Credit Guarantee Scheme (BFS/S)


The scheme issues a range of credit guarantee products to lenders (commercial banks and other financial institutions) for SMME borrowers whose access to finance is impeded by the fact that they do not have collateral required by the lenders.

SMMEs would normally require finance in order to establish, expand or purchase existing businesses. The three broad categories of indemnities available are individual, portfolio and institutional indemnities.

The financial institution will assess the business plan and loan application in terms of its lending criteria. sefa will set certain guidelines for the assessing and monitoring of the loan process on which the indemnity will be enforced. Once the application has been approved, the financial institution will approach sefa for indemnity cover and a mentor may be appointed to help with the implementation of the business plan, setting up of operational systems and general business management. The financial institution manages the loan and collects payments for the duration of the loan. The full repayment of the loan remains the responsibility of the applicant.

Eligibility criteria for the Banks and Financial Sector (BFS)

To qualify for sefa funding, BFSs must:

  • Be commercial banks, which are automatically eligible to participate in the scheme by virtue of being professional money lenders, registered, regulated and monitored by the Financial Services Board and overseen by the South African Reserve Bank. Other lenders will be incorporated into the scheme provided they meet the legislative conditions

  • Agree to the terms and conditions of the scheme, as they would appear in the Indemnity Agreement, and thereafter sign the agreement

  • sefa will have the right to review their credit lending policies and procedures to the SMME market

Eligibility criteria for non-bank financial intermediaries

  • The RFI/SF must meet the minimum criteria as set out in 2.1

  • The prospective intermediary’s objectives must be in line with the sefa developmental mandate

  • The prospective intermediary’s business must be financially sound enough to support its objectives

  • The prospective intermediary must have sufficient human resource capacity and experience to implement its objectives to the satisfaction of sefa

  • The prospective intermediary is required to submit a viable, convincing business plan to sefa before it can be accredited to the scheme