South Africa’s small businesses are under pressure. Rising costs, weak demand and tightening margins have left many fighting to stay afloat. Recent SME data shows that more than half of small businesses are either struggling, contracting, or at risk of closing their doors. At the same time, funding remains one of the most talked-about solutions. It is also one of the most misunderstood.
According to the South African MSME Access to Finance Report 2025, asset financing is the most sought-after funding for small businesses. The assumption is simple. If businesses can access capital, they can grow. But that assumption does not always hold.
Orion Herman has lived that reality. When he first secured funding for his recycling business, Liquid Gold, which repurposes organic waste into sustainable fertiliser and animal feed, it felt like a turning point. His business aimed to empower communities through circular economic principles by creating employment opportunities and mitigating the environmental impact of organic waste. Demand for the business was already there. The expectation was that capital would accelerate growth. Instead, it introduced a new level of pressure.
“One of the biggest misconceptions is that funding alone will unlock growth” Herman says. “Capital without the right operational discipline, market access, and technical capability can place more pressure on a business rather than accelerate it.”
With more capital came the need to make complex decisions. Pricing had to be reworked. Systems needed to be formalised. Investments had to be prioritised with far greater discipline. Growth stopped being about doing more. It became about making better decisions, consistently.
What changed the trajectory of the business was not funding in isolation, but what came with it.
Through the SAB Foundation’s Social Innovation Fund, funding was paired with mentorship, technical guidance, and access to networks. Each addressed a different pressure point. Technical support reduced costly mistakes. Mentorship sharpened decision-making. Networks unlocked opportunities that would otherwise take years to access.
“Funding is an enabler,” Herman says. “But growth is driven by execution, knowledge, and access.”
His experience is not unusual.
Across South Africa, many entrepreneurs reach a point where funding becomes available while the fundamentals of the business are still taking shape. Financial management is still evolving. Operational systems are not yet stable. Routes to market are inconsistent.
At that stage, capital can move a business forward, but it cannot build the foundation it depends on.
Without the right support, funding can expose weaknesses faster than it solves them. This is where the design of funding programmes matters.
Approaches that combine capital with mentorship, training, and ongoing support are more likely to produce businesses that survive and grow. They recognise that funding is only one part of what it takes to build a sustainable business.
The difference becomes clear over time.
South Africa has one of the highest small business failure rates in the world, with an estimated 70 to 80 percent of SMMEs failing within five years. If funding alone drove growth, those numbers would look very different.
In a market where failure is the norm, structured support changes outcomes. Businesses that receive both funding and guidance are more likely to stabilise, grow, and create jobs. They are better equipped to navigate the realities of running a business in a volatile environment.
For Herman, that support created clarity.
“Mentorship helped us focus on unit economics and understand where value is created,” he says. “It changed how we think about scaling, especially in a capital-intensive space.”
South Africa’s small business funding gap, estimated at over R350 billion, remains a real constraint. Closing that gap is necessary. Right now, the conversation is still too focused on how much funding is needed, and not enough on what happens after it is deployed.
That gap is where many businesses fail.
South Africa doesn’t just have a funding problem. It has a follow-through problem. Money gets businesses moving. Support is what keeps them standing.
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<SIDEBAR>
Funding won’t grow your business – these 5 things will:
- Strong fundamentals: Funding can’t fix weak systems. Financial discipline, clear pricing, and operational structure come first.
- Better decision-making: More capital means higher-stakes choices. Knowing where (and where not) to invest is what drives growth.
- Execution over intention: Funding creates opportunity, but consistent execution is what turns it into results.
- Guidance at the right moments: Mentorship helps entrepreneurs navigate complexity, avoid costly mistakes, and make smarter moves.
- Access that opens doors: Networks, partners, and market access often accelerates growth faster than capital alone.