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Custom Capital Finance

Financing that is a game-changer for SMMEs

SDG Alignment

Investment Summary


Financial Services


December 2022



Consumer Finance


Financial Inclusion



Head Office in Umhlanga, Natal


Custom Capital Finance at a glance

After successfully establishing Mercantile Bank's alternative lending division and subsequently selling their stake to the bank, the Du Toit brothers founded Custom Capital Finance (CCF) in 2018. CCF specializes in alternative lending solutions, specifically Rental Finance and Invoice Discounting.

Rental Finance primarily targets Small, Micro, and Medium Enterprises (SMMEs) that face challenges in obtaining financing from traditional banks. This alternative financing option allows SMMEs to acquire necessary equipment without requiring significant upfront capital. With an average rental term of 54 months, SMMEs benefit from improved cash flow and can navigate economic difficulties such as the impact of Covid-19, ensuring long-term sustainability for both the business and its employees.

In 2020, CCF expanded its offerings by acquiring an invoice discounting business, which provides short-term financing (30-90 days) against invoices from reputable blue-chip off-takers. With a reputation as one of South Africa's top teams in alternative lending origination and operational management, CCF currently ranks as the third-largest operator of its kind in the country.

What is the Social Challenge?

According to FinFind, small, micro, and medium enterprises (SMMEs) starting from a pre-revenue of R594,000 make significant contributions to South Africa's GDP. Therefore, fostering the growth of these small businesses is a crucial opportunity for economic development and job creation in the country.

The International Finance Corporation reports that small enterprises employ 50-60% of South Africa's workforce and contribute approximately 34% to the GDP. However, there exists a substantial credit gap for SMMEs in South Africa, estimated to be between R86 billion and R346 billion, as highlighted by the SA SMME Fund report.

Traditional banks struggle to cater to the unique needs of SMMEs, as they often treat these businesses as a homogeneous market. Their lending methods typically rely on collateral and conventional financing scorecards, which do not adequately address the financing requirements of micro, very small, and small enterprises. This one-size-fits-all approach hampers their access to finance.

Our Response:

The Fund's investment, additional share subscription, and shareholder loan ensure that CCF has sufficient equity to secure the necessary debt levels for its lending activities to new SMMEs. Summit also provides value add expertise in strategy, software and systems development, product innovation, and governance. Summit secured financing for CCF in the form of a R2 billion RMB Notes Program. The Summit Value Add team also assists CCF in implementing robust risk management and governance frameworks aligned with international standards such as the IFC performance standards, Sustainability Accounting Standard Board, and King IV Combined Assurance. This collaboration enhances CCF's capabilities and positions it for sustainable growth and responsible practices.

Who Are the Stakeholders?

The investment in CCF primarily benefits SMMEs by addressing their challenges in accessing finance. It also has positive implications for job seekers, investors and shareholders, government and regulatory bodies, and historically disadvantaged individuals. The growth of SMMEs leads to job creation, aligning with government objectives of reducing unemployment. Investors and shareholders have a vested interest in CCF's success, while government bodies support initiatives promoting economic growth. Historically disadvantaged individuals, including black individuals and black women, gain opportunities for economic empowerment through increased access to finance and business expansion.

What is the Impact?

The Fund's investment in CCF grants the company access to increased Debt Finance through the RMB Notes Program for the next five years, expanding their ability to provide financial solutions to a larger number of SMMEs. This investment addresses the challenge of limited access to finance faced by SMMEs in the South African market, contributing to increased revenue and job growth for these businesses.

Job Creation:

CCF's projected growth in its finance book over the next five years is expected to require the employment of an additional 10-15 people, directly contributing to job creation. Indirectly, assuming that CCF's financing enables at least 20% of the SMMEs it supports to employ one additional person each, a minimum of 3,893 new jobs would be created throughout the investment term. This demonstrates the potential for significant job creation resulting from CCF's activities.

Community Upliftment:

CCF's provision of alternative finance to over 19,469 new SMMEs will promote economic development and entrepreneurship. These supported businesses can expand, leading to increased employment opportunities and GDP growth. Through the RMB Notes Program, CCF aims to finance a substantial number of Rental Finance agreements to a diverse range of SMMEs, including micro & very small enterprises. This inclusive approach empowers businesses to provide more products and services and fosters job creation, contributing to community upliftment.

Transformation, Diversity & Inclusion:

With Fund's investment, CCF is now 51% black-owned, with a workforce of 18 people, 78% of whom are women. The board has transitioned from three white males to two white males and two black women. As part of their Value Creation Plan, CCF will establish ring-fenced financial products. This includes a Rental Finance product supporting black-owned women's businesses and an Invoice Discounting product for black-owned suppliers serving blue-chip debtors. These initiatives will be actively promoted to blue-chip debtors, fostering economic opportunities and inclusivity.

What if Custom Capital Finance Did Not Exist?

CCF, the third largest rental finance alternative lender in South Africa, plays a critical role in driving economic growth and job creation. Without CCF and similar institutions, fewer SMMEs would have the opportunity to expand and grow their businesses, directly impacting job creation and GDP growth.

What is the Risk?

CCF runs an efficient financial services operation with minimal environmental impact. It plans to expand its risk management policies and procedures and develop specific governance and compliance policies. CCF prioritizes employee well-being, with positive staff morale and an open-door policy. They aim to implement diverse labour policies in 2023. CCF recognizes the need to track electricity usage and optimize resource efficiency. They also plan to establish a formal external grievance procedure and target women black-owned and run SMMEs with favourable financing options. Overall, CCF demonstrates a commitment to sustainability and responsible practices.

Addressing the financing requirements of small, micro and medium enterprises

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