Submitacompletedapplicationform
2.SubmitacompletedcomprehensivebusinessplanthatmeetSEFAsapplication
requirements.Includeinitialandsupportingdocumentation.
3.Demonstratedabilitytorepayloans
4.Personalandcreditreferences
5.Theapplicantmustbeanownermanager
6.TheapplicantmustbeaSouthAfricancitizenwithIDdocumentsoravalidpermanent
residence.Alternatively,thebusinesscanbeinthecontrolofaSouthAfricancitizen.
7.Thebusinessmustbelegallyconstitutedincludingsoletraderswithafixedphysical
address
8.Musthavecontractualcapacity
9.Alloperationsincludingprojects,programmesactivitiesetc.mustbewithinSouth
Africa
10.Theenterprisemustbecompliantwithacceptedcorporategovernancepractices
11.Atrustthathaswithinthetrustdeedthepowertoborrowmoneyandpledgeassets
assecurityandtogivesuretyforborrowing.

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ContactSEFAforfunding
Visitwww.sefa.org.zaformoreinformationonregionalbranches,howtoapply,
exclusioncriteria,productsandservicesavailable.Tocontactheadoffice,call086000
7332.

ReadmoreonSEFAhere.

4 TheIsivandeWomensFund(IWF)
Thisgovernmentfundaimsatacceleratingwomens
economicempowermentbysupplyingcosteffective,user
friendlyandresponsive,availablefinance.TheIWFoffers
supportservicestoimprovethesuccessofyourbusiness.

Ittargetsbusinessthatarestartingup,expanding,
rehabilitating,franchisingandbusinessthatneedbridgingfinance.Theaimofthefundisto
createselfsustainingblackandwomenownedbusinessesbyofferingyouprimaryfinancial
andnonfinancialsupport.

HowtoApplyforIWFFunding
Thewomenownedcompaniesneedtomeetthefollowingcriteriatobeeligible:

1.Operationalfor6months.
2.Needsearlystagecapitalforexpansionsandgrowth.
3.50%plusoneshareownedandmanagedbywomen.
4.Havepotentialgrowthandcommercialsustainability.
5.Improvingsocialimpactwithemploymentcreation.

ContactIWFforfunding
BusinessesthatareeligibleandneedfundingbetweenR30000andR2millioncan
submittheirapplication.
ApplytotheIWFthroughtheIDFwebsiteorcall+27(11)7727910.
Downloadapplicationformscanfromwww.idf.co.za.

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5 KhulaSMEFund
OfferedbyKhulaEnterpriseFinanceLtd,thisgovernment
fundsaimistogrowandincreasesustainabilityofsmall
businesses.

Thepurposeofthefundisto:

OffersSMEsearlystageandexpansioncapital.
Offerearlystagedebtfundingtobusinessthatmeetthecriteria.
SupportSMEsinruralandperiurbanareas.
Improvethebusinessownersaccesstofinance.
Growbusinessessotheycancreatenewjobs.
EncouragemeaningfuleconomicinvolvementofblackSouthAfricans.
FosterentrepreneurshipformenandwomenwithintheSMEsector.

HowtoApplyforKhulaFunding
ThefollowingaretherequirementsforbusinesswantingtoapplyforKhulagovernment
fund:

SouthAfricanSMEwhohaveamajorityshareintheircompanyandwhoareseeking
tostartand/orgrowtheircompany.
SouthAfricanSMEswhohaveamajorityshareintheirbusinessthatisinruralareas.

ReadmoreontheKhulaSMEFundhere.

6 GovernmentGrants
Agovernmentgrantistheawardoffundsfromthe
governmenttoyourbusiness.Itdoesntneedtobe
repaid,doesntaccrueinterestandhasstrictguidelines
forapplication.Thegrantsthatareavailablefromthe
governmentfocusedonobjectivessuchasblack
economicempowerment,jobcreationanddevelopingthe
economy.

Agrantisanawardofmoneyandisnotrepayable.Thereisnoobligationbyyouoryour
businesstorepaythemoneyyouhavereceived.Althoughthegovernmentisthemain

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sourceofgrants,itsselectioncriteriaarestrictandthepaperworkisintensive.Thebusiness
thatreceivesthefundsneedtospendthefundsinthewaytheproviderspecifies.Hereare
afewexamplesofgovernmentgrantsthatfocusesonblackentrepreneurs:

1.BlackBusinessSupplierDevelopmentProgramme(BBSDP)

Isacostsharinggrantthatoffersblackownedbusinessesimprovetheir
competitivenessandsustainability.
Thisgovernmentgrantdoesnotsupportstartups,onlytheexpansionsofexisting
business.
Theaimofthisgovernmentgrantistofasttracksmallandmicroenterprises,
encouragelinksbetweenblackownedbusinesses,corporatesandpublicsectoraswell
astocomplementaffirmativeprocurementandoutsourcing.
ItprovidesblackentrepreneursagranttoamaximumofR1million.

