Finfind, South Africa’s leading online access to finance solution for Micro, Small and Medium Enterprises (MSMEs), has released the highly anticipated SA MSME Access to Finance Report 2025 in partnership with African Bank. This second edition follows the landmark inaugural report published in 2018 and presents an unparalleled data-rich analysis of the MSME finance provider and seeker landscape in the country.
High unemployment remains one of South Africa’s most urgent challenges, making the role of Micro, Small, and Medium Enterprises (MSMEs) in creating jobs and promoting inclusive economic growth more critical than ever. However, the report reveals that MSMEs, especially formal micro enterprises, continue to face significant barriers in accessing the financing they need to grow.
“The data paints a clear picture,” says Darlene Menzies, CEO of Finfind. “Formal micro enterprises with turnovers of less than R1 million a year are responsible for over 80% of the jobs created by MSMEs and make up more than 85% of the funding needed, yet they are the most underserved by funders. If we are serious about job creation, we must invest all our efforts in supporting the businesses that are creating the jobs.”
“African Bank’s vision is to be a bank for the people, by the people, serving the people – and that means understanding where our economic engine is most alive. This report provides a powerful lens into the needs of South Africa’s MSME sector, which we believe is key to building a more inclusive economy,” says Zweli Manyathi, CEO: Business & Commercial Banking at African Bank.
Many viable micro and small businesses are excluded from the formal financial system, not due to a lack of potential, but because they do not fit traditional funding models. Our partnership with Finfind demonstrates our commitment to listening, learning, and leading with solutions that address the real-world challenges faced by micro, small, and medium enterprises (MSMEs). We will leverage this knowledge to co-create more effective funding products, enhance enterprise development efforts, and strengthen our contribution to meaningful economic participation.
Who are the Businesses Applying for Finance?
- 6% of applicants are businesses with turnovers under R1 million.
- More than 60% of applications come from South Africa’s key economic hubs: Gauteng, KwaZulu-Natal, and the Western Cape.
- Gauteng maintains its position as the dominant business location, although there has been a decline from 44% in 2018 to 37.3% in 2025. The Western Cape has seen a decrease of 4.3%.
- Several provinces have seen growth since 2018, with Mpumalanga increasing by 3.9%, KwaZulu-Natal by 3.3%, Eastern Cape by 2.2%, and Northern Cape by 1.3%.
- Manufacturing, accommodation and food services, agriculture, forestry & fishing collectively comprise nearly 60% of all funding requests.
- The most common business registration type is (Pty) Ltd, representing 88% of applicants.
South Africa’s MSMEs with annual turnovers below R1 million are caught in a systematic blind spot. Classified as individual consumers under the National Credit Act, they are assessed using credit risk models that fail to reflect their business realities. This misalignment results in a lack of funding, compounded by fragmented business data regulation.
Demographics and Ownership
- Black-owned MSMEs now account for 83.7% of funding requests—up from 66% in 2018.
- Gender distribution has shifted with female ownership increasing from 32% in 2018 to 36.1% in 2025. In contrast, female-targeted funding products decreased by 33% from 18 products in 2018 to 12 products in 2025.
- Gender disparities intensify with business size: female ownership drops to just 23.6% in businesses turning over more than R10 million.
- 73% of MSME shareholders are black, but this declines sharply with business size, from 76% in enterprises under R1 million to just 39% in those above R10 million.
- 9% of business owners in enterprises under R1m have poor or below average credit scores, business owners credit scores improve as the business size increases.
Funding needs
- 7% of all businesses are looking for loans of less than R250k, with 30.8% requesting loans between R250k and R1 m.
- Buying equipment (21.0%), business expansion (16.1%), and finance for startups (13.0%) are the three most requested types of funding, accounting for over 50% of all loan applications
- Cash flow assistance is one of the top two funding requests for businesses with a turnover of more than R1 m per annum.
- The demand for purchase order funding increases as the business size increases, with 4.8% in businesses with a turnover of less than R1 m per annum to 10.2% in businesses with a turnover of more than R10m per annum.
Funding Supply and Demand
The demand has remained consistent since 2018, with finance for equipment purchases, expansion funding, and startup finance remaining the top three funding needs.
Funders have been slow to respond:
- Finance for startups and micro businesses is in high demand.
- Startup finance is absent from the top 10 finance product offerings by funders.
- The ICT sector is oversupplied with finance products (125 offerings), despite demand accounting for just 5.5% of MSME funding requests.
In contrast, the accommodation and food services sector, which ranks second in demand, remains significantly underserved.
Finance Recordkeeping and Funding Readiness
- Only 30.9% of applicants are able to provide a list of outstanding debtors, and just 36.8% have formal financial statements, with less than half being able to produce latest management accounts, highlighting a persistent lack of funding readiness across the sector.
- Only 24.6% of businesses utilise formal accounting systems, and 83.4% function without payroll systems, despite 71.6% of these employing three or more people.
- The SA MSME Access to Finance Report 2025 not only highlights challenges, but it also points the way forward. Calling for change:
- Intentional focus on funding solutions for MSMEs with a turnover of less than R1 m pa.
- Reforms to traditional risk assessment and credit scoring models used by banks and DFIs (Development Finance Institutions).
- Open finance and alternative data – a shift from the current data holder-centric approach to a data subject-centred approach to improve data sharing to revolutionise MSME credit risk assessments and scoring.
- Banks and DFIs to partner with fintechs to harness digital solutions for loan processing to reduce the costs of smaller loans.
- Improved risk sharing models, including the revamping of the Government’s credit guarantee scheme with a focus on supporting funding for MSMEs with turnovers of less than R1 m.
- Enhanced MSME support services, including financial recordkeeping training and accounting tools, funding readiness assistance, and digital enablement.
Changes needed to banking sector submissions (BA200 and BA900) to the Reserve Bank for their reporting on lending to MSMEs to provide greater granulation and transparency, aligned with OECD standards.
Implementation of the recommendations in the newly gazetted MSME funding policy.
Seven years after the first report, the same challenges persist. It is vital that we respond to what the data is telling us and shape appropriate solutions to meet the demand. The newly gazetted MSME funding policy contains good proposals, we need to ensure they are actioned it’s time for funders, business development agencies and policy makers to take coordinated action to implement them in order to close the R350 billion funding gap.
The Report is being made freely available through the generous support of sponsors for the benefit of all stakeholders in the sector, including private sector lenders, government funding agencies, incubators, business service providers, corporates, MSMEs, media, and policy makers, amongst others.
For a copy of the Report, visit https://accesstofinancereport.co.za/
