Compare Business Funding Options in South Africa
No single funding structure is right for every business. A company waiting 60 days for a customer to pay has a different problem from one buying a delivery vehicle, opening in a new city or raising capital without giving up ownership.
This page puts the main funding options available to South African SMEs side by side: how each works, what it is commonly used for, what it is linked to and what to check before choosing it.
Compare funding by purpose, repayment structure, security, ownership impact and business situation.
How Should Businesses Compare Funding Options?
Compare funding options against the commercial need they are meant to solve, not only the headline rate. A cheap facility that does not match how cash moves through the business can cost more in practice than a structure built for that need.
The factors worth comparing are:
• Why the funding is needed
• How much is needed
• How quickly capital is required
• How long the funding will be used
• How repayments work
• Whether collateral is required
• Whether ownership changes
• How funding affects cash flow
• Total cost
• Existing financial commitments
The comparisons and examples on this page are provided for general educational purposes and do not represent Flow48 funding approval criteria, pricing or financial advice.
Business Funding Options at a Glance
Typical characteristics only. Terms depend on the provider and the agreement.
| Funding Option | Typical Use | Funding Basis | Repayment Structure | Security / Collateral | Ownership Impact | Common Business Situation |
|---|---|---|---|---|---|---|
| Revenue-Based Financing | Working capital, growth | Business revenue and performance | Depends on agreement; may be revenue-linked | Depends on provider | No shares issued | Established revenue, need not tied to invoices |
| Invoice Financing | Bridging customer payment terms | Eligible unpaid invoices | Typically settled as invoices are paid | Typically the receivables | No shares issued | Cash tied up in B2B invoices |
| Traditional Business Loan | Broad purposes | Credit and affordability assessment | Commonly fixed instalments | May be required, depending on lender | No shares issued | Defined need, predictable repayment capacity |
| Business Overdraft | Short-term liquidity | Approved limit on a bank account | Revolving; balance moves with use | Depends on the bank and facility | No shares issued | Day-to-day timing differences |
| Working Capital Funding | Stock, suppliers, payroll | Depends on the structure used | Depends on the structure used | Depends on provider | Generally none | Operating costs due before revenue arrives |
| Asset Finance | Vehicles, machinery, equipment | The financed asset | Commonly fixed over the asset’s life | Typically the asset itself | No shares issued | Buying a specific productive asset |
| Purchase Order Finance | Fulfilling confirmed orders | A confirmed customer order | Typically settled when the customer pays | Typically linked to the order | No shares issued | Large order the business cannot fund upfront |
| Trade Finance | Imports, exports, stock procurement | The trade transaction | Typically tied to the transaction cycle | Depends on structure | No shares issued | Supplier payments due before goods are sold |
| Equity Funding | Long-term growth | Investor valuation of the business | No conventional repayment | Not applicable | Existing owners diluted | Seeking investment and strategic partners |
Flow48 provides Revenue-Based Financing and Invoice Financing. The other structures are described for comparison and are not Flow48 products.
Revenue-Based Financing
Revenue-Based Financing is a form of business funding in which business revenue and performance form an important part of the funding assessment and structure.
It is commonly used for working capital, inventory, marketing, hiring, growth and expansion. It is non-dilutive, the assessment focuses on revenue, and it can support growth without issuing shares. How repayments work varies by provider: some structures link them to revenue, others use fixed or scheduled amounts.
May Be Relevant When
- The business has established revenue
- Capital is needed for working capital or growth
- The need is not tied directly to a specific invoice
- Owners want to retain equity
Invoice Financing
Invoice Financing is funding linked to eligible unpaid customer invoices.
When a business sells to other businesses on 30, 60 or 90-day terms, the value of those sales sits in accounts receivable until customers pay. Meanwhile suppliers, staff and overheads still need paying. Invoice Financing addresses that specific working-capital pressure by releasing capital tied up in issued invoices. Not every invoice qualifies; providers typically assess the invoice, the customer and the business.
