Yoco secures $100 million credit to expand merchant lending

By Grace Kim

Yoco secured a $100 million credit facility from US investment firm Victory Park Capital to expand its small-business lending operation and take greater control of the financing offered through its payments platform.

The South African fintech says the facility gives it direct control over the financing layer at scale for the first time.

How much has Yoco already advanced?

Yoco Capital has advanced more than R6.5 billion ($395 million) to over 40,000 merchants since 2018, working with specialist credit providers. Yoco expects the new facility to give it greater control over merchant-loan pricing and risk as the business scales. The company describes the facility as one of Africa’s largest dedicated merchant cash advance facilities.

Yoco says it has not recorded an unprofitable lending cohort since it began advancing capital in 2018, including during the Covid-19 pandemic. The company did not provide cohort-level performance figures, default rates or write-offs with the announcement.

What it means: Yoco brings R6.5 billion of lending history to the deal, but its announcement provides no cohort-level default or write-off data.

How does Yoco Capital work?

Yoco Capital provides working capital advances to merchants already using Yoco’s platform. Merchants do not submit an application. Eligible offers appear in the app after Yoco assesses merchants using live sales data from in-person and online payments.

Advances range from R2,000 ($122) to R1.5 million ($91,185), with no collateral required. Yoco automatically deducts repayments from a merchant’s daily takings rather than requiring fixed monthly instalments. Yoco designed repayments to move with sales, but that approach raises questions about how merchants fare when revenue falls or trading becomes unpredictable.

Yoco says merchants typically use advances to:

• Buy stock ahead of busy periods.
• Hire staff.
• Upgrade equipment.
• Open branches.

Yoco plans to extend Yoco Capital to more than 200,000 merchants across retail, hospitality and services in South Africa.

What it means: Live sales data replaces a formal application, while daily takings determine each merchant’s repayments.

What does the new facility change?

Carsten Holtkemeyer, Yoco’s chief executive officer, said in a Monday statement: “We have spent a decade building an operating system that runs a merchant’s whole business, payments, point of sale, and now the decisions in between. Financing was the one layer we didn’t fully control. This facility changes that.”

Victory Park Capital brings experience in private credit and asset-backed finance to the arrangement. The firm says it has invested more than $12 billion across 260 investments since 2007. Jason Brown, its senior partner, said Yoco had demonstrated a track record of supporting small and independent businesses. He added: “We’re supportive of Yoco’s mission to expand access to flexible financing solutions for South African entrepreneurs.”

Yoco believes the facility fits a broader effort to become an operating system for independent businesses, combining payments, point-of-sale software and financing. The company has expanded its product offering, acquired software business Dyner and said it is developing an AI-powered platform. Yoco also says it has reduced merchant fees by R250 million ($15.20 million) a year.

What it means: The facility shifts merchant-credit pricing and risk from specialist providers toward Yoco.

Can payment data fill South Africa’s SME funding gap?

The 2025 Finfind and African Bank SA MSME Access to Finance Report estimates South Africa’s small-business financing gap at about R350 billion ($21.3 billion). It says small and medium-sized enterprises receive 13% of national bank lending, compared with 51% for large corporations.

Yoco says its model rests on a different view of small-business finances. A bank statement or credit bureau report offers a snapshot, while payment records can show sales patterns in real time. The company says that information can help it tailor funding to a merchant’s trading history and business needs.

Yoco believes transaction data generated by merchants using its card machines and online payment tools can help it assess businesses that traditional lenders may struggle to evaluate. The company also believes it can turn its payments relationships with more than 200,000 businesses into a larger lending operation.

The open question is whether that data advantage can preserve profitable lending and repayment discipline as the book expands.

The test ahead: Yoco must scale lending without compromising repayment discipline, while merchants will judge the facility by whether funding arrives when they need it to keep operating.