R300bn funding delays fuel alternative lending boom

• A R300 billion funding backlog is pushing South African SMEs towards faster, alternative sources of finance.
• Finance, real estate and business services recorded the highest number of company liquidations in early 2026.
• Speed of funding is becoming a competitive advantage as businesses prioritise survival and growth over cheaper credit.

R300bn funding delays drive shift towards Alternative Finance

A growing funding bottleneck across South Africa's public and private sectors is reshaping how businesses access capital, with an estimated R300 billion funding backlog accelerating demand for alternative lending solutions.

According to Kyndal White, founder of Chase Capital, the delays are affecting thousands of small and medium enterprises (SMEs) waiting for government grants, development finance, enterprise supplier development (ESD) funding and private investment.

Rather than receiving capital when it is needed, many businesses are finding themselves caught in lengthy approval processes while cash flow pressures continue to mount.

At the same time, South Africa's broader economic environment is placing additional strain on businesses, forcing many entrepreneurs to seek faster and more flexible funding solutions to keep projects moving, preserve jobs and secure growth opportunities.

A funding system under pressure

‍White says the challenge is no longer simply accessing finance, but accessing it quickly enough to meet operational demands.

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"Too many viable businesses are waiting for approved funding that simply isn't arriving fast enough," he says. "The result is growing cash flow pressure at exactly the time businesses need liquidity to fulfil contracts, secure opportunities and continue operating."

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The trend is reflected in the latest data from Statistics South Africa (Stats SA). During the first quarter of 2026, 377 companies entered liquidation, while corporate liquidations increased by 15% year-on-year in March, reaching 146 businesses.

The finance, insurance, real estate and business services sector recorded the highest number of liquidations, followed closely by the trade, retail, catering and hospitality sectors.

For White, these figures highlight a widening disconnect between funding availability and the speed at which businesses require working capital.

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"Businesses don't fail because opportunities disappear. Increasingly, they fail because funding arrives too late."

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The impact on property and business‍

The consequences extend well beyond SMEs themselves.

Across the property sector, developers, investors, estate agencies and service providers are experiencing increasing pressure as delayed funding slows transactions and disrupts project timelines.

White says property purchasers are missing acquisition opportunities because deposits become payable long before approved funding is released, while contractors and logistics companies are losing contracts because they cannot finance operational costs upfront.

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"Large corporates may be able to absorb payment delays of 60 or even 90 days," he explains. "Smaller businesses simply don't have that luxury."

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The knock-on effect is a slower property market, delayed developments, interrupted supply chains and reduced economic activity across multiple sectors.

Agility versus Failure

While alternative finance often comes at a higher cost than conventional bank lending, White believes many business owners are making a rational commercial decision.

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"Entrepreneurs are increasingly recognising that the cost of missing an opportunity, delaying a project or closing a business is far greater than paying a premium for short-term capital," he says.

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Rather than viewing alternative lending as a last resort, many companies are now using it as a strategic tool to bridge temporary funding gaps and maintain operational momentum.

In today's environment, speed is increasingly becoming as valuable as price.

A growing capital mismatch

South Africa's funding challenge is particularly significant given the role SMEs play in the economy.

According to Trade & Industrial Policy Strategies (TIPS), formal small businesses contribute around 33% of South Africa's Gross Domestic Product, while the informal sector contributes a further 5%.

Yet access to finance remains limited. White points to figures reported by the International Finance Corporation (IFC) showing that despite South Africa's sophisticated banking sector, only around 5% of SMEs successfully access traditional bank credit.

At the same time, Business Day has reported that government departments owe businesses approximately R12.4 billion in invoices that remain unpaid beyond the legally prescribed 30-day payment period

As a result, private credit providers are increasingly assessing businesses on contract values, projected cash flows and operational performance rather than relying solely on historical financial statements or property-based collateral.

Five critical questions before seeking Alternative Finance

White believes businesses should carefully evaluate their funding needs before applying for alternative finance.

1. Do I have a clear cash flow plan?
 Funding should support a defined business objective rather than solve an undefined financial problem.

2. What will the capital be used for?
 Businesses that clearly demonstrate how funds will generate value inspire greater lender confidence.

3. What security can I realistically provide?
 Operational assets, confirmed contracts and future cash flows may strengthen an application beyond traditional property security.

4. How will the loan be repaid?
 structures should align with projected cash flow cycles, seasonal fluctuations and expected income.

5. What is my exit strategy?
 Every funding decision should include a clearly defined plan for repayment once contracts are completed or revenue is received.

The impact of the backlog

South Africa's growing funding backlog is exposing a structural weakness within the country's financing ecosystem.

As businesses seek faster access to working capital, alternative lenders are increasingly filling the gap left by traditional funding models, particularly for SMEs operating in property, construction, logistics and professional services.

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For White, the message is clear. "Traditional financial institutions will need to accelerate credit approvals, modernise their assessment models and become more responsive to the realities facing today's entrepreneurs," he says. "Those that fail to adapt risk losing an increasingly important segment of South Africa's business lending market."

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As economic conditions remain challenging, the ability to access capital quickly may prove just as important as the availability of capital itself, making agility one of the defining competitive advantages for South African businesses in the years ahead.

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