Some alternative small-business credit solutions
Business loans are not the only credit solutions your small business might need.
From fruit vendors to fintech startups, entrepreneurship is the backbone of our economy. If you’re a small-business owner, you probably know the old saying, ‘It takes money to make money’, but small-business financing can be stressful.
Most startups and small businesses may find it hard to qualify for a business loan, but you’ll still need some sort of funding to cover fluctuations in your cash flow. As a small-business owner, you must find ways to encourage customers or clients to pay promptly, so that you can pay your suppliers and service providers on time. It can take you a while to strike the right balance.
Any glitches in the process will affect the liquidity of your business but fortunately, there are various credit options available to help you smooth out your cash flow peaks and troughs.
5 alternative financing options for small businesses
Small-business credit card
A small-business credit card is an excellent way to cover those day-to-day expenses between payments coming in. These work the same as a regular credit card, charging business expenses to your company credit card account. They usually have loyalty rewards programmes with special offers, travel perks and the chance to earn and spend loyalty points.
A Nedbank Small Business Credit Card gives you personalised credit, flexible repayment options, up to 55 days of zero interest, and many more benefits. Link your card to Greenbacks, and you can earn Greenbacks with every transaction, then redeem them in a variety of ways that help reduce business costs. You’ll also qualify for discounts from our partners, free airport lounge access, and the benefit of purchase protection and travel insurance.
Business overdraft facilities
A business overdraft allows you to spend up to a predetermined limit on your business bank account, even if you have no funds left. However, it’s only a short-term, temporary solution for covering operational expenses. Unlike a business loan with fixed repayments, you will only be charged interest on the amount of the overdraft that you use, so it can function as a flexible emergency fund when your business is strapped for cash.
Property finance will allow you to buy a property or land for your business
An overdraft facility is ideal to fund the short-term cash flow needs of your business. Linked to your business current account, an overdraft is a great way to bridge the timing gap between debtor receipts, creditor payments and other monthly outflows.
Merchant cash advance
A merchant cash advance (MCA) is not the same as a traditional loan – for example, you aren’t charged interest on an MCA – but they share some similarities. Like a loan, an MCA gives you a sum of cash up front, but instead of paying it off in fixed instalments, you repay a percentage of your daily debit and credit card sales, plus a fee, until the MCA is repaid. It provides flexible repayment terms based on your sales volume, so it’s a viable option for businesses with consistent card-based transactions but variable income.
With a Nedbank GAP Merchant Advance, you can access funds ranging from R30,000 to R1.5 million (depending on your turnover) through your point-of-sale (POS) device. Repayments occur daily and are paid back as a percentage of between 5% and 15% of card POS transactions over 6 or 9 months. To qualify, your business must have been operational for at least 2 years, be a Nedbank merchant for at least 3 months, generate most of your cash flow from card transactions, and have a minimum annual turnover of R1 million.
Vehicle and asset financing
Vehicle and asset financing allows you to buy cars, machinery, or specialised equipment without having to pay the full amount upfront. You can finance new or used vehicles from approved dealerships or private sellers, get heavy machinery for construction or manufacturing, and specialised equipment for fields like medicine or engineering. Financing options will depend on individual needs, so contact us for a complete list of approved dealers or more information on private sale requirements.
Property finance
Property finance will allow you to buy a property or land for your business.
Apply on the Money app or Online Banking, or contact our dedicated call centre. We’d like to discuss your specific needs and make switching to Nedbank a seamless process for you and your business.
When you join Small Business Services, you get access to flexible finance and a relationship banker to help accelerate the growth of your business.
