Money, the old saying goes, makes the world go round. This is especially true for small businesses, where income and funding are the difference between success and being one of the 70% to 80% of SMEs that fail in their first five years. As Nobesuthu Ndlovu, Director of Old Mutual SME, puts it: ‘To grow, SMEs need cash. There’s nothing more to it.’

The problem is not that money is unavailable or that banks are unwilling to fund entrepreneurs; the problem lies in the credit assessment process. ‘It is designed to assess a business that is performing well, and what “well” looks like is an income statement that shows that you’re profitable, and a balance sheet that says you have more assets than liabilities,’ Ndlovu says. ‘I totally understand that. Having worked in a bank myself, I know that lending happens on the back of deposits.’

The sad irony is that a business that ticks all those boxes probably doesn’t need to borrow anything and besides, the number of businesses that fall into this category is very low. ‘We need to change the credit assessment criteria and how lenders look at businesses. Don’t get me wrong: I’m not saying that money must be given away irresponsibly. But we do need to start looking at small businesses differently to enable responsible lending.’

Funding applications made even easier

To facilitate this shift, Old Mutual’s SMEgo online platform has shifted from being a funding portal to delivering a holistic proposition based on three pillars: funding, efficient business operations, and access to markets. ‘We want to offer solutions that enable entrepreneurs to run their businesses successfully,’ says Ndlovu.

One of those solutions allows founders to generate invoices online via SMEgo. Each invoice automatically includes a payment link, where customers can pay the amount due. ‘Once an invoice has been paid, the entrepreneur can use it to apply for funding simply by clicking on “Apply for funding”,’ Ndlovu explains. ‘This makes the process very easy, as you don’t have to leave the platform to submit an application.’

Between mid-August and end October 2022, 134 SMEgo users generated 755 invoices worth R9 million. ‘This shows that there’s a real need for our service which helps to smooth the whole invoicing process. It’s a non-core activity that takes entrepreneurs away from their main focus, their businesses. In fact, our research showed that founders spend 70% of their time on non-core activities and that is why we built SMEgo – to save them time and run administrative tasks professionally and efficiently.’

Three sides of a triangle

SMEgo relaunched on 15 August 2022, with the platform’s funding element remaining firmly in place. ‘It’s SMEgo’s initial function and we’ve seen 714 successful funding applications so far to the value of R314 million,’ Ndlovu says.

With that, she circles back to the idea of a holistic business solution which provides funding support, operational support and help with access to markets. ‘The need goes beyond lending,’ she says. ‘You’ll often hear lenders telling SMEs that they won’t – or can’t – offer them loan funding, because their businesses can’t afford the interest on the loans. We want to change that by saying: “Okay, how can we help you to optimise your business operations so that we can lend to you, you can repay us and you can continue to grow?”

Ndlovu speaks from experience. Having founded her e-commerce store over 14 years ago, she knows that there’s more to running a successful small business than seeking and securing funding. ‘Whether your business is thriving or struggling, SMEgo’s new capabilities will help to either amplify what is already working or to turn your business around.

Learn more about Old Mutual’s funding and support for SMEs here.