Getting a Business Loan in Cape Town

Getting a business loan in Cape Town, especially during this pandemic, has become incredibly difficult. However, it is also a fact that you may need it at some point in your business.

If you want to grow your business, you will need more capital. That is a universal truth. Now, as a business usually grows, it provides more capital and room for improvement. Such capital can be put into growing your business and paying your bills. At least that is how it normally works.

But as we know, life events are uncertain, and so are business events too. Nobody can predict a perfect future. So, when you get in a financial pinch, it becomes difficult to keep up with your business.

This is where external funding can help maintain the cash flow in your businesses. In this article, we will focus on how you can fund your business in Cape Town, South Africa.


Business Loans – A Saviour or a Burden?

Getting a business loan in Cape Town completely depends on what you need the funds for. For example, you are waiting for delayed payment, or you need new equipment for your business. Now, here is the important question you should be asking yourself: Is it going to cover the cost of my loan within the repayment duration?

Because if it cannot, you are bound to face consequences – such as going bankrupt or loss of assets shown in the collateral.

A business loan is your saviour if you plan ahead properly; that you exactly understand why do you need it.

Always verify that the firm is reputed. Getting a business loan from reputed agencies is important for the safety of you and your business. Always do your research and list down all the reputed agencies that could provide a loan for your businesses. After that, compare their requirements and interest rates to see what fits best for you.


How can I get a Business Loan in Cape Town?

There are multiple ways you can get a business loan in Cape Town. However, regardless of the abundance of options, getting a loan can actually be hard. You will have to meet certain criteria. These criteria may differ from lender to lender, however, the risk analysis will generally be a common factor.

Let’s understand more about the risk factors.

Credit Score

A credit score represents a person’s or a business’s ability to repay a debt. This is calculated based on your past loan transactions and how well you were able to repay them along with your current debts.

Having a good payment history towards your past and current debts means your credit score will be good. However, not all loans can be good. If you have a high-risk unsecured loan standing, you may lose your overall credit score. That’s more or less how it commonly works.

However, each lender will use their own personal judgements to define your creditworthiness. This is why we recommend you talk directly with the lender for more information.

What is a Good Credit Score for me?

According to LulaLend and other South African lending agencies, a 700+ credit score is an excellent credit rating one can have. However, this varies on credit bureaus and how they choose to calculate your rating.

LulaLend suggests getting and maintaining a credit score between 640 to 700. A higher credit score means the lender sees less risk in you. Which means they are more likely to get their money back from you.

For your general reference:

  • Any credit score above 700 is considered good.
  • A fair score can be considered between 600 to 699, however, the lower the score goes on this scale goes, the more difficult it might get for you.
  • A credit score below 600 is considered high-risk by the lenders. Consider rebuilding your credit score.

Also, it is worth mentioning that your personal credit score and business credit score are considered separately. However, your personal credit score still might play an important role in your favour to get a business loan.

Want a Business Loan? Keep your personal and business credit scores healthy!


If you are getting a business loan in Cape Town, many agencies would ask you for a physical collateral asset. A collateral is a physical asset that the agency can claim if you fail to repay their loan in a pre-determined duration. Of course, to cover their costs, the collateral you present has to have a good value that would be able to cover the costs.

Having a strong collateral means it is technically risk-free for the lender to give you a business loan. This is where a lot of SMEs struggle though, as they might not have strong collateral to present.

However, worry not! There are many reputed private funders in South Africa that may provide unsecured loans, given you fulfil their requirements. For example, if you are just waiting for the payment from a delayed transaction, you can use the invoice to get a loan. In this case, you will not have to show collateral as the invoice here acts as an assured proof of income.

Don’t have Collateral? You can still get a loan. There are many alternative funders in South Africa that may offer unsecured loans for your small business.


Business-related documents are a critical requirement to get a business loan in Cape Town. Although the requirement may differ from agency to agency, the usual requirement consists of submitting personal ID, business proof, and income proof related documents.


Where to get a Business Loan in Cape Town?

Getting a business loan from reputed agencies is important for the safety of you and your business. Always do your research and list down all the reputed agencies that could provide a loan for your businesses. After that, compare their requirements and interest rates to see what fits best for you.

Let’s understand which entities can provide a business loan to your small business in Cape Town, South Africa.


The South African government has a separate entity to support small business growth in Cape Town. This entity is called SEDA – Small Enterprise Development Agency. Each district in South Africa has a SEDA branch in the municipality, which means you can reach out to them as easily.

SEDA primarily focuses on assisting small businesses in terms of registering (through CIPC/Bizportal), advising on growing the business, and making them aware of rules and regulations. They are a sub-division of the Department of Small Business Development (DSBD). DSBD also has another sub-division that focuses mainly on providing fundings for business. This division is known as Small Enterprise Finance Agency (SEFA). They provide finances or finance-related alternate solutions to Small and Medium Enterprises in Cape Town.

SEFA Provides fundings to the following sectors:

  • Tourism
  • Retail
  • Wholesale trade
  • Manufacturing
  • Agro-processing
  • Agriculture
  • Construction
  • Mining
  • Green industries

Related: Registering your business? This is what you need to know.

National Empowerment Fund (NEF)

National Empowerment Fund (NEF) is another government agency that directly reports to the Department of Trade, Industry, and Competition (DTIC). Their main focus is on funding and empowering black businesses in Cape Town and all over South Africa. They have a diversity of funding services, such as:

For more information on how you can apply for their funds, check out this section on their website.


Banks are another go-to option when you need a business loan. However, as the bank regulations are traditionally strict, you will have to fulfil a lot of requirements before you can get a business loan. Such requirements are:

  • Strong collateral
  • Business-related documents
  • An excellent credit score

The huge drawback with banks is that you often need to show a collateral or you may get refused. They have strict criteria which may not work in the favor of small businesses. As a small business, it is really difficult to get a business loan. This is why many SMEs would rather turn into more lucrative options, such as a private/alternative lender.

Alternative Finance Agencies:

Alternative Finance agencies are the private funding agencies in Cape Town and all over South Africa. They can provide a reasonable amount of funding for your business.

These options are slowly getting popular as they are easier to deal with than a bank. More importantly, these agencies are also willing to provide ‘unsecured loans’, making them a great option to consider. An unsecured loan is where you do not have to show collateral assets. But, depending on the amount, you may have to present the documents regarding assured cash flow within the duration of the loan repayment.

Related: We have covered more about Alternative Finance in this article: Bridging Finance for Small Businesses.



As your business continues and grows, you will need some extra funding to support your business. So, it is safe to say that you will have to take a loan at some point in your days as an entrepreneur. Getting a business loan in Cape Town is indeed difficult, but not impossible. There is always the right option for you.

Getting a business loan possesses its own risks. Make sure you read all the documents carefully before making your decisions.

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