May Be Relevant When
- The business sells to other businesses
- Invoices have already been issued
- Customers pay on extended terms
- Cash is tied up in receivables
Revenue-Based Financing vs Invoice Financing
Revenue-Based Financing is generally linked to the performance and revenue of the business, while Invoice Financing is linked to eligible unpaid customer invoices.
| Attribute | Revenue-Based Financing | Invoice Financing |
|---|---|---|
| Funding basis | Business revenue and performance | Eligible accounts receivable |
| Primary business need | Growth or working capital | Customer payment delays |
| Relationship to revenue | Central to assessment; may shape repayments | Indirect; invoices reflect sales already made |
| Relationship to invoices | Not tied to specific invoices | Directly tied to specific invoices |
| Working capital use | General operating and growth needs | Releasing cash locked in receivables |
| Ownership impact | No shares issued | No shares issued |
| Typical assessment focus | Revenue history, consistency, cash flow | Invoices, customer quality, payment history |
| Best explored when | Revenue is established and the need is broader than invoices | Customers pay on extended terms |
The Revenue-Based Financing Guide and Invoice Financing Guide cover each structure in depth.
Traditional Business Loans
A business loan is one type of business funding: a lump sum repaid with interest or a finance charge over an agreed period.
Repayments are commonly fixed or follow a structured schedule, which makes them predictable to budget for. Collateral or a personal guarantee may be required, depending on the lender and facility. Loans are used for expansion, equipment, working capital and wider business investment, and remain one of the most flexible general-purpose funding structures.
Revenue-Based Financing vs Business Loan
Traditional loans commonly use an agreed repayment schedule, while some Revenue-Based Financing structures may link repayment more closely to business revenue. Not all RBF works the same way.
| Attribute | Revenue-Based Financing | Traditional Business Loan |
|---|---|---|
| Funding basis | Revenue and business performance | Credit and affordability assessment |
| Repayment structure | Depends on agreement; may be revenue-linked | Commonly fixed instalments |
| Collateral | Depends on provider | May be required, depending on lender |
| Ownership | No shares issued | No shares issued |
| Typical use | Working capital and growth | Broad purposes, including long-term investment |
| Cash-flow alignment | Revenue-linked structures can move with trading | Same repayment in strong and weak months |
| Flexibility | Depends on the structure | Depends on the loan terms |
Invoice Financing vs Business Loan
Invoice Financing is linked to eligible receivables, while a business loan is based on a broader credit and funding assessment and can serve a wider range of purposes.
| Attribute | Invoice Financing | Business Loan |
|---|---|---|
| Funding basis | Eligible unpaid invoices | Broader credit and affordability assessment |
| Purpose | Bridging customer payment terms | Broad business purposes |
| Repayment | Typically settled as customers pay | Commonly instalments over an agreed term |
| Collateral | Typically the receivables | May be required, depending on lender |
| Term | Typically tied to invoice payment cycles | Short, medium or long term |
| Working-capital relevance | Directly linked to the receivables cycle | Can fund working capital among other needs |
Business Overdraft
A business overdraft is credit connected to a business bank account, available up to an approved limit and drawn when needed.
It is generally used for short-term liquidity, such as covering a supplier payment a few days before customer receipts arrive. Interest usually applies to the amount actually used, depending on the facility, and the limit is reviewed periodically by the bank.
Business Overdraft vs Revenue-Based Financing
| Attribute | Business Overdraft | Revenue-Based Financing |
|---|---|---|
| Funding structure | Revolving credit facility | Agreed amount under a funding agreement |
| Access model | Drawn and repaid as needed | Provided as agreed capital |
| Repayment | Balance moves with account activity | According to the agreement; may be revenue-linked |
| Available limit | Approved limit, reviewed periodically | Amount set by the provider’s assessment |
| Working-capital use | Short, recurring timing gaps | Defined operating or growth requirements |
| Provider assessment | Banking relationship and credit profile | Revenue, consistency and cash flow |
Business Overdraft vs Invoice Financing
Overdraft
A general short-term facility. The limit is not tied to any specific receivable.
Invoice Financing
Directly related to receivables. Available funding generally moves with eligible outstanding invoices.
