What is business capital all about?

Find out everything you need to know about business capital for a small business.

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Business capital for small businesses in South Africa

Do you want to start your own small business and wonder what is ‘capital’ is? Capital is any financial item that an entrepreneur can use to create greater value, like start their own business or expand it. For example, a person that owns one spaza shop in Alexandra might need business capital to buy a second spaza shop down the road.

We spoke to Jonathan, who owns a small marketing business, about business capital to share his first-hand experiences.

Read Jonathan's answers to popular questions about business capital.

Did you need capital to start your small business?

“No, luckily, I started my own business as a side hustle. So my full-time job funded the growth of my side business until it was ready for me to leave my full-time employment behind. I did this because I didn’t see any opportunity to get funding for my business. Also, I wanted to play it safe and be able to pay my bills.”

How do you fund your business now?

“I have a business bank account overdraft for emergencies. My strategy for further funding my business is to get more clients.”

What capital does your business have now?

“My business has a variety of capital, from intellectual property to physical capital. I have built a small office on my residential property. I bought a laptop and some office furniture. I have several employees. My skills and experience are valuable to my business and ensure it keeps going.”

Jonathan spoke about a few types of capital and has had his own way of getting and dealing with it.

Don’t worry. With the right advice, you can make sense of it and find out how the different kinds of capital can help your small business.

Now, let’s explore some of the usual types of capital for small businesses in South Africa.

Learn more about business capital

Let’s explore popular capital-related words and phrases, with as little jargon as possible, for you to familiarise yourself with for your small business.

Start-up capital

Start-up capital can come in handy in those early months to get your business up and running and keep food on the table. Start-up capital could come in many forms like debt capital. 

Do you want to start your own business? Read more about how to start your business now.

Debt capital

For example, this is when a business takes out a loan from a bank, friends, family or other sources. The great advantage of debt capital is that it could provide a life-giving injection of funds into a small business. But, it is still a debt that the owner has to pay back. If the interest becomes too much, this type of capital can become a capital loss. 

Some people prefer not to get into debt and rather build their own business as a side hustle. Take the approach that works for you.

Do you want to get a business loan? Find out more about business loans, and types of lending.

Working capital

This is a business's total assets, like assets that let the business generate a profit. For example, a business that uses cotton (raw material) to produce clothes (goods) that it sells for a profit. 

Financial capital

Financial capital includes funds in a business bank account and money owed by clients. Businesses use these funds for day-to-day operations like paying their employees.

What about human capital?

It might sound a bit strange, but this kind of capital includes employees and contractors who keep the business going through services, admin, and the process of production.

Intellectual property

This type of capital includes things unique to your business that make it competitive and able to earn money distinctively, like proprietary programs, patents, and partnerships, which the company uses to make money. For example, this could be your secret chakalaka recipe.

Physical capital

Your cash register should have a lockable cash drawer. You will have to use the key provided when unlocking the drawer for the first time. After the drawer has opened, leave the key in the drawer.

Be careful not to lose this key as you use it to lock the register after each sales session.


All the buildings, stores, warehouses and offices that the business owns fall under real estate. The company can use this real estate when applying for a loan.

How can you use capital in your business?

To sum it all up, your business can use capital to kick-start economic growth and keep the fires burning.  You can use your business’s capital to show others how well it is doing. This, in turn, will attract investors, which will generate more capital. 

Do you need fast funding for your small business? 

Are you a Yoco merchant? Yoco can help you grow your business with a cash advance if you are a qualifying Yoco merchant. How does it work? Access your Yoco Portal to see if you qualify for Yoco Capital. If you do, it takes you five minutes to apply, followed by instant approval. Your moolah will be in your account in one business day.  

Qualifying Yoco merchants don’t have to worry about how they will pay back the cash advance. Yoco does the work for you by subtracting a small percentage of every sale you make through Yoco. So, get in touch to learn more about Yoco Capital and how to become a Yoco merchant.

The right combination of capital might be what your small business needs to take off and grow. You can make it happen. Just don’t give up.

Disclaimer: Please get financial advice from a certified financial advisor. This article is for informational purposes only.

Source: What Is Capital? 4 Types of Business Capital

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