Abstract
M. Tech.
The financing needs of contractors, especially emerging contractors, need to be explored.
In the case of the Small, Medium and Micro-Enterprises (SMMEs’) within the
contracting sector, a type of “finance-PLUS” arrangement, which sees the lender, or an
intermediary, offer additional support services to emerging enterprises, would be worth
exploring. There are various perspectives and opinions on the format and context of the
contribution. One of these perspectives embraces the obstacles involved in the
entrepreneurial process hindering contribution and economic catalisation. This study
follows a focused approach towards the investigation of a financial model for small,
medium sized contractors in South Africa. Interviews were conducted and questioners
were sent out to different constructors who have been successful in the business for more
than five years and also contractors who are currently straggling and trying to survive and
grow. Conclusions will be drawn from the analysis and recommendations will be made
for further study and curriculum revision, if necessary. All types of businesses need
capital before and after they start operating as well as for expansion purpose. The
problem is people who have been listed on credit bureaus have their records count against
them when they apply for a loan. A key factor mitigating against increased investment in
the SMMEs’ sector is the structure of the financial sector.
The findings of the study point to the fact that conventional financing mechanisms do not
allow for cost-effective provision of finance to large numbers of entrepreneurs seeking
small quantities of finance. Effects of poverty and lack of assets mean that many people
do not have the collateral needed to access finance. The study also found that although
there are different initiatives that are in place to assist small and medium size contractors
the typical problems and challenges are still existing. The scopes of this study only
focused on small, medium and micro-enterprise in the built environment (specifically the
construction industry). In addition, the study focuses on the different financial
programmes that are currently in place. An overarching concern is that previously
disadvantaged individuals do not have adequate access to credit offered by formal
financial institutions and therefore are forced to seek relatively expensive (and often
inadequate) amounts of credit from alternative financial sources.