Getting approved for funding is a major milestone, but it's just the beginning. This guide covers everything that happens after approval: the contracting process, disbursement timelines, reporting requirements, compliance obligations, monitoring, repayments, and how to maintain strong funder relationships throughout the funding period.
Critical Success Factor: Most funding cancellations happen due to non-compliance with post-approval obligations, not business failure. Understanding and fulfilling your commitments is essential to keeping your funding.
Who This Is For
- SMEs that have been approved for funding and need to know what comes next
- Businesses preparing for post-approval obligations before applying
- Funded businesses struggling with reporting or compliance requirements
- Consultants helping clients manage funder relationships post-approval
From Approval to Disbursement
The Contracting Phase
What Happens During Contracting
- Approval Notification: You receive formal approval letter with terms and conditions
- Funding Agreement Preparation: Funder drafts contract (10-15 working days)
- Contract Review: You review and negotiate terms if necessary (have lawyer review)
- Security/Collateral Documentation: For loans, collateral registration and security documents
- Signing: All parties sign (wet signatures or electronic, depending on funder)
- Conditions Precedent: Fulfill any pre-disbursement conditions (bank account confirmation, insurance, etc.)
Typical Contract Contents
- Funding amount and terms (interest rate, repayment schedule for loans)
- Use of funds restrictions (what you can and cannot spend on)
- Disbursement method (lump sum, tranches, reimbursement)
- Reporting requirements (frequency, format, content)
- Compliance obligations (tax, CIPC, B-BBEE maintenance)
- Site visit and audit rights for funder
- Default and cancellation clauses
- Change notification requirements
Read Everything: Don't sign contracts without reading and understanding every clause. Many entrepreneurs sign excitedly without realizing the obligations they're committing to. Have a lawyer review if possible.
Disbursement Process
| Disbursement Type | How It Works | Typical Timeline |
|---|---|---|
| Lump Sum | Full amount deposited to your business account in one transaction | 5-10 working days after signing |
| Tranches | Released in portions upon meeting milestones (e.g., 50% upfront, 50% at 6 months) | Per tranche: 5-10 days after milestone proof |
| Reimbursement | You spend first, then submit proof of expenditure for reimbursement | 30-45 days after proof submission |
| Direct Payment | Funder pays supplier directly on your behalf | 10-15 days after supplier invoice submission |
| Voucher Redemption | Present voucher to approved service provider, funder pays provider directly | Immediate redemption, payment within 30 days |
Disbursement Delays: Common causes include incomplete paperwork, bank account verification issues, and missing conditions precedent. Ensure all documents are in order before expecting disbursement.
Immediate Next Steps After Approval
- Read and Understand Contract (Week 1)
Review all terms, conditions, and obligations. Note reporting dates, compliance requirements, and restrictions.
- Set Up Tracking Systems (Week 1-2)
Create systems to track spending, milestones, and reporting deadlines. Use accounting software or spreadsheets.
- Separate Banking (Week 1-2)
Consider opening a separate bank account for funded activities to simplify tracking and reporting.
- Calendar All Deadlines (Week 1)
Add all reporting dates, repayment dates, and milestone dates to your calendar with 2-week advance reminders.
- Assign Responsibility (Week 1)
Designate who in your business is responsible for funder compliance and reporting (yourself or staff member).
- Spend According to Plan (Ongoing)
Use funds only for approved purposes. Deviations require funder approval BEFORE spending.
- Keep Records (Ongoing)
Save all invoices, receipts, contracts, and proof of payment related to funded activities.
