International cloud-based accounting platform Xero has partnered with South African digital lenders - Bridgement, Retail Capital and LulaLend, to secure additional funding for small business customers.

According to a media statement, the partnership was established to help SMEs address the challenge of access to funding – particularly when it comes to supporting increased stock levels, new locations and new channels to customers.

The companies argue that SMEs contribute over a third (34%) to the country's GDP and make up approximately 90% of South African formal businesses.

"But considering it is growing at a mere 1%, there is a clear need for investment in this sector," reads an excerpt from the statement.

According to the agreement in place, customers will be able to use Xero's platform to engage the digital lenders directly and the lenders, in turn, can source financials from applicants immediately.

"We want to help South Africa's small businesses thrive by removing the friction involved in accessing funds," says Colin Timmis, General Country Manager, Xero SA. "A lack of capital is one of the biggest challenges impeding small business growth in this country so by integrating the latest business finance apps with Xero, SMEs will have better accounting data, which can help them access capital."

Daniel Goldberg, founder of Bridgement, said, "Many SMEs do not apply for funding because they either do not understand the process or are disheartened by getting turned down numerous times. This partnership sees us delivering improved innovation to make things simpler in small business finance."

Miguel Da Silva, MD of Retail Capital Group's Funding division, said, "Already, access to the Xero API has enabled Retail Capital to view customer information easily, resulting in real-time decision-making on the approval process. It alleviates much of the time pressure when it comes to determining the eligibility of a small business for funding."

Trevor Gosling, founder of Lulalend, added, "SMEs are significantly underfunded and banks are not proactive in helping them grow. We wanted to launch a technology company that could provide SMEs with assistance at scale."