Johannesburg — ABOUT 12000 small- and medium-sized enterprises (SMEs) have been funded by the Umsobomvu Youth Fund since its inception five years ago, CEO Malosi Kekana said on Friday.

With its once-off state grant of R855m mostly used up, the fund, which helps young people with no credit history and little experience to start businesses, is hoping to secure more money from government and the private sector in order to continue its work.

Government has identified small businesses as vital to boosting SA's economy and reducing the official unemployment rate of 26,5%.

Funding from Umsobomvu comes in the form of loans that are easier to come by than bank loans, or have more lenient terms.

Kekana said every one of the 10000 ventures helped through the fund's business development voucher service was still running. The service gives entrepreneurs a voucher with which to pay consultants who help them formalise their business plans and establish their enterprises.

About 70% of the other 2000 businesses helped, which were given seed money, were still running.

"The Umsobomvu way is the way to go," said 27-year-old Lungi Tsotsi, who started SA's first black-owned Nino's restaurant in Marshalltown, central Johannesburg, in November 2004.

The business grew 50% in the last half of 2005.

Kekana said each business plan was scrutinised and out of every 100 enquiries, about 20 constituted proper business plans and "two or three" were given a loan or other help.

The fund's loan book is worth R215m and bad debt among small- and medium-sized enterprises stands at 7%.

The 12000 businesses the fund has helped establish have ensured new jobs for about 30000 people.