South African payments company Yoco has secured a $100 million (1.6 billion rand) credit facility from US investment firm Victory Park Capital Advisors to expand lending to small businesses. The agreement marks Yoco’s first direct debt financing arrangement and will allow the company to fund merchant cash advances through its own platform. The facility is intended to help businesses purchase inventory, hire employees, upgrade equipment and open new locations.
Yoco will provide advances ranging from 2,000 rand ($120) to 1.5 million rand ($91,000) through its Yoco Capital service. The company uses transaction data from its payment terminals and online payment systems to assess merchants’ eligibility for financing. Qualifying businesses receive funding offers through the Yoco app without submitting loan applications or providing collateral. Repayments are deducted from daily sales rather than collected through fixed monthly installments, allowing payment amounts to change with business revenue.
The agreement changes how Yoco finances its lending operations. Since introducing Yoco Capital in 2018, the company has distributed more than 6.5 billion rand ($394 million) in working capital to over 40,000 businesses through lending partners. The Victory Park facility will allow Yoco to manage financing, pricing and credit risk within its operations. Chief Executive Officer Carsten Höltkemeyer said the agreement gives the company control over merchant financing at scale for the first time, while it will continue working with outside lenders where needed.
Follow us on WhatsApp | LinkedIn for the latest headlines
Founded in 2015, Yoco provides card terminals, payment processing and business management software to more than 200,000 merchants across South Africa. The company is backed by investors including TPG and has expanded from payment acceptance into services for managing business operations. Victory Park Capital, based in Chicago, manages approximately $3.6 billion in assets and has invested more than $12 billion across about 260 transactions since 2007. The firm specializes in private credit and financing for businesses.
The funding comes as South African small businesses face difficulties accessing credit from banks. A 2025 report by Finfind and African Bank estimated the country’s small business financing gap at approximately 350 billion rand ($21.2 billion). Small and medium-sized enterprises receive about 13% of bank lending, compared with 51% for large companies. Yoco plans to use the facility to expand merchant financing across retail, hospitality and services. The companies did not disclose the facility’s interest rate, repayment period or other financing terms.
Key Takeaways
Yoco’s $100 million credit facility reflects a shift among African fintech companies from providing payment services to offering financing based on customer transaction data. Small businesses often struggle to obtain bank loans because they lack collateral, financial statements or credit histories that lenders require. Yoco’s model addresses part of this problem by using payment information collected through its terminals and online services to assess business revenue and repayment capacity.
Merchants can receive advances between 2,000 rand and 1.5 million rand, with repayments deducted from daily sales rather than fixed monthly payments. This structure can help businesses manage repayments when revenue fluctuates, although financing fees and the percentage deducted from sales determine the cost to merchants. For Yoco, bringing merchant financing in-house creates an opportunity to earn revenue beyond payment processing while increasing its exposure to credit risk. The company has distributed more than 6.5 billion rand to over 40,000 businesses through partners since 2018, providing transaction data that could support future lending decisions.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
The agreement also highlights the role of private credit in financing African technology companies. Instead of raising equity and reducing existing shareholders’ ownership, fintechs can borrow capital to finance customer lending. However, debt financing creates repayment obligations and requires controls to manage defaults. South Africa’s estimated 350 billion rand small business financing gap suggests demand for alternatives to bank loans.
The facility represents less than 0.5% of that gap, meaning its impact will depend on how often the capital can be deployed and repaid. For investors, the indicators will be lending growth, merchant repayment performance, financing costs and whether Yoco can increase payment volumes while managing credit losses.