South Africa has never had more money on the table for small businesses. There are over 300 funders in the country, offering at least 600 different finance products between them – double the number that existed before the COVID-19 pandemic. Yet, the country’s small business credit gap sits at a staggering R350 billion a year, and it keeps growing.
Speaking at the 2026 SME Funding Summit, Finfind CEO Darlene Menzies broke down the assumption that this is simply a case of not enough money to go around. “The issue is that the annual demand far exceeds the supply,” she told the audience before adding the line that reframed the entire funding conversation: It’s not that there isn’t enough money; it’s that the money isn’t reaching the businesses that need it.
For Menzies, the real barrier isn’t rejection; it’s invisibility. “It isn’t that we always fail the credit assessment,” she said. “It’s that we never reach it in the first place.” Most South African micro, small to medium-sized enterprises (MSMEs), she argued, don’t lose out because a lender looked at their books and said no; they lose out because no lender ever looked at all.
That single distinction – between failing an assessment and never reaching one – is the thread that runs through everything else Menzies unpacked that morning.
South Africa’s SME Funding Gap Isn’t Only a Cash Problem, It’s a Visibility Problem
The R350 billion funding gap has been established by experts as a readiness problem and not a lack of capital problem. The gap highlights what South African MSMEs need to operate and grow and what they’re actually able to access through formal funding channels. Menzies says it’s not a fleeting figure either. “It’s a gap that renews itself every year, and it’s widening.”
The number of lenders in South Africa serving the small business sector has more than doubled since the COVID-19 pandemic, so small businesses should be in a stronger position to access finance than ever before. Instead, the mismatch between supply and demand has only grown more pronounced.
Menzies says this means businesses are not failing to qualify for funding (they are); they are not making it into the room in the first place. She says, “Small businesses never make it to the assessment stage. This is what’s making that funding gap even bigger; it’s a total mismatch where the supply cannot keep up with the demand.”
Why Most Jobs Come From Businesses That Get Less Than 5% of Credit
To understand why the gap matters beyond spreadsheets, Menzies pointed to who exactly is being shut out. MSMEs make up most of formal businesses in South Africa and are responsible for an estimated 60% of jobs in the sector. Yet, as she put it plainly: “MSMEs represent 90% of formal businesses in the country but get less than 5% access to credit.”
When you set that 5% figure against total bank lending – Menzies cited banking association data putting total corporate and business lending in 2024 at roughly R2,2 to R2,5 trillion, of which only around 12% (roughly R265 billion) went to MSMEs – the scale of the exclusion becomes difficult to ignore.
That single statistic highlights a large, systemic disconnect that isn’t just a banking marketing failure; it’s a human crisis for business owners and workers. The human reality behind this damning stat is:
- The survival trap: Without credit, small business owners cannot navigate temporary cash flow shocks. A single delayed invoice can force an entrepreneur to downsize or close temporarily.
- Stifled upward mobility: Millions of capable entrepreneurs are trapped in “subsistence mode”. They have the talent and demand to expand, but without capital, they cannot hire more staff, buy bulk inventory, or invest in technology.
- Wages and job insecurity: Because MSMEs operate on thin margins without a credit cushion, the larger the workforce employed, the more volatile wages, fewer benefits, and the more constant the threat of layoffs.
“If we talk about the state of MSME funding in South Africa, then we’re in a crisis,” she said, arguing that a sector responsible for the majority of the country’s jobs cannot continue operating on a fraction of the credit available to it.
Invisible Businesses: Why Lenders Can’t Assess What They Can’t See
Ask most small business owners why they can’t get funding, and they’ll usually blame the outcome: rejection, high interest rates, and unfavourable terms. Menzies argued that the real issue happens earlier than that.
Invisible businesses, ranging from informal township spaza shops to digital freelancers, remain unbanked and unfinanced because traditional credit models rely entirely on formal paperwork and audit trails they do not possess.
The result is a kind of structural blindness. Lenders aren’t rejecting small businesses outright so much as failing to see them at all. Menzies explains that there are only two ways a lender can actually assess a business: through documented financial evidence or through a business credit history pulled from a credit bureau. Most South African MSMEs have neither.
“It isn’t that we always fail the credit assessment,” she said. “It’s that we never reach it in the first place.”
This system is even more devastating for MSMEs. Most business owners assume that, like individuals, their businesses carry a credit score somewhere in the system. Menzies said this assumption is largely false, and the reason lies in regulation, not oversight.
South Africa has a robust consumer credit reporting system, governed by the National Credit Act (NCA) and managed by private credit bureaus registered with the National Credit Regulator (NCR).
Every credit provider is required to report monthly to a central hub, which distributes that data to the country’s six major credit bureaus, building up detailed personal credit histories over time. Nothing equivalent exists for businesses.
No Business Credit Score? Here’s Why That’s Costing You Funding
The NCA treats any “juristic person” – a business – turning over less than R1 million or turning over more but applying for less than R250 000, in much the same way as an individual consumer. Above that threshold, businesses fall outside the Act’s protections almost entirely, and lenders aren’t obliged to report on their lending activity at all.
Menzies illustrated the resulting confusion with a memorable analogy about lenders using a business owner’s personal credit history as a substitute for the business’s own: “It’s like looking at how your cousin drives his car, and you think that’s how Darlene drives.”
Two entities. One data point.
She was equally direct about what’s often marketed as a ‘business credit score’. “Business credit scores are scarce or non-existent in this country,” she said. “And where bureaus do sell something labelled as one, it’s frequently little more than a repackaged personal score with a business name attached.”
How Small Businesses Can Make Themselves Visible to Lenders
Having laid out the problem in detail, Menzies turned to what business owners can actually do about it, and her advice was pointedly practical. Her central message: funding readiness has to be treated as an ongoing discipline, not a scramble undertaken only when cash is needed.
Her recommendations included separating personal and business finances immediately, running all business income through a dedicated business account, and building a consistent, clean transaction history over time.
To do this effectively, Darlene specifies that this requires business owners to:
- Consistent revenue
- Manageable expenses
- No erratic personal transactions
- Check their personal credit scores regularly
- Address any historical debt proactively
- Pay themselves a formal, regular salary to build a visible income pattern
“Treat funding readiness as a discipline, not an event. Visibility to lenders doesn’t happen by accident; it has to be built deliberately, month by month. Remember, positive ordinary preparation precedes extraordinary accomplishment,” she said.
What Regulators and Banks Need to Fix to Close the Gap
As much as SMEs can become funding-ready in all aspects of the business, to close the gap, change needs to come from those in charge of the system; Menzies suggests starting with regulatory reform.
She called for the NCA’s juristic person threshold to be urgently readdressed, arguing that bringing more businesses under its protections would force greater transparency from lenders. She also renewed FinFind’s long-standing call for regulators to mandate the sharing of business credit data in the same way consumer data is already shared.
Her most pointed recommendation concerned open finance regulation, a system used in similar economies to South Africa, such as Brazil. An open finance system would compel banks to provide open APIs allowing business owners to consent to sharing their own transaction data directly with alternative lenders.
“South Africa doesn’t have open finance regulation. We’re advocating for it. Without it, MSMEs remain locked out of the fast, data-driven assessment models that fintech lenders are increasingly able to offer,” she concluded.
South Africa has never had more money on the table for small businesses. There are over 300 funders in the country, offering at least 600… Read More
