Manufacturing companies experience cash flow issues that most other industries never see. Customers typically get 60 or 90 days to pay for manufactured products, but the business still needs to pay for raw materials, labour and overheads in that time.
This causes cash flow gaps that can strain a healthy business. A single big order can quickly drain cash reserves and leave a manufacturer struggling to pay staff and suppliers on time.
The funders below have solutions designed to plug these gaps. Quick and flexible, they not only help manufacturing firms keep production moving, but can also be a useful growth tool for new manufacturing business ideas if used correctly.
1. Lula
More than 25 000 South African businesses have trusted Lula since 2014, receiving over R13 billion in funding. Many of these are manufacturers who are ideal candidates for Lula’s fast and efficient service.
Speed is central to Lula’s solutions. You can complete an application online in minutes, and the average time from approval to money in your account is 22 hours. Approval is more likely, too, with Lula assessing your read-only transaction data alongside your credit score to get a full picture of your business.
Two Lula solutions work well for manufacturers. The Cash Flow Facility is a flexible line of funding you can draw from whenever an unexpected expense catches you short, or if you need to take advantage of a new investment opportunity, subject to an affordability assessment. You don’t pay any monthly account or admin fees, and you only pay for the capital you use.
Fixed-Term Funding is useful for larger purchases, a one-off lump sum that you can repay over three, six, nine or 12 months at a fixed fee, with no penalties if you settle early. This solution also works for inventory financing for small businesses ahead of a busy season and purchase order funding by providing the capital to cover large orders that sometimes outpace your working capital.
Best suited for
Manufacturers that seek a ready source of flexible working capital with a quick turnaround, transparent fees and solid customer service.
2. Bridgement
Bridgement offers several financing options to manufacturers, including business loans, invoice financing, and credit facilities.
Funding starts at R20,000, and you can get approved on the strength of your bank statement data instead of the mountain of paperwork that comes with many traditional providers.
It’s possible for your Bridgement funding to sit idle if you don’t need it, thanks to no account fees, which manufacturers may find useful if they need to draw down for sporadic large orders.
Best suited for
Manufacturers looking for pre-approved capital ready to cover uneven production cycles.
3. Genfin
Genfin sees itself as a funding option that fits between microfinancing and institutional debt, offering up to R5 million in unsecured funding.
They accept online applications and base their decisions on recent trading performance, so you don’t need to dig through years of paperwork to get an answer from them.
Best suited for
Established manufacturers with proven revenue that banks have declined due to a lack of security.
4. IDC (Industrial Development Corporation)
The IDC provides risk capital from R1 million upwards to commercially viable industrial projects, with manufacturing and agro-processing among its core sectors.
The application process is thorough, and decisions take time, but the funding is patient and long-term, designed for plant expansions and capital projects that short-term lenders can’t touch.
Best suited for
Capital-intensive manufacturers planning a major expansion who can wait for approval.
5. SEFA (Small Enterprise Finance Agency)
SEFA is the government’s main SME lending vehicle and offers loans from R50,000 to R15 million, with more flexible credit criteria than commercial banks.
Expect a more involved application than fintech alternatives, since government-backed funds require more due diligence. For businesses that lack collateral or a long track record, though, it may be worth the effort.
Best suited for
Early-stage or underserved manufacturers with a credible growth plan and time to work through the process.
6. The DTIC Manufacturing Support Programme
The Department of Trade, Industry and Competition offers a cost-sharing grant covering up to 30% of qualifying capital expenditure for manufacturers. It’s not a loan, so there’s nothing to repay. If you’re planning to upgrade equipment or expand capacity anyway, check whether you qualify before taking on debt for the same purpose.
Best suited for
Operational manufacturers investing in equipment or capacity who can meet the programme’s eligibility criteria.
Which Funding Option Fits your Business?
The answer to this depends on what you’re funding and how fast you need it. Grants and development finance reward patience, while fintech lenders are great at meeting unexpected costs and keeping business momentum going.
Many manufacturers end up using both, taking IDC or DTIC support for the big capital projects while keeping a facility like Lula’s on hand for the week-to-week realities of production.
With the right flexible and affordable funding behind you, the next big order stops being a worry and lets you look forward with optimism.
Manufacturing companies experience cash flow issues that most other industries never see. Customers typically get 60 or 90 days to pay for manufactured products, but… Read More
