Yoco, a South African-based point-of-sale payment service has launched Yoco Capital to provide SMEs with fast, efficient access to a cash advance after securing $16m in Series B round.

 According to recent research conducted by Yoco on more than 3,600 small businesses from its base, 51% of business owners said that access to funding is important to run their business, but only 13% applied for, and successfully received the funding they wanted. The firm then built and piloted Yoco Capital to solve the problem.

According to Yoco co-founder and CEO, Katlego Maphai, “We understand that accessing capital is one of the hardest challenges faced by small business owners. It’s also one of the biggest reasons why small businesses remain small. We are therefore offering a solution that leverages smart technology to help small businesses grow. We’re confident that Yoco Capital’s ability to deliver frictionless access to funds will revolutionise small business funding, in the same way that Yoco lowered barriers to card payment acceptance in the sector.”

Yoco Capital successfully granted 225 advances to the value of R7.5m during its beta.  With the full launch if Yoco Capital, eligible Yoco merchants can now access a cash advance of between R2,500 and R75,000, without the need for security or collateral.

Eligible merchants would need to have been transacting with Yoco for at least three months, with the size of the advance determined by the merchant’s monthly turnover. A merchant simply needs to log in to their Yoco Business Portal to see if they have an offer. The online application is quick and easy, requiring just a few clicks. If successful, approval is provided within seconds and funds are transferred into a merchant’s bank account within 24 hours, and the use of this capital is unrestricted.

While traditional business loans charge an interest rate attached to a specific repayment period, Yoco Capital’s innovative model charges one transparent fixed fee, which customers know in advance. Additionally, there are no early repayment fees, no late fees, and no hidden costs. Customers simply pay back a small portion of the cash advance with each swipe they process through their Yoco card machine. Deductions are automatic and are calculated based on a fixed percentage of every card transaction that is processed, until the balance is paid off.

“This means that when business is good, customers pay their cash advance off more quickly, and when business is slow, they are not burdened by hefty month-end debit orders in service of their capital. As the concept allows businesses to repay as they get paid, there is minimal impact on cash flow,” adds Bradley Wattrus, Yoco co-founder and CFO. Manual payments towards the advance can also be made.

Yoco is now used by over 28,000 small businesses.