MEGA funding: what Mpumalanga SMMEs need to qualify

MEGA funding is business finance from the Mpumalanga Economic Growth Agency for SMMEs and co-operatives in sectors from agro-processing and mining to construction and transport. It focuses on historically disadvantaged entrepreneurs, needs a 10% own contribution and charges an initiation fee of 1% of the loan, capped at R5 000.

Key takeaways

• MEGA lends to SMMEs and co-operatives across most of Mpumalanga's economy, with a focus on historically disadvantaged individuals.
• You need a minimum 10% own contribution, and assets can count towards it.
• The initiation fee is 1% of the loan applied for, capped at R5 000 excluding VAT.
• Applicants need a reasonable credit record and must be actively involved in running the business.
• MEGA does not publish loan amounts or interest rates, so ask before you apply.

What MEGA funds

The Mpumalanga Economic Growth Agency (MEGA) is the province's development agency, tasked with growing the Mpumalanga economy by attracting and facilitating investment. According to MEGA's funding page, it funds SMMEs and businesses in:

• agro-processing and forestry
• mining and energy
• manufacturing and construction
• trade, transport and services
• government and community services

MEGA focuses on developing aspirant business people in the historically disadvantaged individuals (HDI) category. It also funds housing for HDIs, which is a separate product from its business funding.

MEGA lending criteria

MEGA's published lending criteria require that applicants:

• are historically disadvantaged individuals
• are South African citizens or permanent residents with a valid identity document, aged 18 or older
• have access to land – leased, communal, usufruct or owned – or to production facilities
• are actively involved in the operation and management of the business
• run a viable SMME or co-operative with good prospects of profitability
• have a reasonable credit record and the ability to repay the loan
• contribute at least 10% themselves – assets can be considered as the contribution
• are registered with CIPC, except emerging and small-scale farmers
• have not been placed under judicial management, either as a business or as its promoter

MEGA also states that funding is biased towards enterprises with the potential to create jobs, so make the employment case clearly in your business plan.

What MEGA funding costs

MEGA charges an initiation fee of 1% of the loan applied for, up to a maximum of R5 000 excluding VAT. The fee does not apply to co-operatives working under the Comprehensive Rural Development Programme (CRDP).

MEGA does not publish interest rates, loan limits or terms on its site. It does offer a finance calculator, but the rate and amount you are offered are set during assessment, so confirm them with MEGA before relying on a figure.

Preparing a MEGA application

The lending criteria point to what a strong application needs:

• Your contribution, in writing. Show the 10% – cash or assets – and how it will be used.
• Proof of premises. A lease, permission to occupy communal land, or title to production facilities.
• A clean or explained credit record. If there are adverse listings, have the arrangement or settlement on paper.
• A business plan that shows profitability and jobs. MEGA favours enterprises that create employment.
• CIPC registration, unless you are an emerging or small-scale farmer.

Is MEGA funding right for your business?

MEGA's criteria make it a good fit for some businesses and a poor fit for others. Work through these questions before you apply.

• Do you meet the HDI focus? MEGA's business funding is aimed at historically disadvantaged individuals, so check this first.
• Can you show 10%? Without a cash or asset contribution, the application cannot go ahead.
• Is your business in Mpumalanga? MEGA's mandate is the provincial economy, so a business operating elsewhere should look at its own province's agency.
• Do you need the money long term? MEGA funds establishing and growing a business. A short-term need on a single order is a different question.
• Will it create jobs? Funding is biased towards employment, so a plan that adds jobs is stronger.

If the answers are yes, MEGA is a sensible first call for a Mpumalanga SMME or co-operative, and the initiation fee is modest enough that an enquiry costs little.

How to apply for MEGA funding

1. Check that you meet the lending criteria above.
2. Contact MEGA's head office at 02 Eastern Boulevard, Riverside, Mbombela, on +27 13 492 5818 or [email protected].
3. Ask about loan limits, interest rates and turnaround times for your sector.
4. Submit your application with the business plan, proof of contribution and registration documents.

When a contract-backed facility fits better

MEGA's funding is built for establishing and growing businesses over time. It is not designed for the business that has just won a confirmed order and needs supplier costs paid before a delivery date a few weeks away.

For that, purchase order funding works against the order itself. Sourcefin pays your supplier directly so you can deliver, and assesses the strength of the contract rather than the length of your trading history. Sourcefin is a funding partner, not a lender, and the two approaches sit together comfortably: development finance for what you are building over years, contract-backed funding for what you have to deliver this month.

For other options, the national funders most relevant to Mpumalanga's mining, energy and agro-processing businesses are covered in IDC funding requirements and NEF funding. Neighbouring provinces' agencies are in NWDC funding and Ithala business funding, and the full map is in our guide to government funding for small business in South Africa.

Sources & references

• MEGA – funding
• MEGA – lending criteria