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If your business plan is sound and has the potential to kick-start a sustainable enterprise that can create jobs, the Industrial Development Corporation (IDC) could become a valuable partner on your journey.
David McGluwa, who heads operations at the IDC head office and regions across the country, said if the business plan is workable and paints a picture of a business with true potential, the process moves to the second phase. A basic assessment is done on the application to determine whether the business has economic merit and whether it will, in the long run, be able to repay the loan advanced by the IDC.
Four key components are assessed to determine the viability of an application:
1. Management team – Who are they? What is their background?
2. Market analysis – How big is your market? Where will you get orders from?
3. Technical aspects – This is the operational side. If it’s a manufacturing business, does it have the right equipment? Where will it get raw materials? What volumes can it produce?
4. The financial model at a basic level – Will the business be able to repay the loan? Will it be sustainable?
The IDC also has a business support programme that provides advice and support for entrepreneurs before their funding request is awarded and afterwards to assess whether the capital injection has made the business viable and what additional help is required. Entrepreneurs can also access these services at regional offices located in each province.
McGluwa said the minimum IDC business loan was R1 million. There is no limit to how much a business can receive, but if it’s more than R1 billion, it is likely that co-funding options with other financing institutions will be explored. A total of R4.5 billion has been made available over a period of five years to support youth entrepreneurs who have bankable projects in sectors that the IDC funds.
McGluwa is excited about the drive led by the IDC and the department of trade and industry to create new black industrialists. He said new black industrialists were investing in sectors that were driving the economy, often in spaces where few black business people have operated before.
“We are seeing black people in the active industrial sectors that drive the economy of South Africa. They are moving into that space, and that is the exciting part. It has exceeded our expectations.”
