The national empowerment fund is a government institution that offers business loans through various funding schemes to target specific members of the society that are previously disadvantaged. The aim of the NEF is to empower the previously disadvantaged through providing financial and non-financial resources to start businesses, expand businesses and in some cases, acquire businesses.
Funding from the NEF is obtained through the following funds:
- Women empowerment Fund
- iMbewu Fund
- uMnotho Fund
- Rural & Community Development Fund
- Strategic Project Fund
- Art & Culture Capital Fund
- Tourism Transformation Fund
The NEF will also provide non-financial support such as funding advice, business planning support and general assistance to ensure that you are able to complete the application process and represent your business or business idea in an adequate manor.
Women Empowerment Fund (WEF)
The NEF women empowerment fund is targeted at empowering woman in business and providing them with the necessary financial resources required for their start up, expansion or equity acquisition in various sectors.
The NEF Women Empowerment Fund will fund in the range of R250, 000.00 to R75 million per application. The interest will be determined by the risk taken and the instrument used to finance the loan.
- Minimum of 51% black female ownership.
- Operational involvement at the managerial and board levels by black women.
- Commercial viability of the business case being presented.
- Compliance with all relevant laws and regulations.
- Ability of the business to repay WEF funding.
- Creation of jobs.
- Geographic location of the business is also important with the focus on rural or economically depressed areas encouraged.
- Possibility of co-funding with private or public sector institutions is encouraged in larger projects.
- For property transactions, at least 51% of the annual expenditure of the business to be allocated to majority black-owned businesses
The NEF iMbewu Fund is aimed to assist black entrepreneurs who would like to start new businesses or expand their existing business.
The fund offers debt, quasi-equity and equity finance products with fund in the range of R250, 000.00 to R15 million per application. The interest will be determined by the risk taken and the instrument used to finance the loan
Funds can be used for 3 products:
- Entrepreneurship Finance – to fund startups or expansion capital to black business owners who would like to start a business or expand their existing business.
- Procurement Finance – to fund black owned businesses who have been awarded tenders or procurement contracts by public or private organizations. This funds may be used to satisfy a contractual obligation by delivering the goods/services as per the agreement while the business owner waits for payment from the customer/client.
- Franchise Finance – to fund entrepreneurs who would like to purchase a franchise from a franchiser linked to a particular brand to reduce the risks associated with starting a business from the ground up.
The NEF uMnotho Fund Fund is desgined to improve access to BEE capital and provide capital to black- owned and managed enterprises. It can be accessed through 5 different products.
- Acquisition finance – Fund equity purchase between R2 million and R75 million in an existing business. Mainly focused on medium and large companies.
- New Venture Finance – funding R5 million to R25 million per project for BEE parties seeking participation in medium sized Greenfield projects.
- Expansion Capital – black owned business that seek funding between R5 million and R75 million to expand their business.
- Capital Markets – funding for BEE enterprises, particularly black women who wish to list on the JSE or ALTX markets. Also assist BEE listed companies to raise additional capital for expansion.
- Liquidity and Warehousing – Assists BEE shareholders who need to sell a portion or all of their shares. Acquires the shares being sold to temporarily house them before reselling them to new BEE shareholders.
- The NEF uMnotho Fund Fund will fund in the range of R2 million to R50 million per application. The interest will be determined by the risk taken and the instrument used to finance the loan.
Rural & Community Development Fund (RCD)
The NEF Rural & Community Development Fund aims to provide funding to aspiring rural entrepreneurs and non-financial business support in order to equip entrepreneurs residing in rural areas with the necessary skills to promote social and economic upliftment that is in line with the NEF mandate
Sectors which may access the RCD fund:
- Agro Processing and Manufacturing
- Forestry and Fisheries
- Commercial Property
- Aqua and Marine Culture
- Non – Farm Activities (rural based)
Strategic Project Fund (SFP)
The NEF Strategic Project Fund aims to increase the participation of black people in early- stage projects in order for black South Africans to have competitive opportunities in the economy and the inclusion of black participation in opportunities that are not easily accessible.