Reporting Requirements
Financial Reporting
What You'll Need to Report
- Utilization Reports: How you spent funding (itemized breakdown)
- Management Accounts: Monthly or quarterly financial statements
- Proof of Expenditure: Invoices, receipts, bank statements
- Variance Explanations: If spending deviated from budget, explain why
- Revenue vs Projections: Actual performance compared to your forecasts
- Cash Flow Status: Current cash position and runway
Reporting Frequency by Funder Type
- SEDFA Loans: Quarterly management accounts + annual audited statements
- DTIC Incentives: Per claim (reimbursement model) + annual compliance
- NYDA: Quarterly progress reports + annual financial statements
- NEF: Quarterly reports + annual audited financials + monthly for first 6 months
- Grants: Milestone-based reports (as funds are used)
Progress and Impact Reporting
Non-Financial Metrics to Report
- Job Creation: Jobs created/retained (by race, gender, youth)
- Milestones: Progress against agreed project milestones
- Output Indicators: Units produced, services delivered, customers served
- Challenges: Obstacles encountered and mitigation strategies
- Impact: Social/economic impact of funding (community benefit, skills transfer)
- Market Performance: Sales, contracts won, market share growth
Reporting Best Practices
- Submit reports on time (late reports = breach of contract)
- Be honest about challenges (funders can help if you communicate early)
- Use funder templates if provided
- Include supporting evidence (photos, testimonials, contracts)
- Highlight successes AND challenges (balanced reporting is credible)
- Keep copies of all submitted reports
Ongoing Compliance Obligations
You Must Maintain Compliance With:
- Tax Compliance: Valid tax clearance at all times (renew before expiry)
- CIPC Good Standing: Annual returns filed on time, no arrears
- B-BBEE Status: Maintain or improve B-BBEE level (if relevant)
- Labour Compliance: PAYE, UIF, COIDA registered and paid (if employees)
- Audits: Annual audited financials if required by contract
- Insurance: Maintain required insurance coverage
- Sector-Specific: Industry licenses, permits, certifications
Notification Requirements
You must notify funder immediately if:
- Change of ownership/directors/shareholding
- Change of business address or contact details
- Material change in business operations
- Financial distress or insolvency risk
- Legal action against the company
- Any compliance lapses (tax, CIPC)
Non-Compliance Consequences: Funding can be recalled (demanded back immediately) if you breach compliance obligations. Set reminders for all renewal dates.
Monitoring and Evaluation
Funder Site Visits
What to Expect
- Frequency: At least once per year, more for large amounts or high-risk projects
- Notice: Usually 1-2 weeks notice (sometimes unannounced)
- Duration: 2-4 hours typically
- Who Comes: Investment officer, sometimes with technical expert or auditor
They Will Check
- Physical evidence of funded assets (equipment, vehicles, inventory)
- Evidence of funded activities (operations, staff, customers)
- Financial records and supporting documents
- Compliance documentation (licenses, permits, insurance)
- Interview staff, customers, or suppliers
- Take photos for their records
How to Prepare
- Clean and organize your premises
- Have all financial records readily available
- Brief staff on what to expect
- Prepare a brief progress presentation
- Have assets visible and accessible
- Be honest and transparent
Financial Audits
Audit Requirements
- Annual Audits: Required for most loans over R500k and equity investments
- Use of Funds Audits: Specific audit of how funding was spent
- Special Audits: Triggered by concerns or discrepancies
- Who Pays: Usually you (budget for this cost)
- Auditor Selection: Some funders require registered auditors from their approved list
Audit Preparation
- Keep meticulous records throughout the year
- Reconcile bank accounts monthly
- File invoices and receipts systematically
- Use accounting software (Xero, Pastel, etc.)
- Budget R15,000-R50,000+ for audit fees
- Schedule audit early to meet funder deadlines
Managing Loan Repayments
Repayment Best Practices
- Set up debit order: Automate repayments to never miss due date
- Budget for repayments: Factor into monthly cash flow planning
- Pay early if possible: Reduces interest, shows good faith
- Communicate proactively: If cash flow issues arise, contact funder BEFORE missing payment
- Request restructuring early: Don't wait until you default
Grace Periods and Moratoriums
- Some loans have 3-12 month grace periods (interest-only or payment holiday)
- Use grace period to generate revenue, don't waste it
- If in distress, request moratorium ASAP (approval easier before default)
What Happens If You Miss a Payment
- Immediate: Late payment fees and interest penalties apply
- Day 7: Funder contacts you for explanation
- Day 30: Formal default notice, demand for immediate payment
- Day 60: Loan may be called (full amount due immediately)
- Day 90+: Legal action, handover to debt collectors, adverse ITC listing
Default Consequences: Defaulting on government loans can blacklist you from all future government funding and severely damage your credit record. Communicate early if facing difficulties.
