Alternative lender Merchant Capital has announced a partnership with Discovery Insure that will provide SMEs with working capital to assist with cash flow.
Successful applicants will be able to use these funds to meet their business requirements, including paying their insurance premiums. Discovery Insure clients can also receive up to 50% cash back on their business insurance premiums while remaining adequately protected.
SMEs that qualify for the Merchant Capital cash advance will be able to get funding of up to 80% of their monthly turnover generated from debit or credit card sales. This will depend on their profile and how their turnover has been affected by COVID-19, said Discovery Insure CEO Anton Ossip.
“Businesses are facing increased challenges as a result of the COVID-19 pandemic. Many of them have seen a reduction in sales, leading to loss of revenue – especially for SMEs. That is why we give our clients access to capital to assist them during this difficult time,” said Ossip.
“Around 80% of small to medium-sized enterprises may not be able to survive a lack of turnover for three consecutive months. SMEs need insurance that is affordable enough to sustain business operations during this challenging period,” he said.
Merchant Capital CEO Dov Girnun said successful applicants would get access to funds in as little as 48 hours, with repayments based on a set percentage of debit or credit card sales in future months to provide for flexibility during periods of low turnover. SMEs can then access additional capital once they have repaid 70% of the cash advance.
“COVID-19 has caused the revenue of many good businesses to decline sharply, so the Merchant Capital product provides much needed quick and easy access to working capital at this time,” said Girnun.
A rapid response survey conducted by Stats SA during the lockdown reported that almost half of responding businesses (47.9%) had temporarily closed their doors, and nearly one in 10 had ceased trading. Only half expected their workforce size to stay the same, and five in six businesses (89.6%) had experienced a drop in turnover.
“Merchant Capital is extremely excited to be a partner in Discovery’s innovative Shared-value Insurance Model. The enhanced product offering is aligned with our founding principle of providing our clients with real value solutions that evolve according to the changing business environment,” said Girnun.
The Discovery Insure partnership is the latest in a series of initiatives by Merchant Capital to support small businesses during the COVID-19 pandemic. Last month, it launched its RE-BOOT short-term finance product to provide the restaurant sector with working capital to help ease the economic impact of the national lockdown regulations. This offering is now being made available to the broader retail SME continuum.
Earlier, it had announced a payment holiday for the majority of its client base, predominantly from the retail sector, for the duration of the lockdown. The payment holiday applied to all small businesses deemed non-essential under the lockdown regulations. Over the past seven years, the company has assisted more than 5000 SMEs with working capital to the tune of more than R1.5 billion.