SME financing

• General information on financing
• Finance for your business
• Financing or refinancing your own business property
• Financing multi tenanted property investments

General information on financing

• What does Business Partners offer?
• Do Business Partners have group focus areas?
• Which industry sectors does Business Partners invest in?
• Which industries do Business Partners not invest in?
• What kind of businesses does Business Partners invest in?
• Does Business Partners offer value adding services?

Finance for your business

• What are the main criteria for investment?
• What are the Business Partners’ investment parameters?
• What is the requirement regarding own contribution?
• What security is required for the finance?
• What is the repayment period?
• What investment options does Business Partners offer?
• How does an entrepreneur qualify for Business Partners investment financing?
• How do you apply for finance?
• What makes Business Partners different from banks and financial institutions offering investment financing?
• What do Business Partners charge for the finance offered?
• Does Business Partners always become a shareholder in the company?
• Do Business Partners consider venture capital and private equity

Financing or refinancing your own business property

• What are the benefits of purchasing a property for use as premises for a small or medium enterprise?
• Can Business Partners finance my business premises?
• Is 100% finance available to purchase a property?

Financing multi-tenanted property investments

• What is the nature of a multi tenanted property?
• What is the nature of a multi tenanted investment?
• The mechanics on the funding of multi tenanted properties.
• What are the benefits of purchasing commercial or industrial property as an investment?
• What services are offered in the case of a multi-tenanted property?
• What is the typical profile of multi tenanted properties to be invested in?
• How do entrepreneurs get involved in multi tenanted investments?

General Information On Financing

What does Business Partners offer?

Business Partners offers financing to viable small and medium enterprises. The finance offered is tailor made to suit the circumstances of each applicant.

Do Business Partners have group focus areas?

Although all viable SME will be considered for financing, a special effort is made to promote and establish businesses run by females and black entrepreneurs.

Which industry sectors does Business Partners invest in?

Business Partners invests in commercial and manufacturing sectors as well as the service industries. The sectors in which the group invests include manufacturing, property projects, retailing, the motor trade, travel and tourism, leisure and marine fishing.

Which industries do Business Partners not invest in?

On-lending activities, farming (primary agriculture) operations, underground mining, informal or micro enterprise and the financing of non-profit organizations are specifically excluded.

What kind of businesses does Business Partners invest in?

Business Partners invests in start-ups, expansions, buying of businesses, management buy-outs and franchises.
Generally facilities are considered where gross assets are under R100 million, where turnover does not exceed R200 million per annum and/or employees are less than 500 in number.

Does Business Partners offer value adding services?

A pool of 300 mentors is available to clients, potential clients and the public that can assist in a range of services. Examples are marketing, financial management and technical assistance.  

Finance For Your Business

What are the main criteria for investment?

Potential investments are assessed on the viability of a business. Viability of a business comprises of two important elements: the business and the entrepreneur.

The business evaluation includes matters such as the product or service (market acceptability, market size, gearing of the business, ability to exist and grow, history, the stage of its development and medium- to long-term profit potential, technical aspects and the location).  

In evaluating the entrepreneur aspects such the ability to run a successful business, integrity, drive, vision and appropriate experience, will be considered.

What are the Business Partners’ investment parameters?

Business Partners prefer finance more than R250 000 per application and will in exceptional cases finance more than R5 million. The current average value per financing transaction is R1.8 million. Property transactions up to R20 million and multi tenanted properties of up to R75 million can be considered.

What is the requirement regarding own contribution?

Although there is no minimum requirement regarding own contribution, the lack thereof places strain on the gearing of the business and thus effecting the viability of the project.

What security is required for the finance?

As a viability-based investment company, Business Partners doesn’t have the same security requirements that the commercial banks do. The level of security will have an influence on the kind of transaction that Business Partners is able to offer and security also effects the overall pricing of the finance.

What is the repayment period?

Business Partners, in consultation with the client, will establish a suitable repayment period during the initial investment negotiations. On average, the repayment period is five years. Property transactions up to ten years are considered. Business Partners is not offering typical bridging finance over short periods of time.

What investment options does Business Partners offer?

Business Partners’ investments are structured using term loans, equity and shareholders’ loan accounts or any combination of these.

How does an entrepreneur qualify for Business Partners investment financing?

All entrepreneurs with a viable or potentially-viable formal business will be considered for investment financing. Each application is considered on its merits and on the potential profitability of the enterprise. The skills, experience and industry knowledge of the entrepreneur (or entrepreneurs), as well as the market need for the business’s products or services, are two of the most important criteria considered when assessing an application for investment financing.

How do you apply for finance?

Business Partners focuses on the viability of the business and thus needs information. A business plan will assist to understand the background and activities of the business, the funding requirement, the entrepreneurs involved, and where the business is heading.

A business plan framework is available but information in other formats are acceptable. Sufficient information is required for Business Partners to make an informed decision.
Call the nearest Business Partners office and enjoy and interview with one of the Business Partners consultants, whom will guide the entrepreneur through the decision making process.

How long does it take from offering a business plan to getting an answer?
This depends on the comprehensiveness of the business plan, the complexity of the matter and the level of co-operation from the entrepreneurs.  

