The Industrial Development Corporation of South Africa (IDC) offers Entrepreneurs under the age of 35 access to preferential interest rate funding. The fund specifically focuses on job creation in manufacturing businesses where youth entrepreneurs own at least 51% of the business. Lending rates at prime minus 3% are accessible and in some instances may be as low as prime minus 5%. It is also possible to negotiate preferential loan terms and payment holidays, allowing for periods where no payment of capital or interest is required.

Requirements: The project for which funding is required, be it an expansion of a business or a start-up, must exhibit economic merit in terms of profitability and sustainability. The following criteria apply:

• The project must be in the industrial (manufacturing) sector• Majority shareholder(s) must be younger than 35• Minimum funding amount of R1,000,000• Maximum funding amount of R1bn• Cost per job must not exceed R500,000

In addition, shareholders of start-up companies will be expected to contribute some of their own funding.

Security is structured according to the applicant’s business needs and typically does not exceed the outstanding loan amount plus 10%. As a preceeding condition to the loan, the IDC will require a guarantee from the company’s shareholders generally in proportion to their shareholding. Other securities that could be requested include a combination of the following:

• Special notorial bonds over specific assets• General notorial bonds over movable asets• Cession of shareholders loans• Cession of shares• Cession of insurance policies

Loan terms are structured according to business needs and risk profile. Equiment finance typically carries a 5 year term and working capital a term of 3 years. Interest rates may vary between prime less 3% and prime less 5%.

The IDC will require the company to audit their annual financial statments and might request an undertaking to improve the company’s BBBEE status. This could be done via the establishment of a managment or staff trust.

The IDC may place restrictions on the remuneration of directors and the drawings of shareholders funds until there is sufficient equity accumulated within the business.

How To Apply

To apply send the following to

info@innovativefinance.co.za:

• A brief description of your business.

• The amount of funding required and what the funds will be used for

• Latest set of annual financial statements

• Latest management accounts

• If available, a set of financial projections

Contact Us 021 838 2726

info@innovativefinance.co.za www.innovativefinance.co.za

Youth Fund - Call For Applications

Funding Criteria

Security Requirements

Loan Terms

Undertakings and Conditions