South Africa’s 2026 Budget Speech, delivered by Enoch Godongwana, sent a clear message: fiscal discipline is here to stay, structural reform is ongoing, and inclusive growth is the goal. But what does that actually mean for you – the small business owner trying to grow, hire, expand, and survive in a tough trading environment?
Let’s unpack what the Budget said about SMEs, the broader economic context it creates, and why flexible SME funding will be critical in the year ahead.
Skip ahead: I need growth funding
Key Takeaways for Small Business Owners
Here’s what the 2026 Budget means for you:
- The economy is stabilising but still growing slowly.
- Infrastructure spending presents opportunity.
- Consumer pressure remains real.
- Fiscal discipline limits broad stimulus.
- Cash flow management will be critical.
A Turning Point – But Growth Is Still Slow
The 2026 Budget marks a meaningful shift in South Africa’s fiscal story. After years of rising debt, ratings downgrades and uncertainty, government is now talking about stabilised debt, a narrowing deficit, improved revenue collection and renewed investor confidence. Being removed from the grey list and securing a credit rating upgrade are not small achievements; they signal that South Africa is regaining credibility in global markets.
But while the country may be turning a corner financially, the growth outlook remains modest. At 1.6% projected growth for 2026, this is a stabilising economy; not a surging one. For SMEs, that distinction matters.
Economic stability creates a foundation. It does not create demand on its own.
Growth will still need to be driven at business level by entrepreneurs who are prepared to move decisively when opportunity presents itself.
The Minister’s highlights:
- Debt stabilising for the first time in 17 years
- The budget deficit narrowing
- South Africa removed from the FATF grey list
- A credit rating upgrade
- Infrastructure investment exceeding R1 trillion over the medium term
- Economic growth is projected at just 1.6% in 2026
- Medium-term growth averages 1.8%, reaching 2% by 2028
- Logistics bottlenecks, weak infrastructure, and global volatility remain risks
For SMEs that means growth is possible, but you’ll have to create it. And that requires capital.
Related: Advantages of Using Growth Capital as a Business Funding Mechanism
Direct SME Measures in the Budget
The Budget did include some positive moves specifically for small businesses.
1. VAT Registration Threshold Increased
The compulsory VAT registration threshold increases from R1 million to R2.3 million. This is significant.
For smaller businesses, VAT compliance can be administratively heavy and cash-flow sensitive. Raising the threshold gives breathing room and reduces compliance pressure on growing enterprises.
2. Capital Gains Tax Relief for Small Business Owners
The capital gains tax exemption for the sale of a small business increases:
- From R1.8 million to R2.7 million
- Applicable to businesses valued up to R15 million (previously R10 million)
This supports entrepreneurs planning succession or exit strategies.
3. Personal Income Tax Bracket Adjustments
Personal income tax brackets and rebates will be fully adjusted in line with inflation. That helps consumers retain purchasing power: indirectly supporting SMEs reliant on household spending.
Infrastructure Investment: Opportunity for SMEs
The Budget allocates more than R1 trillion to infrastructure over the medium term, including:
- Transport and logistics upgrades
- Rail corridor improvements
- Water infrastructure
- Energy transmission expansion
- Public-private partnerships
- Border post upgrades
For SMEs, this presents two realities
Opportunity – Contractors, suppliers, service providers, and regional businesses can benefit from infrastructure-led growth.
Timing gap – Government projects take time. Payment cycles can be long. Growth opportunities often require upfront capital.
Many small businesses win contracts, but then struggle to fund materials, staff, or equipment while waiting for payment. That’s where access to fast, flexible funding becomes essential.
Explore: How to Use Fast Capital to Seize Growth Opportunities
Fiscal Discipline Means No Massive Stimulus
One of the clearest messages in the speech was this: Government will not fund spending priorities through large tax increases. Instead, it is focused on:
- Improving spending efficiency
- Identifying savings
- Containing the wage bill
- Introducing a principle-based fiscal anchor
This is responsible. It builds credibility. But it also means we are not entering a high-spend, stimulus-driven environment.
SMEs cannot rely on government to drive demand through aggressive fiscal expansion. Growth must come from innovation, competitiveness, and smart reinvestment. And again, that takes capital.
Learn: What Does It Take to Be 'Funding Ready' in 2026?
The Consumer Reality: Pressure Remains
Although there are no broad-based tax hikes, several cost pressures remain:
- Fuel levies increasing in line with inflation
- Excise duties on alcohol and tobacco rising
- Global trade uncertainty
- Infrastructure bottlenecks still affecting supply chains
For small businesses, this means:
- Input costs remain volatile
- Margins are tight
- Cash flow management becomes critical
When margins are thin, waiting months for traditional bank approvals simply isn’t viable.
Discover: SME Cash Advance
Why Flexible SME Funding Is Vital in 2026
At Merchant Capital, we understand one simple truth: Growth rarely waits for perfect economic conditions.
Small businesses don’t expand when it’s convenient. You expand when opportunity strikes.
In a low-growth but stabilising economy, the winners will be those who have the funds to leverage opportunities.
Stability Is Returning. Now SMEs Must Accelerate
The 2026 Budget reflects a country rebuilding credibility. Debt is stabilising. The deficit is narrowing. Infrastructure investment is expanding. Credit ratings are improving. This creates a more stable macroeconomic environment.
But stability does not automatically translate into growth for small businesses. If you want to make the most of a stable economy, you need fast business funding with flexible repayments.
Explore: How Flexible Repayments Are Changing the Game for SMEs
Grow with Fast, Flexible Funding Today
The 2026 Budget sets the macro stage. Now it’s your move.
We fund owner-operated and small businesses because we understand how you actually trade. You need fast, flexible business capital when opportunity knocks. Not three months later.
In a year where the country is rebuilding credibility and laying foundations for growth, SMEs must do the same. If you’re ready to grow your business in 2026, let’s talk about funding that moves with you.
Request a call back and we’ll talk you through your funding today.
