Look Beyond Banks to Secure Working Capital for Your Small Business


The high failure rate among SMEs in South Africa is all too often the result of a lack of access to funding. As traditional bank solutions fail to meet the short-term financing requirements of many smaller businesses, non-bank lenders are jumping at the chance to provide much-needed working capital to vendors and merchants. SMEs struggling to secure working capital from banks should look towards the burgeoning non-bank financial services sector in South Africa.

The global trend towards disintermediation has seen the evolution of a new breed of non-bank firms connecting those with capital with those in need of finance. Non-bank lenders are more able than traditional banks to provide the flexibility and speed of service that is critical to the running of an SME.

Whether your small business needs R50,000 or R1.5-million, if you have a clean credit track record, regular cash flow and can show a viable annual gross turnover (usually in excess of R1-million) you may be eligible for a loan from a merchant financier.

When applying for working capital for your small business, consider a non-bank financier who can offer the following:

1. A variety of short-term working capital loans which can be repaid within a six to 12 month period;
2. Flexible repayment options which can be calculated either as a fixed periodic amount or as a percentage of daily sales;
3. Transparent terms to allow you to easily perform a cost-benefit calculation and to predict the net effect on your bottom line; and
4. A quick turnaround on your loan. The payout timeframe on a successful application should be significantly shorter than a traditional lender – sometimes as short as five business days.

We have a country rich with entrepreneurs and business owners who need working capital to function. Consider thinking beyond traditonal bank finance to grow your business.

Renier Kriek

Renier Kriek is a co-founder of Mettle Merchant Finance, a joint venture between financial services companies Combined Finance Holdings and Mettle, a subsidiary of JSE-listed company Tradehold Ltd. Find him on LinkedIn and like Combined Finance on Facebook.

Article courtesy of Business Essentials


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