ayGate, a local payment service provider, has announced a partnership with Retail Capital to provide start-ups with short-term working capital for them to be competitive ahead of the festive season.
The companies say they co-created the Easy Advance product to allow merchants to gear up and take advantage of the approaching Black Friday.
PayGate, which processes payments for over 25 000 online merchants in Southern Africa, says it wants to make sure its customers have the capital they need to compete “when it comes to the big sale days later this year”.
The company says Easy Advance is pre-qualified funding that leverages a merchant’s existing transactional information to craft a personalised finance solution suited to their specific requirements.
Payment terms can be taken over a one-, three- or six-month period, depending on the preference of the company, and can be deducted from the payments being processed over the PayGate gateway in a flexible repayment schedule.
PayGate says it has begun the rollout to qualifying merchants and will be regularly assessing transactional data to provide funding offers ahead of the holiday sales.
Brendon Williamson, chief sales officer at PayGate, says one of the biggest obstacles for a growing business is access to finance.
He explains: “We know that our merchants are gearing up for the approaching year-end sale days. However, access to finance remains one of the biggest challenges facing businesses today. Traditional finance has very strict criteria, some which simply can’t be met by companies that have only been trading for a short period of time.
“Easy Advance’s criteria takes daily online transactions into account, enabling younger companies to scale up quickly with the security of two reputable institutions backing the product.”
Finfind data shows that start-up capital, buying equipment, expanding businesses and working capital are the largest funding requests in South Africa.
According to Williamson, PayGate has over the last few years seen a shift in the nature of its customers.
“Before, our online merchants were mostly mid to large e-commerce-only outfits. Now we have brick-and-mortar companies who have added an online channel, as well as a healthy percentage of micro enterprises made up of entrepreneurs who are running start-up online businesses,” he says.
Karl Westvig, Retail Capital CEO, believes the economic malaise is making it harder for start-ups to get funding from traditional lenders.
“When providing funding to help business owners grow, we look at their track record and financials, not at their collateral. We are able to optimise their budget and resource strategies and overcome the other practical obstacles they are facing, allowing them to grow,” he says.
Westvig adds Retail Capital understands “the needs of entrepreneurs who need to move quickly to increase stock or launch an aggressive marketing campaign ahead of the big sale days. Working with PayGate we can deliver the most flexible product possible, based on real-time trading data of the company seeking the finance.”