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Disruption that sees SMEs working and growing

Article provided by ProfitShare Partners

Having been in the financial services sector for many years and running his own businesses for the last 15 years, ProfitShare Partners founder and CEO Andrew Maren’s vision was to create a service he believed to be desperately needed in South Africa.

Born from the need for SMEs to access finance, but knowing traditional banking requires far more information and assurances than most SMEs have, ProfitShare Partners disrupted the finance sector with a business model that doesn’t need financials, a track record or even security for an SME to access capital.

ProfitShare Partners (PSP) reviews an SME’s underlying transaction risk, which it helps manage. Based on that risk, the company provides the necessary finance and shares in a percentage of the profits of that particular transaction.

“This approach helps businesses build a track record and business experience, grow turnover and produce a set of financials,” says Maren. “It helps SMEs become more bankable, which makes them more attractive to traditional funders.

“It’s what makes ProfitShare Partners business model unique: We actually build up our clients to lose them to the banks.”

Part of the Maren vision was the #GetSAWorking campaign, an exciting initiative aimed at stimulating growth and development for SMEs in South Africa.

“The campaign aims to help South African SMEs jumpstart the South African economy”, Maren says, explaining that the initiative gives SMEs an alternative source of capital for their business.

“With #GetSAWorking, an SME with a purchase order or valid contract between R250 000 and R5 000 000 you can apply for a share of the R100 million we have allocated to assist and ultimately enable them to create jobs.”

SMEs with no access to funding, no track record or financial history but a valid PO or contract can benefit from our #GetSAWorking initiative. The initiative is already 10 months in, with R77 million in cash dispersed and another R23 million left to help small businesses with finance.

What SMEs need to know

Once approved by ProfitShare Partners, SMEs can step into the business arena with the confidence of having a partner in the financial sector and the ability to deliver on the PO.

“ProfitShare Partners has concluded transactions worth hundreds of millions of rands with zero percent performance failure,” Maren notes. “This gives many corporates the comfort of knowing that the SMEs we back have the financial muscle and the oversight support, to ensure they deliver correctly, on-time, every time.”

With PSP in the SME’s corner, he says both the SME and the corporate have the confidence of knowing this contract will be fulfilled correctly. “This is a powerful argument for any SME to use with any potential corporate client.”

Importantly, ProfitShare Partners is sector-agnostic, dealing with SMEs in all sectors and industries. “However,” Maren says, “what we stay away from is high performance transactions, like construction and low margin transactions like fuel wholesaling. The best fit for ProfitShare Partners is short term transactions, say between 30 and 180 days, where our client is supplying a physical product to a reputable large corporate.”

That said, ProfitShare Partners has created several bespoke structures for clients and is able to look at most short term transactions where they have a large corporate as a client.

The application process: speed and simplicity

Key to the speedy turnaround of ProfitShare Partners’ response to online applications are the following ten steps:

Ten steps to ProfitShare Partners assistance

  1. You apply online, we respond with a “yes” or a “no” within 24 hours
  2. Our website is user-friendly and easy to navigate
  3. Our staff are available to assist you every step of the way
  4. We don’t require 12 months of bank statements or proof of earnings
  5. If you are approved, you get your funds within seven days
  6. All you need is an order for your product or service from a corporate
  7. We help you grow until you require a  bank, then we are happy to introduce you to the ones we work with
  8. ProfitShare Partners was started by entrepreneurs, for entrepreneurs
  9. PSP continues to participate in initiatives that drive an inclusive economy
  10. Our success depends on your success – we are a trusted partner with our clients

Once the funding is approved, Maren says all documents are then signed electronically, which also saves time and money.

“ProfitShare Partners then monitors the transaction from the time our funds are paid out until we collect the funds from the ultimate client. At this stage we collect the capital and our share of profits, while our client receives their portion of profits. The deal is then closed and we start again on the next transaction.”

The agility and efficiency with which ProfitShare Partners operates is vital to SMEs being able to respond timeously to contracts. It’s a silver thread from order to application, and from delivery by the SME to sustainable growth in this vital sector,” Maren asserts. “Putting SMEs in a position of financial strength ultimately props up an enormous part of the economy, and #GetSouthAfricaWorking becomes a reality.” 

ProfitShare Partners is a proud Partner of the NSBC