By Staff Reporter
While the world gets a handle on the Covid-19 pandemic from a medical perspective, we are only just starting to see the long-term effects it has had on world economies, with catastrophic effects on the SMME sector.
The SMME sector is considered the lifeblood of South Africa’s economy and most at risk.
Launch of new fintech platform to streamline the funding application process for SMMEs as they look to recover from the pandemic
As part of a survey conducted earlier this year, Heavy Chef found that 73% of SMEs were not operating during April 2020. As a result, three out of four SMEs might be forced to close their doors.
Unlike large corporates, SMMEs don’t have the cash reserves to deal with the setbacks created by the pandemic. For SMMEs, touted as the country’s answer to joblessness, to operate at full capacity, the sector will require up to an additional R346-billion credit facility, and the banks – the traditional lenders- cannot fill the gap.
President Cyril Ramaphosa has referred to the importance of bolstering SMMEs on several occasions citing their vital role in rebuilding the economy and creating jobs. He’s indicated that along with advancing the agricultural sector and safeguarding food security, growing small, medium, and micro enterprises is a strategic priority for South Africa.
The CombatCovid SMME Survey commissioned by a consortium of SMME-focused organisations in May revealed that three out of four small, medium, and micro-enterprises would not survive beyond July 2020.
It also indicated that 68% of SMMEs were unsuccessful in their application for Covid-19 relief funding, with 71% claiming that they would need this cash injection to operate after the cessation of the national lockdown.
According to McKinsey & Company, SMEs across South Africa represent more than 98% of businesses, employ between 50% -60% of the country’s workforce across all sectors, and are responsible for a quarter of job growth in the private sector.
According to the spokesperson, Rowan Spazzoli, for SMEgo – a web-based funding platform that will simplify the funding application process for SMMES and funders, “Running a business in these times is difficult enough, finding support in the form of funding to get SMMEs back on their feet shouldn’t be.”
“The purpose of SMEgo is to keep SMMEs in business by helping to connect small, medium and micro-enterprises to funding opportunities offered by corporates and various other organisations,” he says.
The #CombatCovid SMME survey also revealed that one out of three SMMEs had reduced salaries between 75% and 100% and that a prolonged lockdown would result in 71% of SMMEs needing to retrench their staff.
Developed during the Covid-19 lockdown, Spazzoli says, “SMEgo was initially designed to be an online centralised funding application platform for SMMEs. But by increasing access to finance and simplifying the application process, SMEgo is a bridge between funders and SMME owners.”
Upon accessing the SMEgo platform, owners are prompted to complete a high-level 10 question form providing SMEgo with their company particulars.
“The technology behind the platform determines which of the listed funding opportunities are suitable for the SMME. It then indicates what documents are required all the while highlighting any outstanding information. This information can be used for a once-off application or multiple funding opportunities, as all this information is stored in one central location,” says Spazzoli.
From a funder’s perspective, SMEgo allows organisations to list all available funding opportunities on a single platform and manage the application process online.
Funders can access information about the SMME from a single dashboard and communicate their decision whether to fund or not by updating the application status. Funders also only receive completed application forms which significantly reduces the administrative burden on these organisations, as each applicant must have met the funds minimum requirements to apply.
“SMEgo allows funders access to more SMMEs that meet their criteria which in turn will give them better quality leads,” says Spazzoli.
“In addition to navigating fund application submissions, the platform will allow SMMEs to update business profiles, mentor SMME owners as their business grows as well as facilitate training,” he adds.
Spazzoli lists the benefits of SMEgo for both SMMEs and funders below.
Benefits to SMMEs
- SMEgo saves time for business owners – by working with funders, the accuracy of the application process is improved, ensuring all applications meet data requirements.
- Apply once for all applicable funds – SMMEs can utilise a centralised platform that stores all business information in one central source allowing owners to apply for different appropriate funds immediately.
- Help SMMEs find funding opportunities that are relevant to them.
- Provides continuous feedback from funders on a SMMEs application status.
Benefits to funders
- Reduce wasted administrative time, costs, and resources spent on incomplete, inaccurate submissions.
- SMMEs will qualify to apply for relevant funding opportunities thereby improving the quality of applications enabling a new source of leads or deal-flow for funders.
- Provide funders with access to eligible SMMEs that they may not have had access to previously.
- Application sorting and managing: The SMEgo platform gives funders the ability to sort and manage applications by searching for SMMEs or filtering application status.
Through streamlining the process, SMEgo not only facilitates the growth of our struggling SMMEs but also assists in reviving South Africa’s economy at a much needed, speedier pace.