Cape Town - While some institutions are hesitant to offer loans to previously disadvantaged entrepreneurs, Woolworths’ start-up funding model enjoys great success, the company said on Friday.
Ninety eight percent of the black-owned small to medium enterprises, financed by Woolworths, repay their soft loans on schedule.
This effort is part of the retailer’s enterprise development programme, designed to support emerging black-owned businesses. The scheme’s loan book currently stands at R41.6m.
The up-and-coming entrepreneurs in the scheme have earned R770m in business from Woolworths, in just three years.
“It has always been our preference to identify promising entrepreneurs, partner and grow them for the long-term,” said Zinzi Mgolodela, Woolworths' head of transformation.
“Over the years, we have learnt that you can’t just fund black start-ups and small businesses and walk away. We’ve learnt that they need a suite of tools to succeed, including a range of financial interventions, for example, shorter payment terms, to help them with much needed cash flow, guaranteed business, mentorship and targeted up-skilling."
Quality over quantity
In total, Woolworths currently has 47 small, micro and medium-sized enterprises (SMMEs) in its enterprise development programme. These range from bakeries to footwear companies, fruit and vegetable farmers – and other food producers – to clothing manufacturers and service providers. These companies currently have created a total of 808 new jobs.
Many more SMMEs have graduated from the five-year program and are deemed sustainable Woolworths suppliers.