Their Development Funds Department provides funding support to projects that have a high developmental impact and will, over time, grow our economy.

The Department currently manages seven different funds. 

In this installment, we look at the Transformation and Entrepreneurship Scheme.

This scheme was set up to finance marginalised groups in South Africa.

The aim of this 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 business.

The IDC offers funding for start- up businesses, expansions or expansionary acquisitions.

Along with this, they offer business support, by way of a grant, helping with business planning, training and mentorship. Under this scheme, some R1bn has been set aside for five

funds:

Women Entrepreneurial Fund;

People with Disabilities Fund;

Equity Contribution Fund;

Development Fund for Workers; and Community Fund

Specific guidelines have also been drawn up for each of the five funds:

Women Entrepreneurial Fund

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

It can apply to a start-up business or for expansions;

It 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 R80m and the maximum amount they will finance under this fund is R30m a transaction.

People with Disabilities Fund

This fund applies to companies where a person or people with disabilities have a minimum shareholding of 50% plus one share; shareholding between 25% and 50% will be considered on revised terms

Applicants must demonstrate operational and management involvement;

The maximum amount that can be financed under this fund is R8m and applies to start-up and existing companies that wish to expand; and

Only new entrants qualify for financing – ie those shareholders with a direct or indirect total net asset base of less than R15m.

Equity Contribution Fund

This funding is available for new black entrants where shareholders hold a direct or indirect total net asset base of less than R1.5m;

Only black individuals or individuals of 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 and must be involved in both the operations and management of the company;

A maximum limit of R10m has been set for each application; and
Finance is provided to businesses with a total asset base of up to R80m.

Development Fund for Workers

This fund provides finance to Broad-based Black Economic Empowerment transactions for at least 85% owned black worker groupings 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 R15m per transaction;

There are no restrictions on the business size;

The workers must acquire a meaningful stake in the business.

Community Fund

This fund provides finance to marginalised communities that want to acquire shares in a company funded by IDC;

These businesses can be start-up, or companies looking to expand. The maximum amount that can be financed under this fund is R10m; and

There are no restrictions on the business size but it is a requirement that the community acquires a meaningful stake in the business.

– Staff reporter.