With the launch of its new Asset Finance and Short-term Finance products, Business Partners Limited addresses two significant pain points for South African small and medium businesses, says Jeremy Lang, the SME financier’s chief investment officer.
Firstly, growing businesses often need cash injections of a size that has been difficult to come by in South Africa and secondly, when they need finance, they need it quickly.
Owner-managed businesses might need to ramp up production for a busy season, upgrade machinery, finance a big new contract or overcome a temporary setback. A sudden increase in orders can cause a growing business to run out of cash in the time between fulfilling the orders and getting paid by their clients.
These situations require finance amounts that lie somewhere between what their bank’s algorithm thinks their overdraft can be extended to on the one hand, and large long-term loans that require intense, energy-sapping due diligence processes and the mortgaging of whatever property is still unencumbered.
Business Partners’ Ltd new Short-term Finance solution with its loan sizes of between R250 000 and R750 000 and Asset Finance of between R250 000 and R5 million fall right where the biggest gap in small business finance has been up till now.
Because small and medium businesses need this kind of finance when they are either chasing an opportunity or warding off a sudden unforeseen crisis, they need it fast. Business Partners Ltd Asset Finance and Short-term Finance are designed with this agility in mind, says Jeremy.
Business Partners Ltd has set up a simplified and speedy online application process with minimal paperwork and a step-by-step guide. The documents that have to be uploaded for an application are limited to those that any well-run business will have at hand anyway: registration certificate, assets-and-liability statements and IDs of the owners, recent financial statements and management accounts of the business, bank statements, a cash-flow forecast, and, in the case of Asset Finance, a quote for the cost of the machine the business wants to acquire.
Because of the emphasis on speedy processing of applications, the new financing solutions are not available to start-up businesses, which require a much more lengthy risk evaluation before finance can be approved.
Does your business qualify?
To qualify for Short-term and Asset Finance, a business must have a trading history of two years or more, must show profit and growth, must have a clear credit record and must be able to afford the loan repayments. Applicants to Asset Finance loans must also be able to put down 20% of the price of the equipment, plus the VAT payment.
Asset Finance is aimed at helping businesses buy production and engineering equipment ranging from CNC milling machines to sorting and packaging equipment, or alternative-energy systems such as inverters and solar panels. But vehicles, IT systems and yellow goods (heavy construction machines) are not eligible for this Asset Finance solution.
The Asset Finance loan term is usually 60 months, and repayment of a Short-term Finance loan is over three to twelve months.
South African business owners have been through a very tough economic period, but have shown remarkable resilience and an agile mindset, says Jeremy. “As our ongoing SME Confidence Index and our extensive interactions with small business owners throughout the country have revealed, the key to unlocking their full potential lies in ensuring access to vital funding quicky and when they need it.
“With adequate funding for working capital and essential equipment, SMEs can propel themselves to new heights, contributing not only to their own success but also to the overall economic vitality of our communities. We believe our newly launched financing solutions speak directly to these entrepreneurial needs. Judging by the feedback we’ve received from our existing clients as well as potential ones, we believe that there will be a good uptake in these new finance products,” says Jeremy.
“The acquisition of assets is a milestone for any small business. Likewise, a capital injection made at the right time, can serve as a powerful enabler for the next phase of a business’ growth. With these two new financing solutions, we are able to meet these needs in a way that is efficient, easy to understand, and most importantly, accessible to small businesses in South Africa. We invite all qualifying SMEs to apply, we are ready to finance them.”