In 2015, the South African Institute of Chartered Accountants (Saica) published the little and Medium Enterprises (SMEs) Insights Report. The report provided meaningful advice about the depressed economy stifling SME growth and explored solutions to improve opportunities for SMEs in Nigeria. The report identified the best obstacle towards the successful operation of sustainable and profitable SMEs as inadequate access to finance. This ultimately will cause cash-flow related problems, that happen to be considered to be the current grounds for the failure of SMEs.
Traditional banking companies are typically often serve SMEs mainly because of the expensive associated when assessing they then, their volatile balance sheets and the inherent high risks associated with start-up companies1. This insufficient financing for SMEs has exposed a spot from the South African lending and borrowing market, and has now encouraged increase in the sphere of social lending, often called crowdfunding. Crowdfunding is really an unconventional alternative approach to raising capital originating from a large group using an online marketplace lending platform2.
Online marketplace lending in Africa has grown a frequent solution to traditional financial institutions3, which for many years dominated the lending and borrowing market with high interest rates, rigorous paperwork, excessive bank charges and inflexible attitudes. Social lending is revolutionising the manner in which SMEs and conventional corporate citizens access funding and it is disrupting traditional understanding of how finance are lent and borrowed. Crowdfunding eliminates the requirement of traditional finance companies poor SMEs and provide consumers with a convenient and flexible online funding platform that promises competitive home interest rates, low charges and fees, and advantageous stipulations.
Launched in 2012 as the first online marketplace lending platform in South Africa, Rainfin Proprietary Limited (RainFin) has experienced rapid growth and recognition due to its power to match borrowers directly with lenders. This eliminates the requirement for an intermediary and produces favourable rates of interest for borrowers and attractive returns for investors. Initially, RainFin was primarily dedicated to granting signature loans to consumers in Africa, but the platform’s focus has gradually shifted towards providing financing to small businesses within the SME sector
