The IDC's Transformation and Entrepreneurship Scheme, which is capitalised at R1-billion, has a number of smaller funds under its umbrella. Of these, the Women Entrepreneurship Fund and the Development Fund for Workers make up the two largest components of the scheme.
The aim of the scheme is to stimulate and develop largely small and medium enterprises, and make the mainstream economy accessible to marginalised groups: women, people with disabilities, workers and communities.
The Transformation and Entrepreneurship Scheme is designed to help entrepreneurs access finance to develop and grow their businesses.
The funds are intended to offer funding for start-up businesses, expansions or expansionary acquisitions. Alongside the funds the IDC offers business support, helping with business planning, training and mentorship.
Funding criteria
There are general criteria set out for all funds:
Applicants must be able to demonstrate that their business is economically viable and financially sustainable.
The business must be in one of the IDC's mandated sectors.
Provision must be made for the employment of people with disabilities.
Funding provided will generally not be less than R1-million.
Specific guidelines have also been drawn up for each of the five funds.
Women Entrepreneurial Fund
Fund Size: R300-million
Approved: R53-million
This fund applies to businesses with a minimum shareholding by women of at least 50%; shareholding between 25% and 50% will be considered on revised terms. This fund can be applied to a start-up business or for expansions and is available to new entrants – that is, those shareholders with a direct or indirect total net asset base of less than R15-million. The business must include women in its operations and management; and finance is provided to businesses with a total asset base of up to R80-million. The maximum amount that will finance under this fund is R30-million per transaction.
The funds are intended to offer funding for start-up businesses.
People with Disabilities Fund
Fund Size: R50-million
Approved: R11-million
This fund applies to companies in which a person or people with disabilities have a minimum shareholding of 50% plus one share; companies with shareholding of between 25% and 50% by disabled persons will be considered on revised terms. Applicants must demonstrate operational and management involvement.
The maximum amount that can be financed under this fund is R8-million and the fund is open to start-up and existing companies that wish to expand. Only new entrants qualify for financing – that is, those shareholders with a direct or indirect total net asset base of less than R15-million.
Equity Contribution Fund
Fund Size: R150-million
Approved: R88-million
This fund is available for new black entrants in which shareholders hold a direct or indirect total net asset base of less than R1.5-million. It is open only to black individuals or individuals in a 100% black-owned company. In the case where the company is not wholly black-owned, the black shareholding must be 25% plus one. This fund applies to start-up businesses or existing companies that wish to expand. Black shareholders who are financed under the scheme must be involved in both the operations and management of the company. A maximum limit of R10-million has been set for each application and finance is provided to businesses with a total asset base of up to R80-million.
Development Fund for Workers
Fund Size: R350 million
Approved: R200 million
This fund provides finance to broad-based black economic empowerment transactions for groupings that are at least 85% black-owned to acquire shareholding in IDC- funded projects. It applies to black low-skilled workers who may have little prospect of accessing equity. Businesses that can apply may be start-ups, or companies looking to expand. The maximum amount that can be financed under this fund is R15-million a transaction. There are no restrictions on the business size but the workers must acquire a meaningful stake in the business.
Community Fund
Fund Size: R150-million
Approved: R78-million
This fund provides finance to marginalised communities that want to acquire shares in a company funded by the IDC. These businesses can be start-ups or companies looking to expand. The maximum amount that can be financed under this fund is R10-million. There are no restrictions on the business size but it is a requirement that the community acquires a meaningful stake in the business.