Access to finance remains one of the biggest obstacles facing South African small and medium-sized enterprises (SMEs). However, a lack of available capital is not the only reason for this challenge; in many cases, a lender can only assess what it can see. Businesses that do not have a clear, consistent financial footprint may therefore find it more difficult to access the funding they need.
According to Louise Roux, Product Head: SME Lending at FNB, limited financial information, inconsistent banking activity and poor record-keeping can make even a healthy business difficult for a bank or credit provider to assess. “Lending has become increasingly data-driven, making the quality and consistency of a business’s financial footprint just as important as its funding need. Businesses that build this visibility are often able to access funding faster, secure solutions that are better suited to their needs, and create a stronger foundation for sustainable growth.”
Roux provides five practical steps SMEs can take to improve their funding readiness:
1. Treat funding readiness as an ongoing discipline
Funding preparation should not begin only when a business has run out of cash, or a growth opportunity arises. Business owners should keep key financial information updated throughout the year, including monthly sales, major expenses, existing debt obligations, and expected cash flow. “Funding readiness should be treated as a discipline, not a once-off event. The easier it is for a lender to understand how the business makes money and manages its obligations, the easier it becomes to make an informed funding decision.”
2. Separate personal and business finances
Mixing personal and business transactions makes it harder to determine a company’s true financial position. A dedicated business account creates a clearer record of income and expenses while simplifying accounting, tax administration, and future funding applications.
3. Build a visible and consistent financial footprint
Modern lending decisions increasingly draw on the data a business creates through its everyday activities. Banking transactions, card payments, invoices, accounting records, supplier payments and marketplace sales all help demonstrate that a business is active and generating revenue. “A clear digital trail can be especially valuable for SMEs that don’t own significant assets or have a lengthy credit history. Over time, consistent transactional behaviour can support faster credit decisions, pre-approved offers and access to funding that does not require traditional collateral.”
4. Build a funding track record before you need a large facility
Rather than waiting until substantial funding is urgently required, businesses should establish a relationship with a lender early. Successfully managing a smaller loan facility and maintaining healthy banking behaviour can make it easier to access larger facilities in future. Owners should also monitor their personal credit records, as these often influence business lending decisions.
5. Match the funding product to the business need
The quickest funding option is not always the most appropriate. Short-term unsecured funding may suit working-capital needs, while asset-backed finance may be more appropriate for long-term purchases such as vehicles or equipment. “The goal should not simply be to access credit. It should be to access the right type of funding, at the right stage of the business, for the right purpose.”
Roux emphasises that the real value of being funding-ready is choice. “A business that understands its numbers and plans ahead is less likely to accept unsuitable or expensive finance under pressure. It can approach funding from a position of clarity, compare its options properly and decide whether taking on debt will genuinely strengthen the business. That shift, from seeking money urgently to using funding strategically, can make the difference between simply staying afloat and building sustainable business growth.”
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