Statistics SA estimates that 11% of small businesses in the country disappeared as a result of Covid lockdowns. Of the 2.3 million businesses left, only 30% are in the formal market, the rest are informal.
The pain inflicted by Covid is reflected in Statistics SA data which shows unemployment hit an all-time high of 35.3% earlier this year. The SME sector was hardest hit by the Covid economic contraction, and many of those entrepreneurs that closed their doors may take years before they re-enter the market. Similarly, jobs lost due to business closure will not be easily recovered.
Traditional banks are ill-equipped to service the SME sector, which is a niche that Preference Capital decided to enter when it was formed in 2014.The realisation that the banks were ill-suited to servicing the SME sector created the gap in the market now filled by Preference Capital, which brings a mix of skills – from high-level corporate advisory to traditional banking, risk assessment and sector specialists – to an SME sector normally starved for this type of talent.
Preference Capital was set up to offer a full suite of financial solutions for SMEs, from asset finance to short-term business funding, invoice and purchase order finance, trade finance and treasury risk management.“When you are selling a computer, there’s plenty of choice and you won’t make a big mistake going one way or the other,” adds Goldberg. “When you are offering money, it’s different.