No Free Lunch Podcast – The SME Funding Challenge

This episode of No Free Lunch explores the rapid growth of South Africa’s ICT and small business sector, with a particular focus on the funding challenges faced by SMEs working on larger projects. Host Greg Stewart is joined by Andrew Keggie, Chief Information Officer at Lula, a Cape Town-based fintech that provides working capital and business banking solutions for SMEs. Together, they unpack the forces driving growth in the sector, the financial pressures that can limit expansion, and the role of flexible funding in helping businesses scale.

A key theme of the discussion is the rapidly expanding ICT landscape, which is being fuelled by cloud computing, telecoms investment, and the rise of AI adoption. Andrew explains that Lula has seen steady year-on-year demand from ICT SMEs seeking capital to support new contracts, infrastructure, licensing, and skills development. Over the years, the company has funded close to a thousand ICT SMEs and deployed nearly R980 million in capital, showing just how significant the demand has become. Greg also highlights the scale of the sector, noting that the vast majority of ICT businesses are small enterprises.

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Access to Funding When Companies Require it – an Ongoing Challenge

The conversation then turns to one of the biggest obstacles for SMEs: access to funding at the exact moment it is needed. Winning a tender or contract often requires upfront investment before any revenue is received, and traditional funding channels can be slow, rigid, and difficult to access. Andrew explains that Lula aims to solve this by offering flexible cash flow products, including lines of credit that businesses can draw down as needed and repay early without penalty. The goal is to build long-term relationships and grow alongside clients as their businesses expand.

The Delayed Payment Dilemma

Another major issue facing SME’s is delayed payment. Both Greg and Andrew agree that payment gaps—sometimes 60 to 90 days or longer—create serious strain for SMEs, especially those that rely on project-based work and have no alternative revenue streams. Andrew points out that this is a cross-sector challenge, but particularly risky for ICT businesses dependent on government or large enterprise contracts. Flexible working capital can help bridge these gaps and keep businesses operating while they wait for payment.

Finally, the discussion addresses how funding is priced. Andrew explains that Lula uses live transactional data and risk-based pricing to assess business health and determine funding costs. The conversation closes on a practical note: SMEs should understand their costs, use funding wisely, and choose financial partners that can support their growth over time.