Grants and Equity Obligations
| Funding Type | Ongoing Obligations | Duration |
|---|---|---|
| Grants | Use for stated purpose only, report on outcomes, repay if misused or outcomes not achieved | Until project completion + 1-2 years monitoring |
| Equity (NEF, IDC) | Board representation for funder, consent required for major decisions, quarterly/annual reporting, exit planning | Until funder exits (typically 5-10 years) |
| Blended (loan + grant) | Both loan repayments AND grant compliance obligations | Loan term + grant monitoring period |
| Vouchers | Use at approved suppliers, report on outcomes, may need to co-fund | Validity period (usually 6-12 months) |
Dealing with Changing Circumstances
Common Scenarios and How to Handle
1. Need to Use Funds Differently Than Planned
Action: Request variation in writing BEFORE spending. Explain reason and provide revised budget. Most funders allow reasonable variations if justified.
2. Business Underperforming vs Projections
Action: Report honestly in quarterly reports. Explain what went wrong and mitigation strategies. Request support or restructuring if needed.
3. Key Staff or Director Leaving
Action: Notify funder immediately. Explain succession plan. Some funders may want to reassess risk.
4. Unexpected Windfall (Major Contract Won)
Action: Report positive news. If it changes your funding needs, discuss options (early repayment, reduced future tranches).
5. Business in Financial Distress
Action: Communicate immediately. Request business rescue support, restructuring, or moratorium. Honesty is critical—hiding problems makes them worse.
What Can Go Wrong and How to Avoid It
| Problem | How It Happens | Prevention |
|---|---|---|
| Funding recalled | Misuse of funds, non-compliance, fraud | Use funds only as approved, maintain compliance, be transparent |
| Loan default | Missed repayments, cash flow problems | Budget conservatively, communicate early if struggling |
| Failed audit | Poor record-keeping, missing documentation | Keep meticulous records, use accounting software, hire bookkeeper |
| Reporting violations | Late or missing reports, false information | Set reminders, assign responsibility, be honest |
| Tranche withheld | Milestones not met, poor progress | Track milestones closely, communicate challenges early |
| Blacklisted from future funding | Serious breach of contract, fraud, default | Take obligations seriously, communicate proactively |
Maintaining Funder Relationships
- Communicate proactively: Share good news and challenges early
- Be responsive: Reply to funder queries within 48 hours
- Exceed expectations: Submit reports early, achieve milestones ahead of schedule
- Invite to events: Invite funder reps to product launches, factory tours, celebrations
- Acknowledge publicly: Thank funder in media, social media, events (good PR for them)
- Request support: Funders often have networks—ask for introductions, advice, connections
- Think long-term: Successful first funding → easier to get second round or larger amounts
Funder-Specific Requirements
| Funder | Unique Post-Approval Requirements |
|---|---|
| SEDFA | Quarterly management accounts; Annual audited financials (loans R500k+); Site visits every 6-12 months; Mandatory training attendance for some programmes |
| DTIC | Proof of expenditure for reimbursement; Quarterly compliance declarations; Job creation reporting (BBBEE verified); Equipment branding (DTIC logo) |
| NYDA | Mentorship sessions (mandatory); Youth employment reporting; Social media engagement (NYDA tags); Graduate entrepreneur network participation |
| NEF | Board observer rights; Monthly reports first 6 months; Quarterly board packs; Annual audited financials; Exit planning discussions (year 3+) |
| IDC | Quarterly reporting portal; Impact reporting (jobs, localisation); Annual valuations (equity); Board representation on larger deals |
Strategies for Success
- Treat Funding as Partnership, Not Just Money
Funders want you to succeed—they're invested in your outcomes. View them as partners who can provide advice, networks, and support beyond capital.
- Over-Communicate Rather Than Under-Communicate
It's better to over-report than surprise funders with problems. They appreciate transparency and can help with challenges if you raise them early.
- Build Systems for Compliance
Don't rely on memory. Use accounting software, set calendar reminders, create checklists. Systems prevent costly oversights.
- Deliver on Commitments
Achieving or exceeding your stated milestones builds trust and opens doors for future funding (larger amounts, easier approval).
- Document Everything
Save copies of all communications, reports, invoices, bank statements. If disputes arise, documentation protects you.
Next Steps
Need Help Managing Your Approved Funding?
Get quotes from verified accountants and financial advisors who can help with reporting requirements, disbursement management, and compliance.
- Business plan development
- Financial projections
- Funding application support
- Pitch deck preparation