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Are You Funding Ready?

Many small businesses are badly unprepared for raising capital and lose out on valuable funding opportunities.

Are You Funding Ready?

Many business owners have approached us for assistance with emergency funding in the wake of COVID-19. Unfortunately, most of them haven't been able to take advantage of the numerous relief programmes because they couldn't collate the necessary paperwork in time.

It's unfair to expect a small business owner to be prepared for a pandemic, but poor administrative readiness is a consistent frustration when helping SMEs source funding. Most entrepreneurs underestimate the scope of work when applying for funding, particularly when approaching government agencies.

While funding applications aren't homogeneous, there is plenty of overlap. Here are some of the most common requirements:

CIPC registration documents

Memorandum of incorporation or association agreement

Annual financial statements for the last three years

Current management accounts

Debtors and creditors age analysis

12 month cash flow forecast

Bank statements for the last six months

Tax clearance certificate pin

Latest income tax return

Latest VAT return

Company profile

Proof of address (e.g. recent utility bill)

Rental agreement

B-BBEE certificate

Trade references

IDs for all members, shareholders, and directors (and their spouses if married in community of property)

Personal statements of income, expenditure, assets and liabilities

(Bear in mind that this list is far from exhaustive. There will also be project-specific requirements, like business plans, supplier quotes, purchase orders, and tenders or contracts.)

In our experience, very few business owners can assemble all of these documents within a few days. Most will need at least a week or two, and it's not uncommon for some to give up in frustration. A good accountant can handle a lot of this for you, but many SMEs don't have particularly good accountants. And even if you do have an excellent accountant, you shouldn't assume that they'll have everything on hand.

Whether you are actively looking for funding or not, there's no sense in being unprepared. Check what your accountant has on file, maintain your own archive, and update your records at least twice a year so that you can seamlessly capitalise on funding opportunities when needed instead of scrambling frantically.