South African financial technology company Lula has secured R340 million (approximately $21 million) in local currency funding from FMO, the Dutch entrepreneurial development bank, to significantly improve financial access for small and medium-sized businesses across the country.
This new funding will enable Lula to expand its technology-driven lending platform, providing fast and flexible working capital to micro, small and medium enterprises (MSMEs) that are underserved by traditional banks. Many small businesses struggle to access credit due to limited collateral, poor credit history, or unstable cash flow. These are challenges that traditional lenders are usually reluctant to address.
Lula’s platform is designed to directly address this gap. The fintech offers loans of up to R5 million, which can be approved and disbursed within 24 hours, giving business owners quick access to funds for urgent needs such as inventory purchases, staff salaries, and operating expenses.
The investment in FMO follows a period of strong growth for Lula. In 2023, the company raised $35 million in Series B funding led by LiteRock with participation from International Finance Corporation, Quona Capital, DEG, and Triodos Investment Management. Recently, Lula secured an additional $10 million in local currency financing from IFC, further strengthening its lending capabilities and strengthening investor confidence in its business model.
Lula said the funding will significantly increase lending to small and medium-sized businesses that remain excluded from the formal banking system. We focus on providing working capital tailored to the realities of running a small business, rather than rigid loan structures that can stifle growth.
Trevor Gosling, co-founder and CEO of Lula, said the investment is a strong validation of the company’s mission. “Access to capital remains the biggest hurdle for small business owners. By closing this gap, we are not only funding businesses, but fueling the economic engine,” he said.
The main feature of financing is that it is denominated in local currency, which is an important factor for both lenders and borrowers. Local currency loans protect small and medium-sized businesses from foreign exchange fluctuations and enable Lula to provide predictable, stable and sustainable loan rates. For small business owners with low profit margins, this stability can be the difference between survival and long-term growth.
FMO also highlighted the far-reaching economic impact of the partnership. Angelica Ortiz de Haas, FMO’s Manager for Financial Institutions in Africa, said the investment is in line with the bank’s strategy to support fintech solutions that promote financial inclusion and strengthen competition within the local financial ecosystem.
This funding highlights the growing role of alternative finance in the South African economy, beyond individual companies. With access to timely and affordable capital, small and medium-sized businesses are in a position to expand their operations, create jobs, and contribute meaningfully to local economic development.
Looking ahead, the partnership between Lula and FMO is expected to support thousands of South African SMEs over the next three years and help build a more inclusive, resilient and sustainable SME ecosystem – one where access to finance is an enabler of growth rather than a barrier.
