Gro-E funding boosts youth-owned businesses
Gro-E funding boosts youth-owned businesses sadminYouth-owned businesses have been urged to take full advantage of the Industrial Development Corporation’s (IDC) Gro-E Scheme, which funds start-up businesses.
The R10 billion Gro-E Scheme was launched in 2011 to help create jobs. According to IDC CEO Geoffrey Qhena, by 2013 about R3.5 billion had been approved to 114 companies, with an estimated 23 800 jobs created.
As part of the Youth Employment Accord, the IDC earmarked R1 billion of the remaining R6.5 billion budget of the Gro-E Scheme for businesses owned by young people (those younger than 35).
The scheme provides loans to businesses that operate in industries that fall within the IDC’s mandate and create jobs. The funding is available to South African citizens and the minimum amount of finance is R1 million.
Qhena said young entrepreneurs played an important role in the South Africa’s economic development.
“It is important that we recognise the role that young people play in developing the country’s economy and the fund will go a long way in helping youth grow their businesses. The fund will also contribute in reducing the current levels of unemployment.
“It will support the youth to become part of the solution to curb unemployment. Young people are very enterprising. However, access to funding has been one of the greatest challenges,” says Qhena.
The scheme is aimed at companies with a shareholding by youth of more than 50 per cent.
Those who can apply for funding from the Gro-E Scheme include:
- Start-up businesses that need funding for buildings, machinery and working capital.
- Existing businesses that want to expand.
- Businesses that show economic merit and have prospects of acceptable profitability.
- Businesses whose maximum cost per job does not exceed R500 000 relative to the total funding required for the duration of the funding period.
- Businesses operating or expanding in South Africa.
Where necessary, a Broad-based Black Economic Empowerment certification from an accredited verification agency will be needed. The funding period will be structured to meet the cash flow needs of the business and there is no prescribed minimum for owner contribution.
Appropriate capital and interest payment holidays will apply depending on the financial needs of the business.
Qhena said the IDC would work closely with other institutions, such as the National Youth Development Agency (NYDA), Small Enterprise Development Agency (Seda), Small Enterprise Finance Agency (Sefa) and sector bodies, to ensure that the fund is well marketed.
“We appeal to experienced entrepreneurs to join with the youth in establishing businesses to ensure that these new entrepreneurs are coached and mentored,” he added.
Applications for Gro-E Scheme funding can be made at any of the IDC offices across the country.
Entrepreneurs can also make use of IDC’s online application facility on www.idc.co.za