Limited Collateral Blocks Young and Women Entrepreneurs From Mainstream Business Funding

Author: Jeremy Lang, managing director at Business Partners Limited

For many of these entrepreneurs, limited collateral remains a key obstacle when it comes to accessing mainstream business funding. Younger business owners are still early in their financial journeys, and most will not yet have accumulated the assets or credit history typically required by lenders. Similarly, women in South Africa are statistically less likely to have access to property or other collateral that can be used to secure traditional funding.

These challenges are further compounded by limited trading history and financial documentation, particularly for the youth. Without established track records or formal financial statements, many businesses are perceived as high-risk, even when they are able to demonstrate viability and strong growth potential.

Traditional funding models also remain largely standardised, relying on uniform criteria that do not reflect the diversity of today’s SME landscape. Heavy dependence on formal documentation, rigid repayment structures and a preference for established businesses overlook how many modern enterprises actually develop, particularly youth-led businesses, which often evolve from informal or part-time ventures into full-scale operations.

As a result, viable businesses are excluded not because they lack potential, but because they do not align with conventional lending frameworks.

Addressing this gap requires more than increasing the availability of capital. It requires a shift towards more intentional and targeted support.

This does not imply preferential treatment, but rather a recognition that equitable access involves meeting entrepreneurs where they are and guiding them to compliance and readiness. Financial products and support mechanisms need to be designed with the realities of early-stage and growth businesses in mind, including more flexible lending criteria and repayment structures aligned to variable cashflows as well as technical support.

Business Partners Limited’s Basadi-Women Growth Fund is an example of one such initiative, combining funding with tailored support to help women-owned businesses overcome both capital and capability constraints. The Fund provides business finance ranging from R250,000 to R5m that can be used for property acquisition, working capital, equipment or asset finance, acquisitions or takeovers, replacement finance or to acquire a viable start-up franchise.

A key differentiator for the Fund is its flexible structure: women-owned businesses benefit from the option of an interest capitalisation or a repayment moratorium of up to six months.

Access to funding alone, however, is not enough. By offering technical support, as well as networking and mentorship opportunities, the Basadi-Women Growth Fund is also addressing the deeper barriers that limit female entrepreneurs’ growth.

For women and youth entrepreneurs, the surrounding ecosystem often determines long-term success. Mentorship and business coaching provide the guidance needed to navigate challenges and build resilience. Financial education – particularly around cashflow management – helps ensure that businesses are sustainable once funding is secured. And access to networks opens doors to partnerships, markets and new opportunities.

If South Africa is serious about unlocking the full potential of its SME sector, the focus must shift from generic solutions to targeted interventions. Women and youth entrepreneurs are already shaping the future of the economy, but without the right support structures in place, that potential will remain under-realised.