What makes Business Partners different from banks and financial institutions offering investment financing?

Firstly, Business Partners is a specialised investment group for small and medium enterprises in South Africa. Entrepreneurs are the company’s exclusive and only focus and, as such, it is able to offer products and services specifically tailored to meet their unique needs.

Secondly, Business Partners has been investing in entrepreneurs since 1981 and offers both investment and added-value solutions, catering for the entrepreneur every step of the way.

Most importantly, Business Partners is a viability-based investment company and does not have the same security and other requirements that the commercial banks do.

Other factors that make Business Partners different include:

• As Business Partners specialises in investing in entrepreneurs, its people have in-depth knowledge of the small and medium enterprise sector, as well as experience of and insight into the challenges facing independent businesses
  Business Partners’ range of investment and added-value services provide an integrated solution for entrepreneurs, catering for all aspects of their needs.

• Added-value services include property broking, property management, consulting and mentorship. Business Partners is a one-stop business shop for small and medium enterprises

• Every Business Partners client is assigned a Business Advisor, who is dedicated to providing professional advice and superior client service on an on-going basis

• The company’s risk financing model is regarded as one of the most innovative in the world and has even been presented at World Bank conferences as a potential model for use in other developing countries
  Similarly, the Business Partners due diligence process is thorough, tried and tested, often exposing the extent of inherent risk in a deal

• Business Partners’ systems and processes have earned the group ISO 9001:2000 accreditations – the first investment company in the country to be accredited in this way. Business Partners believes that people are its real business and is committed to investing in entrepreneurs in every sense of the word. By doing this, the company believes that it will not only create individual wealth, but also fuel the growth of the economy and the creation of jobs

What do Business Partners charge for the finance offered?

The price of the funding is the result of the risk associated to the transaction. A better secured facility will have a more market related rates compared to transactions with a higher risk profile due to the inherit financial (security) risk as well as the business risk (the business and the entrepreneur. The approach is the higher the risk the expected higher return.

Business Partners offers unique financing solutions for entrepreneurs. How does it structure these solutions?
The circumstances of each application differ and Business Partners and the applicant will evaluate possible financing solutions.

Does Business Partners always become a shareholder in the company?

No. There is a range of financing products available where obtaining a shareholding is not done.

Where the risk is high, Business Partners may want to be compensated for the risk by negotiating a minority shareholding in the business.

Do Business Partners consider venture capital and private equity?

Yes. 

Financing or refinancing your own business property

What are the benefits of purchasing a property for use as premises for a small or medium enterprise?

Acquiring premises for own use offers many real benefits, including security of tenure, security of capital invested in property improvements, long-term capital appreciation, long-term market share and customer loyalty by trading from a permanent location and ultimate ownership of a valuable fixed asset.

Can Business Partners finance my business premises?

Business Partners has been financing business premises for many years, whether industrial or commercial properties and to a lesser extend, offices. Business Partners understand that owning the business property may have major advantages.

Is 100% finance available to purchase a property?

Indeed. This means that the entrepreneur can utilise available cash flow in operating the business and not tie up much needed cash resources in a deposit for business premises. A specialized financing product is available where no or limited deposit is available.

Financing multi-tenanted property investments

What is the nature of a multi tenanted property?

Multi tenanted property consists of multi users (tenants) of a property and typical examples are industrial parks and shopping centres.

What is the nature of a multi tenanted investment?

Entrepreneurs often identify multi tenanted properties but do not have sufficient deposit as required by a commercial bank. Business Partners will consider partnering with such an entrepreneur on the basis of contributing with the entrepreneur to qualify for bank funding. The shareholding will be based in accordance to the equity contributed by each party.

The mechanics on the financing of multi tenanted properties.

Each of the parties (Business Partners and the entrepreneur/s) pool the equity (deposit) and a commercial bank will finance the balance. The equity is normally in the format of a shareholders loan account that may be redeemed once the cash flow permits this.

What are the benefits of purchasing commercial or industrial property as an investment?

Acquiring premises for investment purposes offers such benefits as long-term capital appreciation, reliable, market-related rental income and the possibility of a post-retirement income from the property.

What services are offered in the case of a multi-tenanted property?

Business Partners has a dedicated property team with specialist knowledge. The team will assist in the viability analysis, negotiating a transaction and using a team of specialist, often the case when a building needs to be erected.
The entrepreneur does not have to be involved in the management of the property. Business Partners’ property management division is contracted to manage the property. This includes maintenance, administration and tenanted placements.

What is the typical profile of multi tenanted properties to be invested in?

This varies from industrial parks (where the size units will cater for SMEs) to suburban or en smaller regional shopping centres. The total value of these properties will be between R4 million to R75 million. The current average value per transaction is about R20 million.

How do entrepreneurs get involved in multi tenanted investments?

The entrepreneur identifies the property and has a reasonable portion of the required deposit available. Business Partners will use a specialist team to work with the entrepreneur on the due diligence and put a proposal on the table for all parties to consider. Business Partners will forward the proposal to a bank for 1st bond consideration.