Small businesses are the backbone of everyday economic life in South Africa, and for years the people who run them have faced the same wall when they approach a bank for funding. The complaint is familiar: lenders pay lip service to supporting entrepreneurs, and loan applications are rejected because the business lacks collateral. That rejection reaches well beyond the individual owner. When a young venture cannot access working capital, it cannot cover its expenses, pay its suppliers or keep trading, and the communities that depend on it feel the squeeze.
A shift is now under way. Two banks, GoTyme Bank and Capitec, are introducing a funding model that looks less at what a business owns and more at how much cash it generates. Instead of granting a loan against the collateral inside a business, they base lending decisions on cashflow. For entrepreneurs who have long been locked out, this changes the practical terms of access to finance.
Capitec’s approach relies on data generated by the Point of Sale (POS) devices it sells to its customers. The bank monitors how much cash those businesses generate and uses this information to run a credit assessment that determines the size of the loan it can grant. The results suggest the formula is working. In the six months to the end of August 2026, Capitec’s business clients more than doubled from 244,000 to 545,000 year-on-year. The number of merchants using its POS devices has risen from 32,000 two years ago to 141,000 this year, and total turnover through those devices climbed from R27,1 billion two years ago to R61,8 billion this year. Its lending book grew by 37% to R35,5 billion in the period, and the portion of that book lending to very small businesses rose by 175% to R4,2 billion.
GoTyme has taken a parallel route with its working capital offering, which does not require collateral at all. To date it has granted R17 billion in working capital loans to 90,000 businesses. For owners who need liquidity quickly, whether to bridge a gap until invoices are paid or simply to keep the doors open, products of this kind speak directly to a need that traditional lending has struggled to meet.
The broader significance is worth pausing on. Up and coming ventures are generally still trying to figure out what makes them tick, and at the same time they need liquidity to cover their expenses. Funding models that are not onerous to access, and that deliver much-needed cash quickly, meet that moment. Miguel Da Silva, GoTyme’s business group executive, noted that while his group took pride in helping to grow businesses, it was also happy to provide them with the liquidity just to pay the rent until their invoices were paid. That is a practical, everyday form of support, and it is the kind that keeps small operations alive between one payment cycle and the next.
None of this is risk free, and honesty about that matters for the public too. Basing loans on cashflow requires lenders to run sophisticated automated credit scoring systems, and if those systems get it wrong, the lenders are exposed to loan defaults. The performance of the broader economy is a second pressure point. If the economy takes strain, cash generation will be affected, making it harder for clients to pay back what they owe. With no collateral to fall back on, lenders have few options to recover their money if clients go under. Those risks sit with the banks, but they also matter to depositors, whose funds must be protected, which is why safeguards in lending have always existed.
Even so, the growth in cashflow-based lending should be welcomed. It provides a funding source at a difficult time for emerging ventures, and it comes from institutions responding to a gap that has held back entrepreneurs for years. A fuller account of these developments can be found at https://cbn.co.za/industry-news/business-advisory-financial-services-news/sme-funding-in-south-africa-how-capitec-and-gotyme-are-reshaping-business-finance/. The bottom line is that the country’s entrepreneurs need all the support they can get, and the introduction of cashflow-based lending products is probably among the most useful contributions the financial services sector has made in a long time.