The 2026 Budget Speech has been welcomed for measures that reduce the compliance burden on growing micro, small and medium businesses, as the announcements send a strong and encouraging signal that government is increasingly aligned around MSMEs as the country’s most important job creators.
Finfind points to key changes announced in the budget that will ease the burden on MSMEs. The compulsory VAT registration threshold increases from R1 million to R2.3 million – the first adjustment since 2009.
The budget also improves exit relief for entrepreneurs selling qualifying small businesses by raising the capital gains tax exclusion to R2.7 million and increasing the qualifying business value cap to R15 million (up from R10 million).
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Finance Minister Enoch Godongwana said the change “will enable small business owners to receive more tax relief when they sell their businesses”.
In his post budget speech interview, the Minister confirmed that these changes have been made to support this vital business sector and pointed to regulators to make the changes needed to ensure MSME growth.
Enabling regulation is needed
When it comes to addressing the R350 billion MSME funding gap, this aligns with Finfind’s call for key regulation changes. Access to finance remains the primary challenge constraining micro, small and medium businesses in the country.
The sector is not growing significantly and hasn’t been for the last decade, financing MSMEs is imperative to increased growth.
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Changes are needed.
The recommendations in Finfind’s SA MSME Access to Finance Report – published in partnership with the Department of Small Business Development in May 2025 – are of major importance to the sector.
The report calls for a move away from traditional models for credit assessments used by banks and Development Finance Institutions (DFIs), that are highly document intensive, and a move to global open finance trends using digital data to produce the financial information needed by lenders to assess and score business loan applicants.
Open finance is the game changer needed for MSME lending
In other developing countries like Brazil, open finance regulation has paved the way for banking transaction and other digital data to be used to automatically produce the financial information needed by lenders for business credit assessments.
For example, banking transaction data is automatically categorised using machine learning models and is able to produce income statements (including affordability), cash flow analysis and the key ratio analysis needed by lenders for credit assessments and scoring.
Read: The power of cash flow forecasting
This shift from traditional assessment models is ensuring that viable businesses who need finance, that are unable to meet the heavy financial documentation requirements and as a result have remained largely invisible to lenders, are now able to be easily assessed for credit and priced more accurately.
To achieve this in South African, regulators including the Financial Sector Conduct Authority and the South African Reserve Bank amongst others, need to prioritise the work they are doing to develop and implement Open Finance Regulation in the country. It is the game changer this important sector needs.
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The sharing of business credit data
Further to Open Finance regulation, we also need to solve the crisis of the lack of business credit data in the country, it is a major constraint to increased MSME lending.
Finfind is calling for the raising of the juristic turnover threshold in the National Credit Act by the National Credit Regulator, from juristic persons (i.e., business entities) with an annual turnover of less than R1 million per annum to a minimum of R10 million per annum.
They are also calling for improved monitoring of the mandatory sharing of credit data by providers of business credit who fall within the thresholds.
Jaco van Jaarsveldt, chief innovation and strategy officer at Experian, in a budget webinar co-presented with Econometrix last week said that, “The Budget points to a structural drive across government to enable MSME growth – and that 2026 now presents a real opportunity to turn intent into implementation across policy, funding, regulation and data-sharing.”
This year must be the year we move from discussion to delivery when it comes to scaled lending to this vital business sector.
If we are serious about job creation, then we must all invest our efforts in supporting the businesses that are creating the jobs and growing the economy by making bold, enabling policy changes.
Darlene Menzies is CEO at Finfind.
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