Smaller businesses are struggling in the current economic climate brought about by, among other things, the COVID-19 pandemic.

Following a colloquium held by the National Planning Commission in June, it was found that 92 percent of small businesses are struggling to operate during the lockdown. Perhaps more worrying is an estimate from researchers at the colloquium that 50 000 SMEs would not survive the pandemic.

In a bid to assist SMEs, ProfitShare Partners has announced that it has secured R100 million from the SA SME Fund. The firm says that this will be used to provide capital to SMEs.

“The availability of funding and access to working capital has always been a challenge for SMEs. This has been exacerbated by the country’s economic crisis which has been deepened by the pandemic. ProfitShare Partners will provide SMEs with an alternative funding model to act as a catalyst for their survival and growth. The SA SME Fund is extremely pleased to be announcing this investment; it could not be more timeous,” said chief executive officer (CEO) at the SA SME Fund, Ketso Gordhan.

So how will this capital reach SMEs?

ProfitShare Partners’ business model is described a hybrid of venture capital and private equity. The firm says it doesn’t take up shares in the client’s business but rather partners with them principally.

“Our model is designed to give SMEs a boost. As opposed to providing capital as a form of a loan, we share in the profit and assist our clients in achieving financial sustainability to the point where they are either in a position to qualify for traditional finance or they no longer require finance,” explains ProfitShare Partners CEO, Andrew Maren.

SMEs who are interested in working with ProfitShare Partners should visit its website.

“This deal is a great win for SMEs who can’t access traditional funding. This capital helps ProfitShare Partners financially partner with hundreds of SMEs to catalyse their businesses to becoming bigger and more sustainable, enabling them to attract traditional funding in the future,” Maren concluded.

[Image – CC 0 Pixabay]