Online alternative lending may be solution to SMEs' financial woes
A new online alternative lending platform promises to assist small businesses with securing funding.
Gone are the days when the only way to get financial assistance for your small business was through a traditional bank. In 2005, a UK online lending company Zopa changed the game when it introduced a new lending ecosystem called online alternative lending which has to date provided businesses with £2 billion worth of loans.
Moneyworks, a new online lending marketplace in South Africa, hopes to help medium-sized businesses to access finance through enterprise and supplier development funds, development finance institutions and investment institutions.
Speaking at the third Finance Indaba on 4 October in Sandton, Moneyworks CEO Thandeka Zondi told business owners that the cashflow constraints faced by SMEs have given rise to SME-focused marketplace lending platforms such as Moneyworks.
“About 82 percent of small businesses fail because of lack of cashflow. Government takes at least 86 days to pay SMEs which makes it hard for small businesses owners to pay rent, salaries or even feed their own families. “Small businesses die because of late payments not because of bad ideas.”
It is for this reason that Thandeka, a qualified chartered accountant, and her business partner Dr Mdu Gama of Resultant Finance, decided to start an online lending platform. According to Thandeka, Resultant Finance had already been in the alternative lending space for 16 years and all that needed to be done was to digitise it so that things could be sped up. And that’s why she teamed up with Mdu.
Thandeka told a room packed with finance professionals and business owners that Moneyworks’s objective is to make medium-sized businesses sustainable by helping them access finance, supporting them in managing the complexities of a growing business and helping them get access to markets.
“Our credit assessment process, which involves an application programme interface and on-site visits, looks at all the elements and aspects of the borrowers so that we can minimise the lending risk for our investors.”
Moneyworks platform also has an e-invoicing functionality which makes it easier for small businesses to submit invoices and get paid early.