Join our Waitlist for Expert Advice!

Why Spartan Is Focusing On SME Funding And How They Can Support Your Business Spartan doesn't just fund entrepreneurial businesses, it is an entrepreneurial business. Kumaran Padayachee, CEO, Spartan reveals this is why his team understands SME financing needs and the unique challenges founder-led businesses face.

By Spartan SME Finance

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur South Africa, an international franchise of Entrepreneur Media.

Bigstock

Historically speaking, entrepreneurs don't typically have the quantity and quality of collateral needed to secure debt finance. It was this realisation that led Spartan to develop and deliver a solution that would help SMEs to grow their businesses, even though they didn't always meet the criteria of more traditional lending institutions.

"We understand that many business owners don't want to go the equity funding route, selling shares in their businesses in exchange for funding. Without the collateral needed to secure debt funding however, this is often the only route available to them," says Spartan CEO, Kumaran Padayachee.

"We decided to approach things from a different angle. To service this sector, you need to be flexible. The same rules don't apply as they do for corporates. To achieve this, we've assembled a team that really understands SMEs, their inner workings, the finance they need and the terms that will give them the best ROI for the funding they receive — after all, the point of funding is to help your business grow, so ultimately that's what it needs to achieve."

Spartan offers financing

At its core, Spartan finances small businesses (fast-growing companies with R5 million to R10 million annual turnovers) and medium businesses (R10 million to hundreds of million in annual turnover).

Spartan finances specialised asset finance (tech, software, plant and machinery, office fit out and furniture); working capital finance (bridging finance, medium term loans); and growth finance (expansion, BEE deals, acquisitions).

Working capital in particular is a big portion of what Spartan assists its clients in. "This is project and growth-related finance, and many of the enquiries are for working capital, for which there is a huge need in the SME landscape."

What finance suits your business?

As a debt funder, Spartan's team carefully evaluates what the finance will be used for, and if the return is greater than the repayments — in other words, does finance make financial sense for the business?

"There are numerous ways that finance can be applied incorrectly by SMEs," says Kumaran. "One of the first flags we look for is debtors age. If the industry norm is payment in 30 days, but a business is typically paid by its clients in 60 or 120 days, then we know there is something wrong with their internal processes.

Either the company is too shy to be assertive with clients, or it lacks the capacity or capability to invoice clients and collect cash. Either way, the result is a shortage of cash. Business owners in this situation apply for cash in order to be able to pay the bills, when they should be reviewing their business, pulling one or two levers, and improving their cash flows."

Growing your business with alternative funding methods

On the other hand, there are many situations where working capital and bridging finance can help a business to grow beyond its own, organic abilities.

"A customer project or contract that requires a new product line or opening a new branch are both positive, expansionary situations. The problem is that there's a lead time gap. You need to start the project, spend cash to hire people or purchase equipment, build internal capacity, deliver on the project and then the customer only pays you. Working capital and bridging finance allow the entrepreneur to do just that, and the company grows as a result."

Bridging finance in particular is high risk and requires a large amount of flexibility, which is why more traditional funding institutions shy away from it. Spartan on the other hand offers revolving bridging loans to customers the team has worked with. "We understand this space, and our aim is to support the entrepreneurs within it," Kumaran concludes.

Alternative finance solutions

Spartan is an Alternative Finance company that specialises in financing Small and Mid-sized businesses by providing: Growth Finance (structured finance for expansion); Specialised Asset Finance (equipment/machinery/technology/software/office fit-outs/energy/etc.) and Working Capital Finance (bridging finance & medium term loans).

Bridging Finance

Bridging Finance is available for one to three month terms and is ideal for contract or project-based businesses. It is a solution that assists businesses with solving cash flow issues due to growth-related challenges in their business and is either for a once-off need or for revolving business use.

Spartan is an Authorised Financial Services Provider 47631 and Registered Credit Provider NCRCP8669. e finance solutions.

Given that Spartan SME Finance is exclusively focused on financing SMEs and entrepreneurs – means that we’re serving a target market with expectations of fast turnaround time, convenient engagement and aversion to documentary compliance. So to meet those expectations – we think technology in all we do. We have created and adopted technology smartly in key aspects of the financing process for SMEs. We pioneered Software Finance for SMEs in South Africa – and this afforded us the opportunity to be plugged into the forefront of the software ecosystem. These insights and networks have been used to develop and adopt the right technology to aid our financing of SMEs.
Starting a Business

Schools Fall Short on Teaching Financial Literacy — Here's 3 Ways Parents Can Raise Future Entrepreneurs

Entrepreneurship is not just for adults. Teaching kids the basics of business and finance from a young age will serve them well in life, no matter what path they pursue.

Business News

A Billionaire Founder Admits He Had 'Horrible Habits' — Then He Started a Morning Routine That 'Transformed' His Life

Kind Snacks founder Daniel Lubetzky used to go to sleep at 2 a.m. and skip his morning workout.

Entrepreneurs

10 SA Entrepreneurs Who Built Their Businesses From Nothing

Remarkable stories about local entrepreneurs who built big businesses and well-known brands up from humble beginnings.

Franchise

Burger King Makes a $300 Million Investment in Modernizing Its Restaurants — See the Updated Look Here

The fast-food giant is set to revamp 1,100 of its U.S. locations, signaling a significant next phase in its ongoing "Reclaim the Flame" initiative.

Business News

A Wells Fargo Worker Was Discovered 4 Days After Dying at Her Desk. Her Cause of Death Was Just Revealed.

Medical examiners have released the cause of death of Denise Prudhomme, who was found dead at her desk in Wells Fargo's Tempe, Ariz. office.