Is your SMME Financially Fit for Business Funding?

SMME’s are the backbone of the South African economy, providing the majority of employment opportunities and GDP contribution.  For our country to address the high rate of unemployment and to alleviate poverty, SMME’s require a supportive business environment wherein business survival and growth is facilitated in order to increase and sustain job creation.  Funding to SMME’s is a critical component of this growth, but access to funding remains one of the primary challenges for small business.

The SA SME Fund recently sponsored an independent research study of Finfind’s 2017 data sets of SMME funders and finance seekers.  One of the key findings of this study is that SMME’s are not financially equipped to provide the information that funders require in order to make a determination on the provision of funding.  The research revealed that many SMME’s eligible for funding i.e. business models are viable, security available, etc, are unsuccessful in obtaining funding due to lack of financial readiness i.e. inability to produce the financial information required by funders in order to assess and approve funding applications.

Here are the most common documents requested by SMME funders and an outline of how the MMS Group can assist you in your SMME business funding application.

  1. Company registration documents

This information is key to a funder as it confirms shareholding and other key data such as business location and so forth.  By demonstrating compliance with registration requirements, a funder enjoys certainty that the business enjoys legitimacy.  Our Secretarial Services include comprehensive administration and support services, from company registration, name reservations (or changes), MOI matters and so forth. 

  1. Annual financial statements

The record of business trading, of assets and liabilities and cash flows is important to a funder in determining security for funding, affordability for repayment and business model viability.  Both MMS Group and MMS Cloud Accounting are equipped with professionals skilled in the preparation of accurate financial statements in accordance with IFRS standards for SMME’s.

  1. Bank statements

Your business bank statements record all expense and payment transactions that have occurred in the business.  A funder requires this to measure repayment affordability.  We retain bank statements for our accounting services clients and are able to provide this for our clients’ funders.

  1. Management accounts

Short to medium term business profitability is assessed with reference to management accounts.  For any SMME, it is important to demonstrate sustained and sustainable profitability through accurate management accounts, prepared and reviewed on a regular basis.  MMS’ Xero Cloud Accounting solution is the popular choice for automated management reporting.  Cloud based, this software is designed for the business owner on-the-go and can be accessed anywhere, from any smart device. 

  1. Business Plan & Cash Flow Projections

A funder seeks a business plan that demonstrates business sustainability and cash flow certainty, albeit thanks to the provision of funding for new business opportunities integral to that business plan.  The ability to correctly forecast the impact of business events and associated cash flows is a specialist area of our Management Consulting team.  Our professionals are widely respected for their ability to digest complex challenges and assist our clients to capitalize on opportunities.