Contractor financing in South Africa makes it possible for small businesses to fill gaps in cash flow when fulfilling contracts.
What is contractor financing?
In this type of funding model, the value of the contract – not the company’s creditworthiness – secures the funding.
The finance provider covers the costs of the contract by paying suppliers directly. Working capital is made available to ensure the project is completed on time and within budget.
Repayment terms are designed to coincide as closely as possible with the contract payment cycle. For tenders or building ventures, they typically range from 30 up to 180 days.
Full payment is only due once the contractor has been paid, providing it falls within the negotiated terms stipulated in the agreement.
In addition to providing the financial resources required to complete the job, the finance provider acts as a business partner. Practical input and expertise are given throughout the project life cycle.
How contractor financing can help SA small businesses
Due to inherent risks in the South African construction industry, traditional lenders are reluctant to provide loans to contractors, particularly entrepreneurs and small businesses.
Contractor financing is a quick and easy alternative.
It helps contractors pay for the materials, tools and equipment required for the job, improves cash flow and drives business growth.
With financial support, smaller contracting companies can compete for more lucrative projects and ultimately thrive and flourish.
Advantages over other funding options
There are a number of advantages that contractor financing offers, including:
- fast, flexible access to funds
- no repayment until you get paid
- no sharing business ownership
- hands-on assistance with paying expenses
- hands-on assistance with project management
- limited paperwork.
What we offer at BizFunding
BizFunding specialises in providing small businesses with the funding and expertise needed to fulfil construction and other government tenders.
We also offer financing for eligible private sector contracts.
Supplier invoices are paid on your behalf. We cover all, or a portion, of the running costs, and work hand-in-hand with you to get the job done.
Unlike other finance providers, we work on a profit-sharing basis. Each deal is structured around a specific contract or project.
When to use contractor financing
Contractor financing is a practical solution when you:
- don’t have business assets as collateral
- don’t qualify for a bank loan
- want to scale up your business to exploit more lucrative contracts
- only need funding to fulfil a project
- trust you’ll get paid timeously.
How much we can fund
BizFunding offers contractor financing in South Africa ranging from R50,000 to R2 million.
Projects must meet certain criteria, including a minimum gross profit margin, to qualify for funding.
If your business is looking for contractor financing in South Africa, consider partnering with us. Apply online or contact us on 012 001 0095, and we’ll guide you through the process – which is fast, reliable and straightforward.