Working Capital Funding
Working capital funding describes the purpose of finance rather than one single product.
It covers funding used for short-term operating needs, and can be provided through business loans, overdrafts, Invoice Financing, Revenue-Based Financing, trade finance or inventory finance. It is most often needed where operating costs fall due before customer revenue arrives.
Working Capital
Working Capital = Current Assets − Current Liabilities
Example
A distributor has R1,800,000 of current assets, mostly stock and receivables, and R1,200,000 of current liabilities, giving working capital of R600,000. If it takes on a large order that needs R400,000 of extra stock on 30-day supplier terms, while the customer pays in 60 days, that buffer shrinks quickly before the related cash comes back.
The Working Capital Guide explains current assets, current liabilities and the operating cycle in detail.
Asset Finance
Asset finance relates primarily to financing a specific asset, such as a vehicle, machinery, equipment or another productive asset.
The asset is usually central to the arrangement and often acts as security. That differs from working-capital funding, which pays for costs that are consumed in the operating cycle, such as stock or salaries, rather than for something the business keeps for years.
Asset Finance vs Revenue-Based Financing
Asset Finance
Funds one identifiable asset, with repayment often matched to how long that asset will be useful.
Revenue-Based Financing
Funds broader growth or working-capital needs, with the assessment focused on revenue and performance.
Matching the funding to the underlying use matters. Paying for a machine that will work for eight years with funding that must be repaid within months puts pressure on cash flow long before the machine pays for itself.
Purchase Order Finance
Purchase order finance is funding related to a confirmed customer order, used before the goods are delivered and invoiced.
Purchase Order
Supplier / Production
Delivery
Invoice
Customer Payment
Purchase Order Finance vs Invoice Financing
Purchase Order Finance generally supports costs before goods or services are delivered, while Invoice Financing generally relates to invoices issued after delivery. Purchase order finance typically applies earlier in the commercial cycle.
Purchase Order Finance
Starts at the purchase order. Covers supplier or production costs so the order can be fulfilled.
Invoice Financing
Starts at the invoice. Releases cash from work already delivered while the customer’s payment terms run.
Trade Finance
Trade finance is a family of structures that support transactions involving suppliers, goods and trade, such as paying a supplier, importing or exporting goods, or procuring stock. It is typically tied to a specific transaction and its timing, and structures vary considerably by provider.
Equity Funding
Equity funding provides capital in exchange for ownership.
Potential Benefits
- No traditional loan repayment
- Investor expertise or networks may come with the capital
Considerations
- Ownership dilution
- Investor involvement in decisions
- Governance obligations
- Long-term ownership consequences
Secured vs Unsecured Funding
Secured funding uses specified collateral or security, while unsecured funding does not rely on traditional pledged physical collateral in the same way.
Secured Business Funding
Secured funding is backed by specified assets, such as property, vehicles, equipment or other assets, which the provider may rely on if the funding is not repaid.
Unsecured Business Funding
Unsecured funding does not depend on pledged physical collateral in the same way. It does not mean no assessment, no agreement, guaranteed approval or no financial obligation.
Secured vs Unsecured: Key Differences
| Attribute | Secured Funding | Unsecured Funding |
|---|---|---|
| Collateral | Specified assets pledged as security | No specific asset pledged |
| Assessment | The business and the value of the security | The business, its revenue and cash flow |
| Potential cost | Depends on provider and the security offered | Depends on provider and the assessment |
| Funding amount | May be influenced by asset value | May be influenced by business performance |
| Risk to the business | Pledged assets may be at risk on default | Obligations still apply; no specific asset pledged |
| Ownership | No shares issued | No shares issued |
| Business situation | Assets available and willing to pledge them | Few pledgeable assets, or preferring not to pledge them |
Neither type is universally cheaper or easier to obtain.
