Small and medium-sized enterprises (SMEs) in South Africa have long struggled to get the funding they need.

Traditional banks have not been able to meet their financial needs, with fewer than 15% of SMEs able to get loans, excluding overdrafts. Also, alternative lenders haven’t been able to fill the gap, which is estimated to be around $30 billion (ZAR 550 billion), according to the International Finance Corporation.

However, in 2025, things are starting to change. Technology, changing economic conditions, and efforts to solve the unique challenges of South African SMEs are all improving how businesses can get funding.

Advances in cloud computing, data analysis, and artificial intelligence are making financial services cheaper and better at assessing risk.

The South African Reserve Bank’s Fintech Unit is also helping by creating a better environment for new financial services.

Fintech companies are a big part of this change.

These digital platforms make it easier and faster for businesses to get loans, lowering the barriers to getting capital.

By using artificial intelligence and machine learning, these lenders can offer loans with terms tailored to the specific needs of each business.

For many small businesses that have had trouble getting loans from banks, fintechs provide an alternative.

These platforms are helping businesses gain access to capital by analyzing digital data to create more accurate credit profiles.

As technology improves, there are also more specialized solutions, like mobile-first lending platforms that cater to people in areas where banks are less common.

Alternative ways of financing are also becoming more important.

One example is revenue-based financing (RBF), which is becoming more attractive for businesses with steady income.

Instead of paying interest, businesses repay a percentage of their revenue, which means no fixed repayment amounts or term limits.

This makes it more flexible and easier for businesses to get funding without the pressure of fixed payments.

Invoice financing is also growing in popularity.

This lets businesses get cash quickly by using unpaid invoices as collateral.

This is especially useful for businesses that work with long payment terms, as it helps them keep cash flow steady while waiting for payments.

Factoring, a similar option, lets businesses sell their outstanding invoices to a third-party company for quick access to capital.

These alternative options are especially helpful for businesses that have little collateral or a short credit history.

They provide flexible ways to fund growth and stability.

Even though new digital and alternative options are becoming more common, traditional banks are still important in SME financing.

Banks are adapting to stay competitive by offering their own online lending platforms and improving application processes.

Banks have the advantage of trust, large networks, and more money, and they are combining these strengths with digital services to create more flexible options.

South African banks are also becoming more specialized, offering services designed for specific industries to stay competitive against smaller lenders.

Banks are partnering with fintech companies, combining their customer networks with the latest technology, creating a more connected financial system that benefits SMEs.

In 2025, the financing system for SMEs in South Africa is becoming more inclusive and diverse, providing businesses with more ways to get the funding they need to grow.

With digital solutions and regulations continuing to improve, entrepreneurs will have more access to capital.

To succeed, SME owners will need to choose the financing options that fit their specific business goals and needs.

As the financial system becomes more varied, South African SMEs will be better positioned to succeed in an increasingly competitive market.