Empowering SA's entrepreneurs: Fintech startup disburses R2bn in working capital to SMEs

Small businesses are often described as the engine that will help South Africa's economy grow.

Entrepreneurs in this space have traditionally been held back by a lack of access to capital, but fintech companies are now helping them overcome that obstacle.

iKhokha announced this week it's passed the landmark figure of R2 billion disbursed in working capital to SMEs around the country.

The Durban-based company achieved this in partnership with SME funder Retail Capital, now a division of TymeBank.

The accomplishment not only fuels economic growth but also highlights the value of strong partnerships to provide support to entrepreneurs navigating funding challenges in a tough economic landscape, says Retail Capital in a press release.

iKhokha started out trying to solve a very specific problem which was helping SMEs be able to accept payments and become part of the digital economy in South Africa says company co-founder and CEO, Matt Putman.

They soon realised however, that one of the biggest problems facing smaller businesses AFTER accepting card payments was getting access to capital to grow these businesses.

"Making sure these businesses are capitalised is very important for the economy... It's been a fundamental part of our journey, and it's been great to see the traction that the products got in a space where traditional banks have been unable or unwilling to service the small business sector..."

Matt Putman, CEO - iKhokha

Putman says iKhokha's customer space covers a wide range nationally, 'from retail to hospitality to hair and beauty, to healthcare, to tradesmen...'.

He adds that 80% of these business owners wouldn't get a traditional loan from a bank, because it's not attractive for them from a risk appetite perspective.

"I guess the banks have struggled to get their heads around... how you provide capital to this space in a way that is sustainable. We were very fortunate, six or seven years ago, to partner with Retail Capital. They brought the smarts around how we could build a sustainable lending engine..."

".. and we worked very hard with them to figure out how we take very raw, very real trading data from these businesses and translate that into offers that these small businesses can use to grow their business, but in a sustainable way."

Matt Putman, CEO - iKhokha

Cash advances can range from a few thousand rand up to a million rand, catering for very small, grassroots outfits up to big, formal businesses says Putman.

iKhokha's belief is that if they keep on this track, they could play a key role in helping get the South African economy back on track.

On the back of iKhokha’s significant growth over the last five years, shareholders recently decided to spin the business out of the Adumo group.

Putman says future plans with TymeBank include distributing an app which turns your phone into a card- accepting device.