Debt Funding vs Equity Funding
Debt funding is repaid under an agreement and leaves ownership unchanged; equity funding is not repaid in the conventional sense but gives investors a share of the business.
| Attribute | Debt Funding | Equity Funding |
|---|---|---|
| Ownership | Stays with existing shareholders | Shared with investors |
| Repayment | Repaid under the agreement | No conventional repayment |
| Control | Owners keep control, subject to agreement terms | Investors may gain voting or board rights |
| Dilution | None | Existing shareholders diluted |
| Cash-flow impact | Regular repayments draw on cash flow | No repayments; returns come from future value |
| Investor involvement | Limited to the funding relationship | Often ongoing involvement |
| Funding duration | Defined term or facility | Typically long-term, until exit |
What Is Non-Dilutive Funding?
Non-dilutive funding allows a business to access capital without issuing new shares. Business loans, Invoice Financing, Revenue-Based Financing, overdrafts and certain alternative finance structures are generally non-dilutive. The owner keeps the same percentage of the business, in exchange for a repayment obligation and a funding cost.
Which Funding Options Affect Business Ownership?
No Equity Issuance Generally Required
- Business loans
- Overdrafts
- Invoice Financing
- Revenue-Based Financing
- Asset finance
Equity Issuance Required
- Equity investment
Some agreements include conversion rights or other features that can affect ownership, so the exact legal position depends on the agreement.
Which Funding Options May Require Collateral?
What a funding type relies on varies by provider and facility. This shows the typical basis, not a rule.
| Funding Type | Traditional Asset Collateral | Invoice / Receivable Basis | Business Performance Basis | Ownership Dilution |
|---|---|---|---|---|
| Revenue-Based Financing | Depends on provider | Not the primary basis | Central | No |
| Invoice Financing | Not usually the main basis | Central | Partly | No |
| Traditional Business Loan | May be required | Not usually | Assessed through credit and affordability | No |
| Business Overdraft | Depends on the bank | Not usually | Partly | No |
| Asset Finance | Typically the financed asset | No | Partly | No |
| Purchase Order Finance | Typically linked to the order or goods | Partly, once invoiced | Partly | No |
| Equity Funding | Not applicable | No | Central to valuation | Yes |
Compare Repayment Structures
How a facility is repaid often matters as much as what it costs, because it determines when cash leaves the business. The repayment structure is set out in the agreement.
Fixed Repayment
A predetermined amount on a set schedule, common with term loans and asset finance.
Variable Repayment
Changes under the agreement, for example with an interest rate.
Revenue-Linked Repayment
May move with business revenue. Used in some, not all, Revenue-Based Financing structures.
Invoice Settlement-Linked
Settled as customers pay the financed invoices, as with Invoice Financing.
Revolving Credit
Drawn and repaid repeatedly within a limit, as with an overdraft.
No Conventional Repayment
Equity investors are rewarded through ownership rather than repayments.
Short-Term vs Long-Term Business Funding
Funding duration should generally align with how long the asset or use will generate value. Short-term needs suit short-term funding; long-life assets suit longer repayment periods. Exact terms depend on the provider.
Short-Term
Commonly aligned with working capital, inventory, temporary cash-flow gaps and seasonal requirements. Examples include overdrafts, Invoice Financing and many Revenue-Based Financing structures.
Medium-Term
Commonly aligned with growth projects, equipment and expansion that pay back over a few trading cycles, such as term loans or asset finance.
Long-Term
Commonly aligned with property, major assets and long-term expansion, such as longer-term loans or equity.
What Can Affect Funding Speed?
No funding type is always faster than another. How long it takes typically depends on:
- How complete the application is
- How readily financial information is available
- The provider’s assessment process
- The type of funding
- Whether security has to be valued or registered
- Whether customers or invoices must be verified
- The complexity of the transaction
Which Funding Option Matches the Business Need?
These scenarios show options worth exploring for common needs. They are starting points for research, not personalised recommendations.