Sectors funded (This list is a guideline and the fund will evaluate each project based on its economic merit and ability to deliver on the development mandate):
- Business Process Outsourcing (Call centers, data storage centers and termination centers)
- Mining, Mineral Processing and Mineral Beneficiation
- Renewable Energy and Biofuels (solar, biomass, hydro, co-gen and wind)
- Pharmaceuticals and Chemicals
- Forestry, Pulp and Paper
- Infrastructure (telecoms, healthcare, roads, rail airports, dams and water)
- Tourism (hotels, resorts, tourism attractions and leisure)
Development and Economic Impact
- Creation of new manufacturing and industrial capacity
- Creation of new jobs as opposed replacement capital finance
- Investment of new fixed capital into economically depressed areas or poverty nodes
- Creation of an inclusive economy by increasing black South African participation in early-stage projects
- Increase RSA export-earning potential and reduce import dependency
- Increase co-investment and linkages with foreign direct investors
Art & Culture Capital Fund (ACF)
The NEF Art & Culture Capital Fund aims to promote and develop the arts and culture sector by providing funding with low interest rates to start or expand small businesses within the arts and culture sector. It is a very important fund for startups or companies that that have a limited to no operating history as many financiers will not fund provide finance to businesses that have a very limited operational history.
- All compliance requirements listed below must be submitted
- A brief profile of artists that will be performing to be included in the business plan
- Justification for proposed pricing of the event and line up of artists. Demonstration of the artists’ ability to draw a crowd must be submitted as part of the business plan
- There must be commercial returns at the end of the project, in other words the revenue to be made through ticket sales must exceed the total cost of the event
- The venue to be used must be available, have enough capacity and be suitable for the event
- Reputable distribution channel must be used for ticket sales; and
- A demonstration of how the proposed timing of the show is the optimal, that is, it should not coincide with other events that may compromise the ticket sales
- Completed NEF application form
- Business plan and projected Income Statement, Balance Sheet and Cash Flow Statement for the duration of the funding period
- Cash flow projections indicating how the loan will be repaid over the term and the loan duration
- Registration documents as a legal entity
- Valid tax clearance certificate
- Minimum of 50.1% shareholding by black South African citizens as defined in the B-BBEE Act who are resident within the borders of South Africa
- In need of start-up or expansion capital
- Require loan from Arts and Culture Venture Capital Fund of not less than R250,000 and not more than R5 million; However applicants are welcome to apply for normal NEF funding above R5 million
- Loan repayment should be within twenty four (24) months
- Own contribution of 5% or more towards the project
- Audited/reviewed financial statements for the past three years along with management accounts not older than three months ONLY for businesses that have been in operation
- A minimum of three (3) months must be provided between the closing date of the advert and the actual date when the first disbursement on the loan is required to allow enough time for the project
- All quotations must be submitted with the application form which amounts to the funding requirement. A minimum of three quotations for procuring goods and services unless if it is a procurement of a unique service such as artists
- Business must have an active bank account
- Financing any asset such as equipment or infrastructure must be for the purpose of start-ups or expansion with existing contracts or orders
- Social impact in the form of job creation and economic empowerment by indicating how many job opportunities will be created; Employment numbers must be stated by race, gender, disability, etc. for the project to be funded
- Applicants should be actively involved in the day-to-day operations of the business. If applicant is employed full time, he/she may be required to resign from his/her employment and provide the Fund manager with proof of resignation
- Necessary skills, experience or with the potential skill appropriate for the enterprise to succeed
- Have a profit motive and clearly indicate how the loan will be repaid
- Applicant’s projections must show growth prospect in order to be self-sustainable in future
- Brief profile and financial strength to settle projected receipts when due of the applicant’s customer(s) or sponsor(s)
Tourism Transformation Fund (TTF)
The NEF Tourism Transformation Fund is a dedicated investment funding mechanism specifically made to provide financial support to black entrepreneurs in the tourism sector. The fund mainly aims to assist young black women owned and community owned tourism enterprises to develop the tourism sector.
The Tourism Transformation Fund has a grant portion that can be used to reduce the approved loan finance or equity contribution by the NEF where the commercial viability of the project has been proven.
The grant contribution for approved application will be limited to 30% of the total funding approved and is capped at a maximum of R 5 million per beneficiary
- Applicants should submit their application forms and supporting documents directly to the NEF, who will assess applications for commercial viability and TTF eligibility.
- More detailed information on the TTF as well as an application form and checklist can be downloaded below
- All TTF applications and inquiries should be sent to firstname.lastname@example.org
- Note that incomplete applications will not be considered for funding.
General funding Criteria
- Commercial viability of the business case being presented
- The business must comply with all relevant laws and regulations
- There must be operational involvement at the managerial and board levels by black people
- Minimum percentage of black ownership or interest of 50.1% is a requirement
- The business must be able to repay NEF funding
- The business must create a reasonable number of jobs
- Geographic location of the business is also important with the focus on rural or economically depressed areas encouraged
- Meaningful black women participation is viewed more favorably
- Rural and Community Development Projects must have meaningful participation by communities
- Possibility of co-funding with private or public sector institutions is encouraged in larger project