While South Africa’s “big four” banks have historically dominated the financial landscape, their appetite for small business risk remains notoriously low. Into this void steps Lula (formerly Lulalend), which has just announced a R340m ($21m) funding injection from the Dutch entrepreneurial development bank, FMO.

The investment is structured as local currency funding — a strategic move that shields the fintech from the volatility of the South African rand. For Lula, the mission is clear: scale its “lending-as-a-service” and neobanking platform to reach the thousands of micro, small, and medium enterprises (MSMEs) currently locked out of the formal credit market.

From Niche Lender to Neobank

Founded in 2014 by Trevor Gosling and Neil Welman, Lula spent its first decade perfecting a digital-first lending model. Traditional banks often require years of financial statements and physical collateral; Lula uses AI-driven credit scoring and alternative data to provide funding decisions in hours rather than weeks.

However, the company’s recent evolution is more ambitious. In partnership with Access Bank, it launched “Lula,” a neobanking solution that bundles business accounts with cash-flow management tools and instant credit.

This latest R340m from FMO follows a busy period of capital raising:

• 2023: A $35m Series B round led by Lightrock.
• Late 2025: A $10m local-currency loan from the International Finance Corp (IFC).
• This week: The FMO facility, which brings its total recent lending firepower to over $60m.

The FX Advantage

In the world of African fintech, debt is often a double-edged sword. Borrowing in dollars or euros to lend in local currency can be suicidal if the local currency devalues.

“Receiving this capital in local currency is a critical enabler,” says CEO Trevor Gosling. “It eliminates the volatility of exchange rate fluctuations, allowing us to provide stable, predictable, and sustainable lending rates to our customers.”

By securing ZAR-denominated debt, Lula can maintain its margins without passing the cost of currency hedging onto the small business owners it serves.

Targeting the Underserved

A significant portion of this new capital is earmarked for impact-driven lending. Under previous agreements with the IFC, Lula committed to allocating 25% of loan proceeds to women-owned MSMEs. The FMO funding is expected to follow a similar trajectory, focusing on:

• Micro-enterprises: Businesses that often operate informally.
• Thin-file borrowers: Entrepreneurs with limited credit histories but healthy cash flows.
• Low-income communities: Driving financial inclusion outside of South Africa’s primary urban hubs.

What’s Next?

Lula is navigating a South African economy that is currently clawing its way back from post-pandemic sluggishness. While the “big banks” are slowly digitizing, Lula’s advantage lies in its agility and its “neobank” pivot. By controlling the business bank account, Lula gains deeper insights into an SME’s daily health than a third-party lender ever could.

The challenge will be maintaining low default rates as they move further down-market into the “informal” or “micro” sectors, where cash flow can be as volatile as the weather. But with a cap table featuring Quona Capital, DEG, and Triodos, Lula has the institutional backing to suggest they’ve cracked the code on SME risk in emerging markets.