Revenue Is Strong but Working Capital Is Tight
Options to explore:
Need Additional Stock
Options to explore:
Need to Fulfil a Large Confirmed Order
Options to explore:
Compare Funding by Cash-Flow Situation
The way cash moves through a business often points to the funding concepts worth understanding first.
| Cash-Flow Situation | What Is Happening | Concepts Worth Understanding |
|---|---|---|
| Long customer payment terms | Cash sits in receivables for 30 to 90 days | Invoice Financing, debtor days |
| Seasonal revenue | Costs rise before peak-season sales | Revenue-Based Financing, working capital funding |
| Fast growth | Stock, staff and receivables grow ahead of cash | Revenue-Based Financing, Invoice Financing, growth capital |
| Inventory-heavy business | Cash is tied up in stock on the shelf | Inventory finance, working capital funding |
| Large upfront supplier payments | Suppliers must be paid before goods are sold | Trade finance, purchase order finance |
| Recurring revenue | Predictable monthly income | Revenue-Based Financing |
| Project-based revenue | Costs incurred before milestone payments | Invoice Financing, working capital funding |
| Equipment requirement | A long-life asset is needed | Asset finance |
Funding Options by Business Stage
Which options are available depends on financial history and each provider's criteria. Stage alone does not determine eligibility.
Early Trading
Limited history typically narrows the options. Owner funding, supplier credit or equity are common at this point.
Established SME
A financial track record gives providers more to assess, which can widen the range of structures available.
Growth Stage
Working-capital needs tend to rise with sales, making revenue- and receivables-based funding more relevant.
Expansion Stage
New sites, markets or capacity can call for longer-term loans, asset finance or equity alongside working capital.
Mature Business
Needs often shift towards refinancing, operational investment and optimising cash flow.
Funding Needs by Industry
Typical needs and related funding concepts by sector. Industry does not determine eligibility for any product.
| Industry | Common Funding Needs | Related Funding Concepts |
|---|---|---|
| Retail | Seasonal stock, new stores | Revenue-Based Financing, inventory finance |
| E-commerce | Inventory, paid marketing, fulfilment | Revenue-Based Financing, working capital funding |
| Wholesale | Bulk stock, B2B credit terms | Invoice Financing, trade finance |
| Distribution | Stock and extended customer terms | Invoice Financing, working capital funding |
| Manufacturing | Raw materials, equipment, large orders | Asset finance, purchase order finance, Invoice Financing |
| Professional Services | Payroll ahead of client payment | Invoice Financing, Revenue-Based Financing |
| Logistics | Vehicles, fuel, operating costs | Asset finance, Invoice Financing |
| Construction | Materials and labour before milestones | Invoice Financing, working capital funding |
| Technology | Product development, customer acquisition | Revenue-Based Financing, equity funding |
| Hospitality | Seasonal staffing, refurbishment | Revenue-Based Financing, asset finance |
What Do Different Funding Providers Assess?
Providers run their own credit assessment and underwriting processes, and the emphasis shifts with the funding type:
Revenue: Especially relevant to Revenue-Based Financing
Cash flow: Relevant to most debt-type funding
Trading history: Relevant to most structures
Credit profile: Especially relevant to traditional loans
Invoices: Central to Invoice Financing
Assets: Central to asset finance and secured lending
Banking activity: Relevant to revenue- and cash-flow-based funding
Existing liabilities: Relevant to all debt-type funding
Funding purpose: Relevant to all structures
Customer quality: Especially relevant to Invoice Financing
Assessment Focus by Funding Type
A general view of what each structure tends to focus on. Each provider sets its own criteria.
| Funding Type | Revenue History | Cash Flow | Invoices | Assets | Credit Profile | Business Performance | Ownership / Investor Review |
|---|---|---|---|---|---|---|---|
| Revenue-Based Financing | High relevance | High relevance | Not primary basis | Not primary basis | May be relevant | High relevance | Not primary basis |
| Invoice Financing | May be relevant | May be relevant | High relevance | Not primary basis | May be relevant | May be relevant | Not primary basis |
| Traditional Loan | May be relevant | High relevance | Not primary basis | May be relevant | High relevance | May be relevant | Not primary basis |
| Asset Finance | May be relevant | May be relevant | Not primary basis | High relevance | May be relevant | May be relevant | Not primary basis |
| Equity Funding | May be relevant | May be relevant | Not primary basis | Not primary basis | Not primary basis | High relevance | High relevance |
This is not any provider’s eligibility criteria, including Flow48’s.
