Khula Enterprise Finance Ltd Maximising access to finance


Khula Enterprise Finance Ltd was established in 1996 to focus on the promotion and development of SMEs in South Africa. The aim is to address market failures and reduce socio-economic gaps through making access to finance easier for small and medium enterprises (SMEs). Khula's core function is to promote sustainable access to finance for SMEs through an effective network of retail financial intermediaries, and commercial banks. In the near future Khula will extend its outreach and impact by introducing new delivery channels such as using SEDA regional offices as access points and partnering with corporate as well as the public sectors.

Target Market

Khula targets primarily Black-owned owner-managed formal SMEs. We provide start-up and development or expansion capital. At least 60% of loan facilities have been channelled in the following underserved provinces: Free State, Eastern Cape, Northwest, Mpumalanga, Northern Cape and Limpopo. The balance of the facilities is in KwaZulu-Natal, Gauteng and the Western Cape.

Our loan sizes range between R 10K - R250K benefiting a total of 66% of our target market with the balance allocated to the bigger size loans which range from R250K R3 million.

Khula's Strategic Direction

Our strategic objectives are to maximise access to finance and development impact, increase awareness of Khula and its products in the target market, invest in the development of our people to build high performance teams as well as build an efficient, effective, financially viable institution.

Khula offers the following products to the entrepreneur:


         Khula Credit Indemnity Scheme


         Khula Land Reform Empowerment Facility


         Khula Mentorship Programme


         The non-bank: Retail Financial Intermediaries


         Khula Joint Ventures


        Business Partners-Khula Start-up Fund

        Anglo-Khula Mining Fund

        Khula-Shoprite Checkers Joint Venture

        Enablis-Khula Loan Fund


Khula Credit Indemnity Scheme: The purpose of the Indemnity Scheme is to share the financing risk with banks thus enabling SMEs to access funding from a participating bank or other financial institution. The scheme enables entrepreneurs to access funding for purposes of establishing, expanding or buying out an existing business, business assets and working capital. Finance has to be approved by the financial institution and the latter will only apply to Khula for a guarantee where there is inadequate collateral.

Khula Land Reform Empowerment Facility: The Land Reform Empowerment Facility is funded by the Department of Land Affairs (DLA) and the European Union (EU). The aim is to facilitate land transfer and economic participation by black people in economically viable land based agricultural enterprises (both primary and secondary) and eco-tourism sectors.

Khula Mentorship Programme: The primary aim of the Mentorship Programme is to facilitate of access to finance for SMEs. It offers two services, namely; pre-loan and post loan mentorship services. During the pre-loan stage entrepreneurs are assisted by experienced mentors with advice, counseling and the development of viable business plans in order to access funding. In the post-loan stage clients are assisted with various aspects of managing a successful business as identified by the client, mentor, bank and Khula.

Non-bank Retail Financial Intermediaries: Retail Financial Intermediaries, commonly referred to as RFls, are independent organisations or companies accredited by Khula to lend money directly to SMEs. Once accredited, RFls receive loan funds from Khula to disburse to small and medium enterprises according to their own lending policies. RFls have to ensure that loans disbursed are paid back by the SMEs in order to pay back the loan originally received from Khula.

Joint Ventures

The Business Partners-Khula Start-up Fund is a fund created to enable entrepreneurs to establish new enterprises as well as early phase business expansion. Both Khula and Business Partners have co-invested in the venture, and the fund is managed by the latter.

The Anglo-Khula Mining Fund is a joint venture between Anglo American and Khula Enterprise Finance which facilitates entry of junior but commercially viable mining ventures into the mainstream mining sector. The fund provides seed capital to assist junior mining projects at pre-feasibility and pre commissioning stages.

The Khula-Shoprite Checkers Joint Venture aims to create positive spin-of its for BEE in South Africa by granting successful SME applicants OK Foods franchise concessions on negotiable terms. OK Franchise and Khula provide dual guidance in terms of outfitting, training and mentoring the SMEs to deliver maximum viability for their new businesses.

The Enablis-Khula Loan Fund is a partnership between Enablis Entrepreneurial Network, Khula Enterprise Finance Limited and FNB Enterprise Solutions. The fund provides 90% guarantees for loans extended to ICT focused and enabled businesses. Enablis is a non-profit private-public partnership sponsored by Hewlett-Packard, Accenture, Telesystem and the Government of Canada. FNB Enterprise Solutions, a subsidiary of First National Bank Limited, is FNB's specialist Small and Medium Enterprises financing division.