DoYouQualifyfortheBBSDPgovernmentgrant?
YourbusinessmustbeaCIPCRegisteredcompanyorcorporation
50.1%blackowned(Black,IndianorColoured)ormore
Managementteam50%Black
Tradingforatleastoneyearandhavefinancialstatementstoproveturnover.
TurnovermustbebetweenR250kandR35mperannum
ValidSARStaxclearanceandVatregisteredifturnoverisgreaterthanR1Million.

HowtoapplyfortheBBSDPgovernmentgrant
ThefollowingarethedocumentationthatyouneedtoapplyfortheBBSDPgrant:

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1.CIPCCompanyregistrationdocuments(proofofownershipandshareholding)
2.CertifiedIDofallDirectors/members
3.CertifiedIDofallmanagers/stafftraining(ifapplicable)
4.Certifiedfinancialstatementsforlatestfinancialyear(threeyearsifavailable)
5.Managementaccountsforcurrentyear
6.ValidSARStaxclearance(with3monthstoexpiryorgetanewone)
7.VATregistrationdocument(whereapplicable)
8.3Monthsbankstatements
9.3Quotations(comparable)foreveryintervention
10.DeclarationappointingGraphitastheconsultant.
11.Companydiagnosticquestionnaireandapplicationtypedontemplatesuppliedby
Graphit.PleasesendbackasaWordDocument
12.Domicilliumform
13.Bankconfirmationofyour50%contribution(Willyoubeabletogetfinanceforyour
50%or20%contribution.)(Clearcreditrecord)

EmailalltheabovedocumentationasaPDFdocument,excepttheapplicationwhichneeds
tobeinWord.Pleasesendthembackasindividualdocuments.

2.IncubationSupportProgramme(ISP)

Designedtocreateanddevelopsuccessfulenterprises.
Theseareenterpriseswiththeabilitytorevitalisecommunitiesandlocaleconomies.

3.NationalYouthDevelopmentAgency(NYDA)

Thisgovernmentgrantismovingawayfromgrantsforyouthandshiftingtowards
mentorshipanddevelopmentprogrammes.
Grantsarehowever,stillavailableforyouthentrepreneurs.

TypesofNYDAFunding
NYDAawardsindividualgrantstoformalandinformalbusinessesthatareinthestartupor
developmentphaseoftheirbusiness.Thesegovernmentgrantsgetawardedtoco
operatives,whichisanautonomousassociationofpeopleunitedtomeetcommon
economicandsocialgoalsthroughajointlyownedanddemocraticallycontrolledenterprise.
Additionally,anotheroptioniscommunitydevelopmentandfacilitationprojects.

HowtoaccessNYDAfunding
NYDAgovernmentgrantsareavailabletoentrepreneursorcooperativesthatmeetthe

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followingcriteria:

1.Applicantsmustbeayouth(18to35yearsold).Theymusthavethenecessaryskills
andexperienceorshowthepotentialofskillsforthebusinessandindustryinwhichthey
wishtooperate.
2.ApplicantsmustbeSouthAfricancitizenswithIDdocumentsandoperatetheir
businesswithinSouthAfrica.
3.Theapplicantmustneedthegranttostartorgrowtheirbusinessi.e.noothersource
ofcapital.
4.Applicantsmustinvolvethemselvesintheoperationandmanagementofthebusiness
onadaytodaybasisandmustworkonafulltimebasis.
5.Thebusinessmaybeformalorinformalandcategorisedasamicroenterprise.
6.Theenterprisemustshow,orhavepotentialtobecommerciallyviableand
sustainable.
7.Applicantsshouldbesoletradersorinthecaseofgroupshaveaminimumoffive
people.

ContactdetailsforNYDAfunding
FormoreinformationontheNYDAgovernmentgrantvisitwww.nyda.gov.zaorcontactthe
callcentreon0800525252.

4.SupportProgrammeforIndustrialInnovation(SPII)

TheSPIIgovernmentgrantaimsatpromotingtechnologydevelopmentinSouth
Africanindustries.
ThedirectiveofSPIIistoprovideentrepreneurswithfinancialassistanceforthe
developmentofcommerciallyviable,innovativeproductsand/orprocessesandfacilitate
thecommercialisationofyourtechnology.

Learnfromentrepreneurswhostartedinthesameplaceasyouandhavemadeitto
thebigtime:10DynamicBlackEntrepreneurs

Mar8,2016

Nicole Crampton

NicoleCramptonisanonlinewriterforEntrepreneurMagazine.ShehasstudiedaBAJournalismatMonash
SouthAfrica.Nicolehasalsocompletedseveralcoursesinwritingandonlinemarketing.

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