This is a start, but many such starts are needed if a difference is to be made in the funding backlog of small enterprises. So much for the private sector. Government, in turn, has a range of public sector institutions which may be able to play this role in addition to doing their customary work. Institutions such as provincial development corporations, the Post Bank and Industrial Development Corporation hold not only appreciable capital assets, but also have the infrastructure to roll out additional funding to SMMEs. The IDC is a case in point, having refocused its role to provide finance for SMMEs in addition to its usual work.
Funding is only part of the problem.
Traditionally, most unlisted SA businesses have tended to rely extensively on loan finance, both as start-up and working capital, an option that has left many of them with high gearing levels. It is only recently that a wave of private equity and venture capital funds has begun to emerge to inject badly needed equity capital into businesses. However, these funds target investment needs in excess of R2-million. This is the area where small and medium-sized enterprises are to be found, usually with a view to a listing. This leaves the very small micro-enterprises in need of innovative funding mechanisms and, ultimately, equity financing.