How Should Businesses Compare Funding Costs?
Headline rates alone may be misleading, because products express cost in different ways. Compare the total funding cost against the capital actually received.
• Principal or funding amount
• Interest
• Fixed fees
• Facility fees
• Transaction costs
• Repayment period
• Repayment frequency
• Total repayment
• Settlement terms
• Ownership cost, for equity
Total Cost of Funding Checklist
- How much capital will the business receive?
- What is the total expected repayment?
- What fees apply?
- How often are repayments made?
- How long does the funding run?
- What happens if revenue declines?
- What happens if a customer pays late?
- Does early settlement change the cost?
- Does equity dilution have a longer-term ownership cost?
Compare Funding Cost With the Business Opportunity
A funding cost only makes sense in relation to what the capital enables. Weigh it against:
- Expected additional revenue
- Gross margin on that revenue
- Operational benefit
- Size of the growth opportunity
- Cost of delay if the business waits
- Effect on working capital
Expected returns are estimates, not guarantees, so it is worth testing the comparison against a slower or smaller outcome as well.
How to Choose Between Business Funding Options
A structured approach makes the comparison more reliable:
Define the Actual Funding Need
Describe the problem the capital solves, not the product you have heard of.
Estimate the Amount Required
Work from planned costs minus cash the business can allocate itself.
Understand Expected Cash-Flow Timing
Map when money leaves and when the resulting revenue returns.
Identify What the Funding Is Linked To
Revenue, invoices, an asset, a purchase order, general working capital or growth.
Decide Whether Ownership Dilution Is Acceptable
This separates equity from every other structure on this page.
Compare Repayment Structures
Check how repayments behave in weaker as well as stronger months.
Compare Total Cost
Total repayment against capital received, including all fees.
Review Existing Obligations
Current repayments reduce the room for new ones.
Understand the Agreement
Fees, default, settlement and security terms should be clear before accepting.
Choose the Structure That Aligns With the Requirement
The aim is fit with the need, not a universally best product.
A Simple Funding Decision Flow
Work down the questions in order. If the answer is no, move to the next question.
Question 1
Do customers owe you money on issued invoices?
Yes: Explore Invoice Financing →
No: Continue to the next question
Question 2
Does the business have established revenue and need working capital or growth capital?
Yes: Explore Revenue-Based Financing →
No: Continue to the next question
Question 3
Is the funding for a specific asset?
No: Continue to the next question
Question 4
Is capital needed for a confirmed order before delivery?
Yes: Explore Purchase Order Finance →
No: Continue to the next question
Question 5
Are you willing to give up ownership?
No: Review the comparison tables above
This is educational guidance only, not a funding recommendation. More than one answer can apply, and each provider assesses businesses individually.
Common Mistakes When Comparing Business Funding
Comparing Only Interest Rates
Rates are expressed differently across products and leave out fees and timing.
Ignoring Fees
Arrangement, facility and transaction fees can change the real cost significantly.
Ignoring Repayment Frequency
Weekly or daily collections affect cash flow differently from monthly ones.
Ignoring Cash-Flow Timing
Repayments must fit when cash arrives, not just monthly totals.
Choosing Funding Before Defining the Need
Starting from a product rather than the problem often leads to a poor fit.
Using Short-Term Funding for Long-Term Assets
Quick repayment of a long-life asset can strain cash flow.
Assuming Unsecured Means No Assessment
Unsecured funding is still assessed and still creates an obligation.
Assuming Equity Is Free Capital
Equity has no repayments, but costs a share of future value and control.
Ignoring Ownership Dilution
A stake given up early can be expensive once the business is worth more.
Ignoring Existing Financial Obligations
New repayments sit on top of current ones.
Choosing Based Only on Funding Speed
Fast capital on poorly matched terms can cost more over time.
Not Reading the Agreement
The agreement, not the product name, determines how the funding works.
