An investigation of small and medium-sized enterprise financing in selected areas in South Africa

MBA, North-West University, Potchefstroom CampusFinancing capital remains the most important aspect for each business from the initial start-up phase all the way through the expansion phase of each entrepreneur‟s enterprise. However business development, access to credit and inability to produce collateral when seeking finance, still inhibits many entrepreneurs, even though the Government as well as the private sector have developed several avenues where entrepreneurs can access finance for their business ventures. Efficient financing for entrepreneurs is important in order for Small-, Medium- and Micro Enterprises (SMMEs) to grow and be sustainable. This thesis applies a qualitative approach informed by the concept of both public and private sector to evaluate the problems of entrepreneurial financing in South Africa, and generates useful insight on the different financing platforms for SMMEs. The results of the research highlight how SMMEs still struggle to get financing and relevant support (business development and mentoring) in their respective businesses. At the same time, the results reveal a need for awareness of different funding institutions within the public sector and highlight that the efficiency of these sectors can help improve each entrepreneur‟s experience and thus help South Africa to create employment. The objective of the study is to explore and investigate SMME financing in the selected areas within South Africa and to give practical recommendations to ensure success of entrepreneurial activities. This study includes a total of 39 entrepreneurs who highlighted that the reasons for them starting their own businesses were motivated by factors such as confidence in the services provided, and a need for independence and self-fulfilment. Entrepreneurs in this study are between the ages of 30 to 39 years old, they married and have an average of two children. They are fairly educated with their highest qualification being a degree followed by matric certificate. The typical entrepreneur in this study is operating at an annual turnover of R50 000 to R500 000. Participating entrepreneurs are faced with obstacles such as: a lack of start-up capital, no proper business plans, insufficient awareness or access to business support, a lack of collateral, the lack of timely business information, and inadequate business management skills.Master