In the only programme of its kind in South Africa, Business Partners Limited supports business owners with zero-interest loans to help them improve their operations and profitability.
“When you work with business owners as closely as Business Partners Ltd does, you know that they often need more than just working-capital and asset finance,” says Petro Bothma, group enterprise development manager at Business Partners Ltd. The unique Technical Assistance Programme has been set up to support Business Partners Ltd clients in some of their many non-financial needs.
No fewer than 150 businesses have already benefited from a total of R45 million of the Technical Assistance Programme, a joint venture between the Swiss government (State Secretariat for Economic Affairs – SECO) and Business Partners Ltd, each of whom had contributed US $2 million to the project.
The interest-free technical assistance loans are available to Business Partners Ltd clients for a wide range of business-improvement projects, from the setting up of business systems, staff training, compliance, and accreditation to developing marketing plans. “The range is so wide that it’s easier to say what the Technical Assistance Programme won’t support, namely working capital and the purchasing of equipment and property,” says Petro.
Typical interventions funded by the Technical Assistance Programme include the installation of financial and operational management systems, productivity-improvement services, marketing projects such as exhibiting at trade fairs, legal services from trademark registration to business rescue, recruitment of key personnel, the training of staff, ISO accreditation services and coaching and mentorship of the business owner.
The programme was launched in South Africa after the concept was proved to be strikingly successful in other African countries where it was pioneered by Business Partners International (BPI). Results from BPI’s Technical Assistance Programme shows that beneficiaries increased their profitability by a whopping 79%, their turnover by 32% and their staff by 26%.
Even more striking is the difference between businesses that had benefited from the Technical Assistance Programme and those that had not. Only 8% of businesses that made use of the Technical Assistance Programme were unable to pay back their loans, compared to 22% of those who had not.
These numbers make a compelling argument that access to non-financial support substantially decreases the risk of business failure. But Petro says the aim of the Technical Assistance Programme goes beyond risk mitigation that normal mentorship programmes are usually set up to do.
“The emphasis of the Technical Assistance Programme is on growth – identifying opportunities for faster growth for our clients by removing obstacles or empowering them through skills transfer. “The need for technical assistance is usually identified in the interaction between Business Partners Ltd investment professionals and their clients.
Often, the service provider proposed for the intervention will be sourced from the Business Partners Ltd extensive database of external experts and consultancies, but clients are welcome to propose experts or services that are not on the Business Partners Ltd list, says Petro.
A common example is when a business acquires a complex piece of equipment and has to hire specific engineers to commission the machinery. The cost of such expertise can be funded through the Technical Assistance Programme. Business Partners Ltd will vet the service provider before funding is approved.
Although the Technical Assistance Programme was designed as a 10-year pilot project with most of the funds dispersed in the first five years, the concept has a much longer time horizon. The idea is that the loans paid back by the beneficiaries will be perpetually used to support other businesses.
Petro says with the levels of success shown by the project so far, the chances are very good that it will become a long-term part of Business Partners Ltd offering. From Business Partners Ltd perspective, it significantly reduces the risk of default, and boosts its job creation and economic development goals.
From the business owner’s point of view, the zero-interest technical assistance loan presents a compelling opportunity to grow. The only conceivable cost to the business owner is the fund’s requirement of a twice-yearly report on the use of the funds and the results. “It’s truly a win-win proposition,” says Petro.