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Get a loan from SMEgo for your business
SMEgo , a platform backed by Old Mutual, offers a variety of funding solutions tailored to the diverse needs of South African entrepreneurs. With a single application, you can access multiple funders, increasing your chances of obtaining the financing that best suits your business.
Before we get into what SMEgo can offer your business, it’s best we cover what interest rates are and how they’ll apply to your business and loans.
Understanding interest rates
When exploring funding options for your small business, it’s crucial to understand how interest rates impact your repayments and overall financial health.
Here’s a breakdown to help you navigate this aspect:
What are interest rates?
Interest rates represent the cost of borrowing money, expressed as a percentage of the loan amount. They can be fixed (remaining constant over the loan term) or variable (fluctuating with market conditions).
Current interest rates in South Africa
As of January 30, 2025, the prime lending rate in South Africa is 11.00% per annum.
Calculating interest on your loan
Understanding how interest affects your repayments is vital. For example:
If the interest is applied annually, you would pay approximately R11,000 in interest over the year, totalling R111,000 to be repaid.
Factors influencing your interest rate
Several elements can affect the interest rate offered to your business:
Creditworthiness: A strong credit history may secure lower rates.
Loan type: Secured loans (backed by collateral) often have lower rates than unsecured loans.
Economic conditions: Market trends and the South African Reserve Bank’s policies influence rates.
It's crucial to understand the differences between personal loans and business loans, especially if your revenue is below R500,000.
Personal loans for business use
Personal loans are often more accessible for new businesses since they rely on your personal credit and income rather than business financials. This can be advantageous if your business lacks an extensive financial history. However, using a personal loan for business purposes carries significant risks:
Personal liability : You’re personally responsible for repaying the loan, regardless of your business’s success.
Credit impact : Any defaults or late payments can negatively affect your personal credit score.
Higher interest rates : Personal loans may have higher interest rates compared to business loans, increasing your overall repayment amount.
According to Entrepreneur, “Personal loans are often more accessible for new businesses since they rely on personal credit and income rather than business financials. However, they come with personal risk, have higher rates and can cause potential damage to your credit if the business fails.”
Alternative financing options
Funding options for small businesses
Given the potential drawbacks of personal loans, consider these alternatives:
Overdrafts: A flexible credit facility that allows you to withdraw more than your available balance. Useful for short-term cash flow issues but often comes with higher interest rates.
Business revolving credit: A reusable line of credit with interest charged only on the amount used, providing flexibility for ongoing expenses.
Merchant cash advances: A lump sum provided in exchange for a percentage of future sales. Companies like Yoco offer this, with repayments deducted as a percentage of daily sales. Be mindful of high costs.
Invoice financing: Borrow money against outstanding invoices to improve cash flow without waiting for customers to pay.
Traditional business loans: Lump-sum amounts with fixed repayment terms and interest rates.
Choosing the right option
Selecting the appropriate financing depends on your business needs, financial situation, and risk tolerance. Consulting with a financial advisor can help you navigate these options and choose the most suitable one for your business.
We will be posting more blogs on loans and other ways to fund your business by accessing credit and applying for loans. Stay tuned!
Why choose SMEgo for your business funding?
Trusted partnership: As part of Old Mutual, SMEgo provides a reliable and secure platform for your financial needs.
Multiple funding options: One application connects you to various funders, streamlining the process and saving you time.
Tailored solutions: SMEgo’s intuitive funding selection tool helps identify the most appropriate financing options based on your specific requirements.
Simplified application process: The platform allows you to link your bank accounts, facilitating a hassle-free application experience.
Quick disbursement: Once approved, funds are promptly deposited into your business account, letting you focus on growth.
Understanding SMEgo’s funding options
Selecting the right financing option is crucial. Here’s an overview of the funding products available through SMEgo:
Funding type
Amount available
Purpose
Business loan
Up to R50 million
Unsecured funding for general business operations, including purchasing stock, hiring staff, and managing cash flow.
Personal loan
Up to R250,000
For employed business owners to start or grow their business.
Purchase order finance
Varies
Partly secured funding to fulfill orders or contracts, useful for acquiring materials, inventory, or machinery.
Trade finance
Up to R10 million
Financing for domestic or international trade transactions, such as buying inventory or importing goods.
Supply chain finance
Varies
Enhances working capital by enabling prompt payments to suppliers, leveraging your balance sheet strength.
Asset finance
Up to R10 million
Secured funding to purchase machinery, equipment, vehicles, or business premises.
Contract finance
Up to R20 million
Funding to meet the requirements of fulfilling contracts with government or large clients.
Early invoice payments
Up to R3 million
Get paid within 72 hours for invoices issued, improving cash flow. Available for invoices generated on SMEgo and elsewhere.
Note: Funding amounts and terms are subject to change. Always consult directly with SMEgo for the most current information.
Pros and cons of SMEgo’s funding options
Pros: Diverse financing solutions: Whether you need working capital, asset acquisition, or trade finance, SMEgo offers a range of products to meet various business needs.
No collateral required for certain loans: Some options, like the Business Loan, provide substantial funding without the need for collateral, which is beneficial for businesses lacking significant assets.
Streamlined application process: A single application gives you access to multiple funders, simplifying the search for financing.
Cons: Eligibility criteria: To improve your chances of approval, your business should be registered with the CIPC, have at least six months of operational history, an annual turnover of R500,000, and be able to provide financial statements if required.
Interest rates and fees: Depending on the funding type and lender, interest rates and fees may vary. It’s essential to review and compare these costs before committing.
Maximising your chances of approval
To enhance the likelihood of a successful funding application:
Ensure compliance: Register your business with the CIPC and maintain up-to-date records.
Demonstrate financial health: Maintain accurate financial statements and management accounts to showcase your business’s stability.
Meet operational requirements: Ensure your business has been active for at least six months with a minimum annual turnover of R500,000.
How to apply through SMEgo
Applying for funding is straightforward:
Register: Sign up on the SMEgo platform via their website or mobile app.
Select funding type: Navigate to the funding section and choose the appropriate financing option.
Complete application: Fill out the application form, linking your bank accounts for convenience.
Submit: Your application will be forwarded to multiple funders, increasing your chances of approval.
For more detailed information and to begin your application, visit SMEgo’s official website .
Choosing the right funding is a big step in your business journey. By using SMEgo’s funding options, you can access the capital necessary to move your business forward.