GoTyme Bank SME loans have delivered R17 billion to 90,000 businesses to date
Flexible repayments tied to business performance are helping SMEs manage cash flow.
By Larry Claasen
GoTyme Bank says its working capital offering, which does not require collateral, has seen it grant R17 billion in working capital loans to 90,000 businesses to date.
The digital bank, founded in 2015, says its working capital lending products are gaining traction because they are designed specifically with SMEs in mind.
Lending built around how SMEs actually trade
“When you speak to these business owners, they feel neglected, they feel unsupported and unheard. And it’s not just about giving them another bank account. Entrepreneurs are looking to get paid fast, manage their unpredictable cash flows,” says GoTyme for Business Group Executive, Miguel Da Silva.
This is why it provided them with a user friendly interface and by assessing businesses on their actual performance. This means cash is advanced to them based on their turnover, and not on collateral and or if they’ve got assets to back the funding.
Flexible repayments ease cash flow pressure
GoTyme also takes turnover into account when it comes to repaying the loan.
“When the business does well, it pays a bit more. When the business has a bit of a downturn, it pays less,” Da Silva says.
This flexibility on repayment enables businesses to better manage their cash flow particularly when it comes to seasonal highs and seasonal lows.
“Our objective here is really to make the whole process of funding simple, easy to understand, and to give the business owner the ability to make decisions very fast. They need to have certainty that when they do so, the whole process is frictionless,” said Da Silva.
70% of SMEs return for additional funding
So far, these efforts have paid off. Of the 90,000 businesses that accessed its working capital loans offering, 70% of these business owners come back for additional funding.
GoTyme has also turned 70,000 of these businesses into a community.
Flex for Business: Mentorship and peer support
“The entire journey of an entrepreneur is actually full of challenges and can be quite lonely. So we designed and launched something called Flex for Business. Basically, it’s a free entrepreneur community app which offers mentorship, events, resources, financial education, and support for businesses on what’s relevant in the market,” Da Silva says.
The app allows founders to talk to each other on a platform. This peer-to-peer connection is “incredibly powerful,” Da Silva says, because it allows business owners to ask sensitive questions.
“You’d be very surprised how other business owners are very supportive and ready to help other business owners.”
The payoff for this type of support has been huge for these businesses. A trader at a weekend market, for example, built a large enough revenue and customer base to move to a physical location, which in turn become multiple locations.
Da Silva, however, also points out that though there are many successes, often a business just needs some breathing room to deal with an emergency. “Funding can be used for both purposes.”
Data-Driven lending beyond the balance sheet
Though GoTyme has gotten buy-in from businesses when it comes to using its finance products, it is well aware of the risk that comes with lending money to fledgling businesses.
To mitigate this risk, it bases its lending decisions on information on how the businesses are actually trading, and not just on what the balance sheet shows.
Da Silva says TymeBank looks at bank statements, point-of-sale data, accounting records, purchases, supply data and, in some cases, the business’s social media.
“What we’re trying to really understand is to get a real-time picture of how the business really trades. And once you understand that, you can see the consistency.”
