South African fintech Yoco has secured a $100 million credit facility from US investment firm Victory Park Capital Advisors. The money will fund more loans and cash advances for the small businesses that use its payments platform.
What the Deal Involves
The facility is worth about R1.6 billion. Yoco will use it to give merchants working capital through Yoco Capital, its financing product. Advances range from R2,000 to R1.5 million, and businesses can use them to buy stock, hire staff, upgrade equipment or open new locations.
This is debt, not equity. Yoco’s shareholders keep their stakes, and the companies did not disclose pricing or maturity terms.
Moving Lending In-House
Yoco Capital launched in 2018 and has so far channelled more than R6.5 billion to over 40,000 businesses through lending partners. The new facility lets Yoco take more control over financing, pricing and credit risk within its own operations. That gives the company a way to earn revenue beyond payment processing, though it also means carrying more credit risk.
A Platform at Scale
Cape Town-based Yoco, founded in 2015, now processes payments for about 200,000 merchants and serves around 30 million consumers a year. It has handled more than $15 billion in payments to date. The company has raised over $150 million in equity from global investors, including TPG and Dragoneer.
That transaction data powers the lending model. Yoco can assess a merchant’s sales history and business performance to tailor financing offers, which helps businesses that struggle to qualify through traditional credit checks.
Why Small Businesses Need It
Many small South African businesses struggle to get bank credit. Thin credit records and a lack of collateral make banks cautious. Merchant cash advances tied to card sales offer an alternative, because repayment follows the business’s own revenue.
The Risks Ahead
Lending to small businesses carries real risk. Repayment performance, financing costs and the regulatory treatment of fintech lenders will all shape how the facility performs. Competition among SME lenders in South Africa is also growing, so Yoco will need to keep merchants loyal while managing losses.
What to Watch
Investors and merchants should watch how quickly Yoco deploys the funds, how well merchants repay, and whether lending helps lift payment volumes. If it works, Yoco’s model of using payments data to underwrite credit could become a template for other African fintechs moving from processing payments to providing finance.
