Lending institutions have been notorious for milking every penny from their “trusted” clients through various “special” lending packages.
Merchant Capital, a financial institution with a “conventional” approach to small business lending,. This is what the organisation calls a ‘future funding business for SMEs’.
What does Merchant Capital do differently?
Just to have a bird’s eye view, it is common knowledge that SMEs often fail due to lack of capital needed for growth, expansion or just even to take advantage of a bulk discount on stock.
The need for small business in SA is evident from an economic stand point, yet their failure rate is incredibly high. One of the reasons is the lack of funding and financial institutions willing to provide that funding.
Hence, the business model employed by Merchant Capital is unique and innovative in the South African context, although it is not a new phenomenon in the global arena.
How does it work?
The vendor (Merchant’s customer) applies online for a loan. This loan isn’t managed like the banks would manage it though, the repayments are set according to the behind-the-scenes analyses performed by Merchant. The repayments are in no onerous on the vendor as they are deducted from sales in real-time through their credit/card machines.
Merchant has the IP and agreements in place with the various mobile merchants to receive part payment of each swipe. Basically, what is deposited into the vendors bank account belongs to them, therefore there is no lump sum payment due at the end of the month.
Look out for an interview with Dov Girnun, the founder and CEO of Merchant Capital, in the coming issues of Transform SA Online for more details on how you can benefit.
