The fintech SA start-up iKhokha launches a cash advance service for merchants
South African fintech startup iKhokha, which provides a mobile app and card machine to more than 2,500 formal and informal small and medium-sized businesses nationwide, has expanded its offering to include cash advances to merchants.
The startup tested interest in the product by offering cash advances to 250 merchants, which enabled it to disburse over ZAR 500,000 (US $ 33,500) in cash advances in the first week with an average transaction size of ZAR 19,000 (US $ 1,275) per advance.
“We have always wanted to help solve the real challenges facing South African entrepreneurs and we know, working closely with them, that their number one problem is access to capital,” said the Managing Director of ‘iKhokha, Matt Putman.
“The majority of our traders are not eligible for a formal bank loan because they are considered too risky by traditional institutions. In fact, data from our partners shows that up to 80% of SME financing requests are not matched by banks in South Africa and yet these businesses are healthy and need financing to grow. It takes a huge toll on our economy if they don’t get the support they need. This really worries us, hence the development of the cash advance.
Applying for iKhokha cash advance is made easy with three mobile clicks online. The merchant opens the iKhokha app, reviews their personalized cash advance offer, selects the amount they need, selects the targeted repayment period, and accepts the flat fee. Once accepted, the money is deposited into an account within 24 hours.
As iKhokha already knows the merchant’s transaction history, no additional documents or security is required. iKhokha automatically deducts a fixed percentage from each card transaction processed, so that the merchant’s refunds are tied to their monthly business performance.
The capital cost of the cash advance is capped up front, at a percentage of the amount of capital withdrawn, and does not increase regardless of the time it takes to repay. The better the business, the faster the amount is repaid.
The new service is part of the evolution of iKhokha in addition to being a simple supplier of mobile card machines and payment acceptance for SMEs. The goal is to position the startup as a broader financial service provider for local entrepreneurs in South Africa, such as spazas, tavern owners, traders, salon owners, independent retailers and vendors. of the market.
“These local businesses are expected to drive real growth and jobs in South Africa, but business owners are struggling to access the appropriate services for their growth needs,” Putman said. “We want to fill this gap and help them on their journey to full digital and financial inclusion. “