SEFA

SEFA, which stands for Small Enterprise Finance Agency, is a financial institution that provides financial services and products to qualifying small, medium, and micro-sized enterprises (SMMEs) and cooperatives in various sectors such as services, manufacturing, agriculture, mining, construction, and green industries.

Breaking down barriers: How SEFA is empowering SMMEs and cooperatives across South Africa

The agency operates as a hybrid of wholesale and direct lending channels and was established in 2012 as a result of a Cabinet decision to merge three agencies into a single entity. Its main objective is to foster the growth of SMMEs and cooperatives throughout South Africa, contributing to poverty alleviation and job creation.

Empowering SMMEs: SEFA's collaborative partnerships for sustainable development

SEFA's primary function is to provide SMMEs and cooperatives with easy access to finance in a sustainable and efficient manner. The agency does this through wholesale and direct lending credit facilities or products, credit guarantees, strengthening financial intermediaries, creating strategic partnerships, and developing innovative finance products and tools.

The agency's vision is to be a leading catalyst for sustainable SMME and cooperative development through financial provision, and it partners with various organizations to fulfill its vision.

SEFA's strategic investment philosophy for business growth and development

To deepen institutional culture, support its purpose and aspiration, and promote organizational cohesion, SEFA has established values and guiding principles.

These include acting with speed and urgency, being passionate about development, having integrity when dealing with clients and stakeholders, ensuring transparency in the dissemination and sharing of information, and continuously seeking new and better ways to serve clients.

SEFA invests in companies where it can serve as a strategic financial partner to contribute to the growth of the enterprise and create lasting value. The agency collaborates with subsidiaries, associates, and intermediaries to achieve this goal.

SEFA’s financial solutions in a nutshell

SEFA provides loans ranging from R50,000 to R15 million directly to SMEs and cooperatives in all sectors of the economy. The agency offers asset finance, bridging loans, revolving loans, and term loans tailored to the business's needs.

SEFA provides revolving credit facilities that are suitable for established businesses with satisfactory credit records, and the loan amount varies depending on their monthly cash flow needs.

Repayments are structured based on their cash flow projections, and the maximum repayment term is either 12 months or dependent on the contract duration.

In addition to revolving loans, SEFA also offers asset finance solutions, bridging loans, and term loans to SMEs and cooperatives operating in all sectors of the economy, with a loan range of R50,000 to R15 million.

SEFA's credit facilities are available to established businesses with satisfactory credit records, and the agency collaborates with intermediaries, associates, and subsidiaries to achieve its goal of being a leading catalyst for sustainable SME and cooperative development through financial provision.

Why choose revolving credit facilities for your company?

Revolving credit facilities can help businesses thrive by providing them with a flexible source of funding to cover their operating costs. This type of credit allows businesses to draw funds as needed, which can help them manage their cash flow and respond to unexpected expenses or opportunities.

With a revolving credit facility, businesses can avoid the need to constantly apply for new loans, which can be time-consuming and may result in delays. Additionally, revolving credit facilities can help businesses build their credit by demonstrating that they can responsibly manage their debt and make timely payments.

By having access to this type of credit, businesses can focus on growing and expanding their operations, which can ultimately lead to increased profitability and long-term success.

The potential downsides to revolving credit

• High interest rates: Revolving credit often comes with higher interest rates than other types of financing, which means that businesses may end up paying more in interest charges over time.
• Debt accumulation: Because revolving credit allows businesses to continuously borrow and repay funds, there is a risk of accumulating more debt than they can afford to repay. This can lead to financial difficulties and even bankruptcy.
• Credit score impact: Frequent borrowing and repayment of revolving credit can impact a business's credit score, which can make it more difficult to obtain financing in the future.
• Limited use: Revolving credit is typically best suited for short-term working capital needs, and may not be appropriate for larger investments or long-term financing needs.