Working Capital in South Africa 2026: The 11 Sources, What They Cost & How to Get Approved

Section 6Why does the funding gap persist?

Approval is concentrated among enterprises that can demonstrate formal financial management, clear cash flow forecasting and operational structure. Funders have become more selective rather than more accessible, with rising expectations around financial controls, compliance discipline, governance and predictability.

The distribution matters for how you position yourself. Formal microenterprises — those with turnover below roughly R1 million a year — make up the large majority of businesses applying for funding and create a substantial share of new jobs, yet are the least likely to receive capital. By one estimate, hundreds of thousands of businesses are excluded from formal funding principally because they lack proper financial records. SMEs account for roughly 40 per cent of GDP and a very large share of employment.

Section 7Why is late payment the main driver of demand?

The private sector is no better. Survey research has found that around 91 per cent of South African SMEs had invoices paid late, with the average overdue invoice settled some 18 days beyond terms. In practice many suppliers are paid 60 to 90 days from invoice, and where materials are bought 30 to 60 days before delivery, the end-to-end cash cycle routinely exceeds 150 days.

Section 8What conditions are shaping pricing in 2026?

• Interest rates have turned. The South African Reserve Bank raised the repo rate by 25 basis points in May 2026 — the first increase since May 2023 — taking repo to 7.00 per cent and prime to 10.50 per cent, and held at that level in July 2026 with the Governor flagging upside inflation risks. Facilities priced over prime repriced accordingly.
• Alternative finance has matured. Deal-linked funding — purchase order finance, invoice discounting, asset-backed finance — has become an established route for asset-light businesses that cannot satisfy conventional collateral tests. This is a structural shift, and the most important development in this market for smaller suppliers.
• State funding has consolidated. As of 1 October 2024, sefa, Seda and the Cooperative Banks Development Agency merged into the Small Enterprise Development and Finance Agency under the National Small Enterprise Amendment Act of 2024. Finance and business support are now applied for through a single institution.