When Funding May Not Be the Complete Solution
Funding does not automatically fix:
- Unprofitable pricing
- Weak demand
- High operating costs
- Poor debtor management
- Excessive inventory
- Excessive debt
- Unsustainable growth
In these cases, addressing the underlying issue usually matters more than which funding structure is chosen.
Compare Flow48 Funding Options
Flow48 provides two funding products for South African SMEs. Both are subject to assessment and the applicable funding terms. The other structures on this page are not Flow48 products.
Revenue-Based Financing
Funding associated with established business revenue and performance, relevant to working-capital or growth requirements. Repayments are linked to how the business performs, and Flow48 describes it as requiring no collateral and no equity dilution.
Explore Revenue-Based FinancingInvoice Financing
Funding associated with eligible unpaid invoices, relevant where customer payment terms create working-capital gaps. Repayments align with the invoice collection cycle.
Explore Invoice FinancingFlow48 Revenue-Based Financing vs Invoice Financing
| Attribute | Revenue-Based Financing | Invoice Financing |
|---|---|---|
| Funding basis | Business revenue and performance | Eligible unpaid invoices |
| Relevant business situation | Working capital or growth needs | Customer payment terms creating a gap |
| Revenue relationship | Repayments linked to business performance | Indirect |
| Invoice relationship | Not tied to specific invoices | Linked to specific eligible invoices |
| Working-capital use | General operating and growth needs | Releasing cash tied up in receivables |
| Ownership impact | No equity dilution | No equity dilution |
| Learn more | Revenue-Based Financing → | Invoice Financing → |
Both products are subject to assessment and the applicable funding terms.
Related Guides
Understand the Terminology
Key terms on this page are defined in the Flow48 Business Funding Glossary.
Continue Learning About Business Funding
Frequently Asked Questions
The main options for South African SMEs include Revenue-Based Financing, Invoice Financing, traditional business loans, business overdrafts, asset finance, purchase order finance, trade finance and equity funding. Working capital funding describes a purpose that several of these can serve. Each option is built around a different funding basis, such as revenue, invoices, a specific asset, a confirmed order or an ownership stake.
Start with the underlying need, then compare options on funding basis, amount, timing, repayment structure, collateral, ownership impact, total cost and how repayments fit monthly cash flow. A headline rate on its own can be misleading. Matching the structure to the need, such as receivables-based funding for unpaid invoices, usually matters as much as the price.
A traditional business loan commonly uses an agreed repayment schedule and a broader credit assessment, and collateral may be required depending on the lender. Revenue-Based Financing places more weight on business revenue and performance, and some structures link repayments more closely to revenue. Neither is automatically cheaper or better; the comparison depends on the specific terms and the business need.
Revenue-Based Financing is generally linked to the performance and revenue of the business, while Invoice Financing is linked to eligible unpaid customer invoices. RBF may be relevant for growth or working capital that is not tied to specific invoices. Invoice Financing may be relevant when cash is tied up in receivables because customers pay on extended terms.
Invoice Financing is linked to eligible receivables and is typically settled as customers pay those invoices. A business loan is based on a broader credit and affordability assessment, provides a lump sum for a range of purposes and is commonly repaid in instalments over an agreed term. Invoice Financing is closely tied to working capital; loans can serve both short-term and long-term needs.
Secured funding uses specified collateral, such as property, vehicles or equipment, which the provider may rely on if the funding is not repaid. Unsecured funding does not rely on traditional pledged physical collateral in the same way. Unsecured does not mean there is no assessment, agreement or obligation: the business is still assessed and must meet its repayment terms.
Debt funding provides capital that must be repaid under an agreement, while existing shareholders keep their ownership. Equity funding provides capital in exchange for ownership, with no conventional repayment, but existing shareholders are diluted and investors may gain influence over decisions and a share of future profits. Debt affects cash flow through repayments; equity affects ownership permanently.
Non-dilutive funding allows a business to access capital without issuing new shares, so existing owners keep their ownership percentage. Business loans, overdrafts, Invoice Financing, Revenue-Based Financing and asset finance are generally non-dilutive. They still carry a funding cost and a repayment obligation, which is the trade-off against giving up equity.
