Access to affordable credit remains one of the biggest determinants of small, micro and medium enterprises (SMMEs) survival. The problem, simply put, is that the traditional credit system was never designed with SMMEs in mind.
During his 2026 State of the Nation Address (SONA), President Cyril Ramaphosa announced that the National Credit Act (NCA) would be amended to make it easier for SMMEs to access credit at a lower rate.
The NCA and its regulations have historically focused on protecting individual consumers. While that protection is important, it has had unintended consequences for small businesses.
Many SMMEs fail to access credit not because they are unviable, but because they don’t meet traditional criteria applied. Irregular income, seasonal cash flows, limited collateral and limited equity all work against them. As a result, viable businesses are either declined or pushed toward short‑term, high‑cost funding that becomes unsustainable as rates rise.
The regulatory reforms referenced in the SONA are intended to address this imbalance by modernising how lenders evaluate small businesses. In practice, this means enabling lenders to draw on a broader range of data sources when assessing SMME risk, encouraging cash‑flow‑based assessments rather than salary‑style affordability tests, and improving the overall visibility of SMMEs within the formal credit system.
As a lender that assesses applications based on cashflow viability amongst other important elements such as entrepreneur skill and experience, this is an approach we welcome and support. The aim is not to lower lending standards, but to ensure that risk is assessed in a way that better reflects how small businesses really operate.
Earlier in the year, there was cautious optimism that interest rates could ease as inflation moved closer to the South African Reserve Bank’s target. That outlook has since changed materially. The SARB’s Monetary Policy Committee (MPC) is now facing renewed inflation risks linked to higher global oil prices and fuel‑driven cost pressures, with the war in the Middle East adding significant uncertainty to the outlook. The most recent MPC decision saw the repo rate kept unchanged at 6,75%, which indicates that these realities are being considered.
For SMMEs already operating on thin margins, the borrowing costs are unlikely to ease in the near term – and may even rise if interest rates increase. Regulation cannot override this macroeconomic reality: if interest rates remain high or increase, the base cost of credit will remain high. Where regulation can make a meaningful difference, however, is in shaping the risk premium applied by lenders, which ultimately determines the cost of borrowing for small businesses.
Enhancements to the NCA regulation will provide lenders with richer and more relevant data points when assessing SMMEs. Better insight into a business’s performance and risk profile reduces uncertainty, allowing lenders to price more accurately rather than compensating for unknowns with a worst‑case scenario risk premium. For SMMEs, this can translate into more realistic loan structures aligned to cash‑flow cycles, longer repayment terms that ease monthly pressure, and less reliance on high‑cost, short‑term funding to cover long‑term needs.
With interest‑rate uncertainty back on the cards, SMMEs should take a proactive approach to credit readiness. Regulatory reform is beginning to recognise the realities of running a small business, even as economic conditions remain challenging.
To put yourself in the strongest possible position, here are three practical ways you can improve how lenders view your business and how credit works for you:
- Strengthen your financial footprint
Clear, up‑to‑date records, consistent payments to suppliers and proper separation between business and personal finances all make a meaningful difference to how lenders assess risk. The more reliable and disciplined your financial behaviour, the easier it is for a lender to form a realistic view of your business.
- Know your cash flow in detail
In a volatile rate environment, lenders are less focused on theoretical profitability and far more concerned with when money truly moves in and out of your business. A clear understanding of cash‑flow cycles – including seasonal peaks and pressure points – allows funding to be structured in a way that supports, rather than strains, operations.
- Match funding to purpose
Using short‑term credit to fund long‑term needs is risky in any environment, but particularly when interest rates are unpredictable. Aligning the type and term of funding to the underlying business need reduces refinancing risk and improves long‑term sustainability.
As government prepares to evolve credit regulation to better reflect how SMMEs operate, businesses that are financially prepared, visible and intentional about how they use credit will be best placed not just to endure this cycle, but to emerge stronger from it.
About the Author: Jeremy Lang
