The fintech start-up SA Yoco expands its offer with a cash advance service
South African fintech start-up Yoco, which has had notable success with its point-of-sale (PoS) payment service, has expanded its offering with the launch of Yoco Capital, which provides small businesses with fast and efficient access cash advances.
Yo co creates tools and services to help small businesses accept card payments and manage their day-to-day business. Since launching its first product in late 2015, a card reader that connects to a merchant’s smartphone or tablet, the company has grown its base to more than 28,000 South African small businesses.
Disrupt Africa reported last month, the startup raised a $16 million Series B funding round, led by Partech and including the likes of Orange Digital Ventures and FMOto expand its operations, and it has already started this process by launching Yoco Capital.
Access to finance having been identified as a major challenge for small businesses, Yoco Capital allows them to access cash advances in a simple and efficient way. During a three-month trial, the service issued 225 advances worth ZAR 7.5 million (USD 509,000), with the advance amount determined by the merchant’s monthly turnover.
The product is now out of beta, offering eligible Yoco merchants an advance of between ZAR 2,500 ($170) and ZAR 75,000 ($5,000). To get an advance, a trader simply logs into their Yoco Business portal to see if they have an offer and apply with just a few clicks. If successful, approval is provided within seconds and funds are transferred to the merchant’s bank account within 24 hours.
“It gives entrepreneurs a simple and transparent way to fund growth, while ensuring that their assets are not tied to their business,” said Katlego Maphai, co-founder and CEO of Yoco.
While traditional business loans charge an interest rate tied to a specific repayment period, Yoco Capital charges a transparent fixed fee, which clients know in advance. There are no prepayment fees, no late fees, and no hidden costs, with customers simply repaying a small portion of the cash advance with each swipe they process through their Yoco card machine. Deductions are automatic and calculated based on a fixed percentage of each card transaction processed, until the balance is refunded.
“This means that when business is good, customers repay their cash advance faster, and when business is slow, they aren’t burdened with heavy month-end debit orders serving their principal. Like the concept allows companies to repay as they are paid, the impact on cash flow is minimal,” adds Bradley Wattrus, co-founder and chief financial officer of Yoco.