Invoice Financing is the funding structure most directly linked to unpaid invoices. It allows an eligible business to access capital tied up in receivables before customers settle them under their payment terms. Not every invoice qualifies: providers typically assess the invoice, the customer and the business, and disputed or very overdue invoices may be excluded.
Several structures can support working capital, including business overdrafts, Invoice Financing, Revenue-Based Financing, short-term business loans, trade finance and inventory finance. Working capital funding describes the purpose of the finance rather than one product. The most relevant option depends on what is driving the need, such as customer payment terms, stock purchases or seasonal demand.
Asset finance is commonly used for machinery, vehicles and equipment. It relates primarily to financing a specific asset, which is usually central to the arrangement, and repayment periods are often matched to the asset’s useful life. Using short-term working capital funding for a long-life asset can put pressure on cash flow before the asset pays for itself.
Purchase Order Finance is funding related to a confirmed customer order, used to cover supplier or production costs before the goods are delivered and invoiced. It typically applies earlier in the commercial cycle than Invoice Financing. Once the order is delivered and invoiced, the arrangement is usually settled when the customer pays, depending on the provider and agreement.
An overdraft is one type of working-capital funding, but not the only one. It provides credit attached to a business bank account up to an approved limit, and is generally used for short-term liquidity. Working capital funding is a broader category that can also include Invoice Financing, Revenue-Based Financing, trade finance and short-term loans.
No. Collateral may be required depending on the provider, product and facility. Asset finance typically uses the financed asset as security, and some loans require property or a personal guarantee. Other structures, such as some Revenue-Based Financing and Invoice Financing products, rely more on business performance or receivables than on traditional pledged assets.
Equity funding requires issuing shares and therefore diluting existing owners. Business loans, overdrafts, Invoice Financing, Revenue-Based Financing and asset finance generally do not require equity issuance. Some agreements can include conversion rights or other features that affect ownership, so the exact legal structure depends on the agreement.
Compare the total expected repayment with the capital actually received, and include fees, repayment frequency, the funding period and settlement terms. For equity, consider the long-term cost of the ownership given up. Cost should also be weighed against the commercial benefit the funding is expected to create, such as additional gross profit or an avoided delay.
Not necessarily. A low headline rate can come with significant fees, security requirements or a repayment schedule that does not suit the business’s cash flow. Different products also express cost differently, so rates are not always directly comparable. The total cost, the repayment structure and how well the funding matches the need all matter.
Yes. Profit is different from cash flow. A profitable business can run short of cash when it pays suppliers and staff before customers pay, holds large amounts of stock or grows quickly. Funding is often used to bridge these timing gaps even when the business is performing well.
Revenue-Based Financing may be relevant when a business has established revenue, needs capital for working capital or growth, wants to retain ownership and has a funding need that is not tied directly to a specific invoice. It is not automatically suitable: providers assess each business, and the repayment structure and cost should be reviewed carefully.
Invoice Financing may be relevant when a business sells to other businesses, has issued invoices, and customers pay on extended terms such as 30, 60 or 90 days, leaving cash tied up in receivables. Not every invoice qualifies, and it is less relevant where customers pay upfront or the need is unrelated to receivables.
No. Flow48 currently offers Revenue-Based Financing and Invoice Financing. Traditional business loans, overdrafts, asset finance, purchase order finance, trade finance and equity funding are described on this page for educational comparison only and are not Flow48 products.
Flow48 currently offers two funding products for South African SMEs: Revenue-Based Financing, which gives established businesses access to working capital based on their revenue, and Invoice Financing, which helps businesses access capital tied up in eligible unpaid invoices. Both are subject to assessment and the applicable funding terms.
Compare Your Business Funding Options
If your business needs capital for working capital, growth or managing customer payment cycles, compare the available funding structures and explore Flow48's Revenue-Based Financing and Invoice Financing solutions. Funding is subject to assessment and the applicable funding terms.