Not every business qualifies for a government grant or a traditional bank loan. Many SMEs face challenges such as lack of collateral, limited credit history, or needing funding faster than banks can provide. This is where alternative funding steps in. Alternative funding refers to finance provided by non-traditional lenders — usually fintechs or private institutions — that offer quicker, more flexible, and often unsecured funding solutions.
1. Revenue-Based Finance
Repayments are linked to your business turnover. Instead of fixed monthly instalments, you pay back a percentage of daily or weekly sales until the advance is settled.
Best for: Retail, hospitality, and service businesses with steady card turnover.
2. Merchant Cash Advance
A lump sum is advanced to your business, and repayment is automatically deducted from future card sales.
Best for: Businesses that rely heavily on card transactions, such as restaurants and retail stores.
3. Invoice Financing (Factoring / Discounting)
Unpaid invoices are sold to or financed by a lender, giving your business immediate access to working capital.
Best for: SMEs with long customer payment terms waiting 30–90 days for invoices to clear.
4. Peer-to-Peer (P2P) Lending
Funding is sourced from individual or institutional investors via online platforms, often with flexible criteria compared to banks.
Best for: Businesses that want quicker approval or don’t meet strict bank requirements.
5. Project / Contract Finance
Funding is provided upfront to deliver on a specific project or tender, and repayment is structured around the deal’s completion.
Best for: SMEs winning tenders or contracts but needing capital to execute.
Most alternative funding providers use turnover, sales history, or invoices as the main criteria, rather than collateral or long credit history. Applications are often digital, approval can take 24–72 hours, and funds are released quickly. Repayments vary depending on the product: fixed terms, daily deductions, or profit-sharing models.
Quick approval and funding turnaround.
Flexible repayment terms aligned with sales.
Less reliance on collateral compared to banks.
Accessible to SMEs and start-ups excluded from traditional finance.
Costs can be higher than traditional bank loans.
Repayments linked to sales may impact cash flow during slow months.
Shorter funding terms compared to long-term bank finance.
Not all products are suitable for every industry.
Alternative funding is best suited for:
Small and medium businesses needing fast access to working capital.
Companies with steady turnover but limited collateral.
Entrepreneurs waiting on invoices or tenders to be paid.
Start-ups struggling to qualify for bank or government loans.
South Africa has a growing number of fintechs and private lenders that provide faster, more flexible funding compared to banks and government agencies. The following are some of the most recognised players in the alternative finance space. This is not an exhaustive list — new providers continue to emerge, and each offers different products tailored to SME needs.
Lulalend – Provides quick online business loans with fast approval times.
Retail Capital (a division of TymeBank) – Specialises in revenue-based business funding with repayments linked to turnover.
Bridgement – Offers invoice financing and revolving credit facilities for SMEs.
ProfitShare Partners – Funds short-term projects and government tenders using a profit-sharing model.
Merchant Capital – Provides merchant cash advances for retail and hospitality businesses.
Payabill – Focuses on trade finance, supplier payments, asset finance, and invoice funding.
Bizcash – Specialises in invoice discounting and working capital solutions.
It’s business finance offered by non-traditional lenders, such as fintechs and private companies, instead of banks or government agencies.
Yes, generally. Because lenders take on more risk, rates and fees can be higher than banks. But businesses value the speed and flexibility.
Some providers can approve and disburse funds within 24–48 hours. This makes it attractive for urgent cash flow needs.
Usually not. Most products are unsecured and based on your turnover, invoices, or contract pipeline.
Yes, especially if they have turnover history or secured projects. However, brand-new businesses without sales may still struggle.
Bank loans are traditional, collateral-based, and often cheaper but harder to qualify for. Alternative funding is faster, flexible, but generally costlier.
